Prime Minister-designate Juha Sipilä (Centre) decided late on Wednesday evening to break off negotiations over a social contract that was to boost competitiveness, employment and productivity in Finland.

Sipilä was scheduled to present his proposal to labour market organisations this morning and expected a response to it by this afternoon.

Ultimately, however, he had to concede that the five per cent bump in productivity he has called for is unlikely to be realised. “Of course it's unfortunate that the contract didn't materialise. It would've reduced the need for adjustments,” Sipilä told Helsingin Sanomat.

The issue of working hours, he said, was among the bones of contention but not solely responsible for the collapse of the negotiations. He reminded that the proposal to increase working hours would not have affected all wage earners but would have been implemented on a sector-by-sector basis.

“An increase in working hours was one of the measures in the toolbox. Now, the toolbox is rather modest,” said Sipilä.

Earners demanded that also other measures be introduced to meet the objective.

Although the failure to find an agreement will force the Government to tighten the belt more than expected, Sipilä insisted that he has not lost his confidence in labour market organisations. “I don't point the finger at anyone. This process built trust, this was an exercise worth doing,” he emphasised.

The Federation of Finnish Enterprises has already proposed that the Government carry out several of the proposals as part of its legislative revisions. Sipilä, however, is not interested in revising the Working Hours Act.

“A 40-hour work week is allowed under the Working Hours Act. It's something that requires an agreement, not something that can be changed by the Government,” he said, adding that the Government was seeking to promote productivity not to change the very nature of employment.

“Any changes will be determined by labour market organisations. Adjustments are the responsibility of the Government,” he stated.

The Confederation of Unions for Professional and Managerial Staff in Finland (Akava) estimates that the proposed changes were simply too hard to swallow for earners. “Employees were ready to shoulder their responsibility even at a high cost, but the […] changes to the terms of employment were uneven and unreasonable. Earners were truly prepared to compromise but were offered nothing of note in exchange,” stated Sture Fjäder, the chairperson at Akava.

For example, the measures proposed to develop working life and protect employees against unilateral dismissal were inadequate, according to Akava.

Jyri Häkämies, the director general at the Confederation of Finnish Industries (EK), was disappointed with the collapse of the negotiations. “The Finnish economy is deep in the doldrums and no upturn is in sight. We could've used bold and determined efforts to boost productivity, make hiring easier and lift both export industries and domestic markets,” he argued.

The initial proposal was rejected as insufficient by both employer and employee representatives, the former arguing that it failed to lay out detailed measures to improve competitiveness and the latter that it was biased.

It also remained uncertain on Wednesday how the productivity bump demanded by Sipilä could have been measured across various sectors. In addition, the term used by the Prime Minister-designate had stirred puzzlement among economists as the measures proposed to improve competitiveness were essentially cost cuts.

The proposal was discussed throughout Wednesday, but no agreement on the issue of working hours was ultimately found.

Sipilä in his draft proposal suggested that competitiveness could be improved by five per cent in the union-specific collective bargaining negotiations that are scheduled to begin next year. The unions should, however, commit to the effort to boost productivity by next autumn regardless of when their collective agreements are due to expire.

Teemu Luukka, Tuomas Niskakangas, Olli Pohjanpalo – HS
Aleksi Teivainen – HT