Government proposals on measures to improve cost-competitiveness

The Government’s objective is to raise the employment rate to 72 per cent and the number of people in employment by 110,000 by the end of the parliamentary term. The debt-to-GDP ratio will level off by the end of the government term and living on debt will be brought to an end in 2021.

According to Prime Minister Juha Sipilä, the Government’s solutions are essential to improve Finland’s competitiveness. A particular challenge is the EUR 10 billion sustainability gap. The Government has decided to cover four billion with savings, around four billion with structural reforms and the remainder with measures to improve competitiveness, which include improving cost-competitiveness, pay moderation and improving productivity.

Following the termination of the social contract negotiations, the Government, due to the very poor economic situation, has had to identify exceptional measures to reduce unit labour costs by five per cent and enhance workers’ change security. The proposals are as follows.

Improving workers’ change security:

• Workers of companies employing more than 20 people will be offered, alongside redundancy pay, the right to re-employment training, with a value at least equal to the company’s average monthly pay.
• In a company employing more than 20 people, the employer must provide occupational health care services for a six-month period after redundancy.

Equalisation of family leave costs:

• Young women’s employment will be promoted by equalising the costs arising to employers from family leave, with a lump sum of EUR 2,500.

Improving cost competitiveness:

• Epiphany and Ascension Day will be changed into unpaid public holidays without reducing annual working time.
• The benefit level for sick days will be reduced so that the first day will in future be unpaid and 80 per cent of pay will be paid for days 2–9.
• Overtime pay will be halved and Sunday pay will be reduced to 75 per cent.
• Long holidays, particularly in the public sector, will be shortened from 38 to 30 working days.
• The private employer’s social security contribution will be reduced by 1.72 percentage points from the beginning of 2017.

“These proposals are aimed at restoring our eroded competiveness. Fundamentally, it is a question of creating more jobs and thereby maintaining, even rescuing, the Finnish welfare society. This is the proportion of working people required to put Finland back on track in this serious situation,” says Sipilä.

The intention is to implement the proposals through mandatory legislation to be applied after the end of current collective bargaining agreements. The legislation will come into force at the beginning of the next collective bargaining agreement period. The measures to be enacted will be precise and well defined.

The Government has thoroughly scrutinised the proposals for any inconsistencies with the provisions of the Constitution or with obligations relating to Finland’s EU or ILO memberships. As part of the preparation, the Ministry of Justice was consulted and an informal hearing of experts arranged.

The Government discussed the proposals with social partners before their publication and will continue these talks tomorrow in the Economic Council. After the Council meeting, the Government will have an informal meeting to make a decision on its measures. The parliamentary groups of the Centre Party, the Finns Party and the National Coalition Party have, for their part, approved the proposed measures. Necessary legislative drafting will take place as usual in cooperation with the social partners. In addition, the Government has assessed the impact of the measures in terms of non-discrimination and gender equality.

Prime Minister Sipilä will submit the Government’s proposed measures to improve competitiveness to Parliament in the form of a government statement by the end of September 2015. The aim is to make the legislative amendments necessary by June 2016 at the latest.

Prime Minister Sipilä's presentation in the press conference (pdf, in Finnish only)

Inquiries: Riina Nevamäki, Special Adviser to the Prime Minister (Political Affairs), tel. +358 40 705 2593, Markus Lahtinen, Special Adviser to the Prime Minister (Economic Policy Affairs), tel. +358 50 491 3842, Martti Hetemäki, State Secretary of the Ministry of Finance, tel. +358 295 530 292