Finland seeks to cut labour costs

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.