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Competitiveness pact signed, sealed, delivered at PM's residence

Labour market leaders gathered at Prime Minister Juha Sipilä’s official residence Kesäranta Tuesday afternoon to sign a deal believed to be key to improving Finnish business competitiveness. Sipilä said that the current competitiveness pact covers roughly 87 percent of Finnish workers, paving the way for government to roll out more than 400 million euros in tax cuts.

Juha Sipilä ja kiky-paperi
Prime Minister Juha Sipilä at the signing of the competitiveness deal. Image: Yle

Employer and employee representatives gathered at Prime Minister Juha Sipilä’s official residence Tuesday afternoon to wrap up a competitiveness pact many months in the making.

The deal is a major step forward for the Sipilä administration as it tries to reform the labour market to reduce unit labour costs and make Finnish companies more competitive against their international peers.

Speaking during the signing, Sipilä said that now that unions representing 86.5 percent of Finnish workers have signed up for the accord, the government will make good on its promise to roll out some 415 million euros in tax cuts. However he still held out hope that more labour unions would back the deal over the coming months.

"This morning the new [government] trio met and agreed that we have time to begin the budget process," Sipilä commented, referring to implementation of the tax breaks.

Some unions still on the fence

On Friday, the 142,000-member Metal Workers Union greenlighted the accord, meeting the government’s threshold of 85 percent coverage for the deal before it would implement the tax reliefs promised as an incentive for the deal.

Among other things, the agreement will see workers increase their time on the job by 24 hours a year, while public sector workers will have to deal with a 30-percent reduction in vacation pay.

However other labour unions are still negotiating whether or not to agree to the pact. They include trade unions representing workers in the pharmaceutical and finance sectors.

The agreement has had a long gestation period – the on-again, off-again talks have continued for more than one year after Sipilä announced his goal of improving business competitiveness shortly after he took office.

The PM said that the competitiveness pact will help Finland catch up with EU powerhouses Germany and Sweden in terms of the unit cost of labour during his current term in office. He estimated that Finland will be able to reduce unit labour costs to the same level as Sweden's in 2017, and to that of Germany's in three years. He has also argued that greater business competitiveness will help generate new jobs.

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