Fin­land seeks to cut labour costs

The Pak Banker - - BUSINESS -

HELSINKI: Fin­land's cen­tre-right gov­ern­ment an­nounced on Mon­day plans to cut the cost of labour by five per­cent to boost com­pet­i­tive­ness and re­vive Fin­land's slump­ing econ­omy.

"The goal is to im­prove com­pet­i­tive­ness by re­duc­ing unit labour costs by five per­cent and to im­prove em­ployee se­cu­rity" in dis­missal sit­u­a­tions, Prime Min­is­ter Juha Sip­ila said at a press con­fer­ence. Unit labour cost is an eco­nomic in­di­ca­tor used by the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment (OECD), and it mea­sures the av­er­age cost of labour per unit of out­put. Sip­ila's pro-aus­ter­ity gov­ern­ment sum­moned Fin­land's ma­jor labour unions to ne­go­ti­ate the mea­sures needed to achieve the in­tended five-per­cent cut, as a pos­si­ble deal could in­clude cut­ting back em­ploy­ees' hol­i­days and ex­tend­ing work­ing hours with­out com­pen­sa­tion.

Sip­ila said the harsh mea­sures were nec­es­sary as Fin­land was "in the midst of one of the weak­est pe­ri­ods of its eco­nomic history." Sip­ila also warned the Nordic eu­ro­zone mem­ber's com­pet­i­tive­ness had slumped to a level where it was "up to 15 per­cent lower than that of key com­pet­ing coun­tries", such as Swe­den and Ger­many. But in or­der to achieve the leap, the gov­ern­ment still needs to con­vince the re­luc­tant labour unions to par­tic­i­pate in the deal it has dubbed a "So­cial Con­tract". Fin­land has a four-decade long tra­di­tion of forg­ing tri­par­tite com­pro­mises, in which em­ploy­ers' or­gan­i­sa­tions, labour unions and the gov­ern­ment sit down to agree on taxes, wages and other con­di­tions such as work­ing hours.

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