HELSINKI: Justice and Labour Minister Jari Lindström (left), Prime Minister Juha Sipilä, and Finance Minister Alexander Stubb spoke at a press conference on Wednesday on the social contract. Photo – Lehtikuva.
Prime Minister Juha Sipilä on Wednesday announced that the government had approved the labour market organisations’ proposal for a social contract.
The social contract drawn by the labour market organisations will replace the coercive legislative measures drafted by the government aimed at boosting competitiveness.
“This is the best day as a prime minister,” said Sipilä at a press conference describing it as a historic day. The government has not yet promised that they will cancel the conditional austerity measures and implement the promised tax cuts, even though the labour market organisations had called for that.
Sipilä, however, said the social contract provides a good basis to avoid further austerity measures. The deal by the labour market organisations does not strengthen the public finances as the government would have liked.
According to Sipilä, the economic impact can still be met when the local labour agreements are added and the wage model is specified. The Finnish model should be specified such that it can be incorporated to the Ministry of Finance estimates of the public finances. Minister of Finance Alexander Stubb said the government will make an evaluation for the first time in June and for the second time during the mid-term workshop.
The possibility of tax cuts will also be evaluated at the same time. “We will make an assessment on the whole entity. It entails the social contract, wage settlement, local labour agreement entity and the future wage model. At this stage we cannot yet evaluate this entity,” said Stubb.
Minister of Justice and Labour Jari Lindström thanked the labour organisations for their moves to reach a solution. News agency Xinhua adds: the so-called social contract is a key part of the government’s programme, aiming to reduce production costs and improve the competitiveness of the Finnish companies.
The government had envisaged a 5 per cent cut in production costs. The Finnish employers and central unions of wage earners reached a draft agreement on Monday, following failures in four rounds of negotiations in 2015.
The solution aims at improving the competitiveness of enterprises by freezing salaries, increasing annual working time by 24 hours, cutting public sector’s holiday pay by 30 per cent, raising employees’ pension contribution by 1.2 per cent and so on.
