Skip to content
The article is more than 8 years old

Legislated pay cuts loom as "social contract" talks collapse

Trade union and business leaders have abandoned talks on a social contract aimed at fending off government plans to reduce salaries in cut the cost of labour by five percent. The failed negotiations pave the way for the government to introduce legislation to reduce pay for overtime, sick days, Sunday hours and certain public holidays.

Yhteiskuntasopimusneuvottelut Etelärannassa Helsingissä 30. marraskuuta 2015.
Yhteiskuntasopimusneuvottelut Etelärannassa Helsingissä 30. marraskuuta 2015. Image: Roni Rekomaa / Lehtikuva

This morning's announcement marked the second time that labour and business leaders failed to find ways to sidestep government's planned nationwide wage reforms.

This time around though, the devil wasn't in the details. The main private sector business lobby EK insisted that the talks couldn't progress without a commitment from all labour unions.

It was referring to the Transport Workers Union AKT, which announced late last week that it was opting out of the talks, and would not abide by any of the measures agreed.

"We didn’t have the reason to continue because everyone wasn’t involved. It’s not fair that one group – the AKT – dropped out," EK boss Jyri Häkämies said.

EK boss: AKT workers key for imports and exports

Häkämies said that the AKT’s participation was always a prerequisite for moving forward with the negotiations to help safeguard Finnish imports and exports.

"Everyone knows the kind of key group that the AKT and harbour workers are," the EK chief added.

Apart from the business lobby, municipal employers and Akava, the union representing highly-trained professionals were also calling for all labour unions to help find alternative measures to rein in wages.

Häkämies said that it now look unlikely that the parties would return to the negotiating table and that the government must now decide on a course of action to improve employment.

The largest blue-collar worker federation EK found support from STTK, the largest union confederation for salaried employees.

SAK head Lauri Lyly disagreed with the EK, stressing that there were still grounds to continue a dialogue.

"We had ground to continue, but the employers’ side EK said that there was no basis," Lyly commented following the outcome.

Lyly: Alternatives didn’t measure up

SAK blamed the employer side for the failure of the talks, charging that the EK was never really interested in finding a joint labour market alternative to the government’s plans.

"I’m surprised by the situation. It would have been possible to find adequate coverage, if we had been able to reach a negotiated solution," Lyly said.

The union leader wondered why the EK wasn’t interested in some of the solutions SAK put forward, such as a flexible vacation pay model, in which vacation pay would decrease during times of high unemployment, and increase when jobless rates fell.

However Lyly did not respond directly to the EK’s charge that the talks foundered because the Transport Workers Union decided to opt out of the process. He did admit however that the discussions would have continued if the AKT hadn’t washed its hands of the social contract.

"I think it’s odd to say up front that everyone needs to be involved," he insisted.

SAK calculated that even without the AKT, any settlement reached with employers would have covered 97 percent of the labour market.

PM disappointed

Responding to the news, Prime Minister Juha Sipilä said that he was disappointed with the outcome. He promised to be in touch with labour and business leaders, but said that the chances of reviving the process looked poor.

Prime Minister Sipilä's government has tabled proposals to cut labour costs by five percent with a series of legislative measures, including reductions in pay for overtime, sick leave, Sunday hours and certain public holidays.

Latest: paketissa on 10 artikkelia