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Bonus rules tightened in state-run firms

The government has tightened regulations governing bonuses given to executives in state-run corporations. Job retention bonuses and additional pension payments will no longer be permitted in corporations fully owned by the state. The minister with responsibility for government ownership policy, Heidi Hautala, said the new measures will help combat excesses.

Heidi Hautala
Heidi Hautala Image: Yle

The highest bonus rate in share companies will be reduced from 140 percent to 120 percent of a person's salary.

A new set of guidelines issued by the government's economic policy committee emphasizes transparency, moderation and results in the granting of bonuses.

Future bonuses in the public sector must be based on profitable results.

Learning from past errors

The minister with responsibility for government ownership policy, Heidi Hautala, says the new measures will help combat excesses. She did not believe they would hinder executive recruitment.

Hautala said the furor surrounding bonuses and housing benefits given to senior management in state carrier Finnair had prompted the government to draw up fresh guidelines. Hautala said they had learned from the mistakes made by Finnair.

“The case illustrated that executive salary deals should be made public complete with all fringe benefits. This is the essence of our policy,” said Hautala.

She said she believed wider publicity of executive deals and bonuses would prevent new excesses.

Bonuses common in private sector

In the private sector, bonus schemes for all levels of staff are surprisingly common.

It is estimated that up to 80 percent of companies use some kind of bonus model.

Earlier this year, the Confederation of Finnish Industries said that around half of its member companies' employees are covered by a profit-sharing system.

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