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Government policy on the Competitiveness Pact reached by the labour market organisations on 29 February

Government Communications Department 2.3.2016 18.12
Press release 84/2016

The Government supports the Competitiveness Pact agreement reached by the labour market organisations.

The Government observes that this solution replaces the Government's earlier proposal for measures to improve cost-competitiveness and will cease their preparation.

The Government also observes that, excluding tax concessions, the Competitiveness Pact would consolidate public finances by approximately EUR 600 million, equivalent to roughly 0.3 per cent of GDP. In line with the Government Programme, the net effect of the social contract and agreed pay settlements must strengthen the balance in general government finances by at least half a per cent of GDP at the 2019 level, taking into account the tax concessions (max. EUR 1 million) linked to them.

The Government is satisfied that the labour market organisations are committed to promoting company-level settlement in collective agreements and to improving the operating conditions of shop stewards in the same connection. The Government deems it positive that the labour market organisations are prepared to reach agreement on the resilience clause, to relegate final decision-making on company-level agreement to workplaces, and to introduce the use of working time banks. From now on, non-organised employers will have the same rights and obligations as organised employers.

Where legislative amendments are warranted for promoting company-level agreement and strengthening the position of employees, they will be prepared in collaboration with the social partners in a working group led by Director General Pekka Timonen.

The Government and the labour market organisations will examine the significance and coverage of the Pact together in June this year. The Government will also assess its overall impact on general government finances as outlined in the Government Programme on the agreement of a social contract.  

The Government observes that, provided it materialises, the solution that has now been reached can potentially make it possible to abstain from implementing the additional expenditure cuts and increases in income taxation mentioned in Annex 2 of the Government Programme which have not yet been introduced.   

The Government encourages the labour market organisations to promote company-level agreement in the course of this spring's labour market negotiation round. Should company-level agreement proceed as specified in the Government objective dated 17 February, the Government will deem the outcome favourably when assessing the conditional income tax reductions mentioned in the Government Programme.

This assessment adds weight to the clarification of the so-called negotiation model for Finland. The model should be specified so that it can be incorporated into the Ministry of Finance's estimates on the state of public finances. 

As already mentioned, the solution that has been reached replaces the Government's earlier proposal for measures to improve cost-competitiveness and the Government will cease their preparation. However, the Government will continue preparing the family leave lump sum arrangement included in the statutes. 

The rest of the changes listed in the Pact that require Government input will be prepared together with the labour market parties as outlined in the negotiation outcomes.

Appendix: Government Programme of Prime Minister Juha Sipilä’s Government, Annex 2
Government Programme in full