HELSINKI: The government may look into reducing payroll tax and some form of tax changes as means to improve competitiveness following the failure of social contract, said economic experts interviewed by news agency STT.
Government options to improve competitiveness singlehandedly without the involvement of labour market organisations are all limited. This is due to the fact that reducing the cost of labour would mean encroaching on salaries or other conditions of employment. There is a possibility that there will soon be a return to the negotiating table, the economists pointed out.
Jaakko Kiander, the president of Mutual Pension Insurance Company-Ilmarinen revealed that the government does not have many opportunities to directly influence competitiveness. For instance, the government may change the employers’ social insurance contributions through legislative changes. The measure would be novel since in principle, the social insurance contributions are agreed in a tripartite basis.
The government position is strengthened since it could offer labour market organisations to agree on achieving the implementation of similar objective through other means, explained Vesa Vihriälä, the Managing Director of Research Institute of the Finnish Economy-ETLA.
