News - 02.09.2013 klo 09.55

A comprehensive national wage agreement brings very modest pay rises

The trade union confederations SAK, STTK and Akava reached a central agreement on wages and salaries with the employers’ organisations on Friday 30 August. The agreement offers a very modest rise in pay across the board over the next two years.

All monthly salaries will be raised by a flat rate of 20 euros beginning four months after the agreement is valid. A year later salaries will be increased by 0.4 per cent.

The agreement covers two years with an option to extend it for a third year. This will be decided in June 2015, after the parliamentary elections in April 2015 and the formation of a new government.

To support the settlement the Government promise to cut income tax by 1.5 per cent, which should compensate for inflation. The cut will not apply to those with an annual income of 100,000 euro or more.

Union confederations are recommending that their member unions support the agreement. The first reactions have been positive, though many unions will not formally make their decision on the central agreement for a few days yet.

The final agreement will be signed on 25 October if most of the unions are prepared to accept it and both employer and trade union confederations are satisfied with the measures taken by the Government to support the agreement. Employers stress that it is especially important to get all the transport and logistics branches to join the central pact.

The agreement came as something of a surprise after the employers had been saying no to any central agreement all year long. The sudden deterioration in the Finnish economy forced them to have a re-think. The government package of structural reforms on Thursday 29 August also paved the way for a broad based labour market settlement.

Trade unions showed responsibility

The chairpersons of trade union confederations are underlining the severe economic situation as a big reason for joining the settlement. "Now is the time for a responsible policy and labour market confederations showed responsibility with this agreement", says Sture Fjäder, chairperson of Akava.

"The mixed salary policy which allows for a flat sum increase plus a percentage increase required and showed the joint willingness for compromises", Fjäder says. Akava wanted to raise salaries only in percentage terms, but accepted the compromise.

For SAK and STTK the 20 euro flat rise was important, as they see it helping especially those with smaller incomes.

The board of STTK accepted the agreement and view it as being satisfactory given the current economic and employment situation. "When wage and salary earners have been very moderate in their demands, responsibility and moderation is required also from company managements. It is a question of fairness", the STTK board says.

Sture Fjäder also says the ball is now in the employers' court as wage and salary earners have already showed their responsibility. "Moderate salary policy and structural reforms demands great responsibility from employers when protecting and creating jobs."

Lauri Lyly, chairperson of SAK says the agreement is a fair one. "The pay rises in the first two years include all Finnish wage and salary earners." Employers were proposing zero per cent rises in many branches, and this has now been avoided.

Lyly says that the settlement does not weaken the workers situation. The Government also promised that those receiving earnings-related unemployment benefit could earn up to 300 euro a month without loosing their benefit. This will make it easier for them to take short term jobs.

The pact will make it easier to anticipate the Finnish economy, Lyly stresses. "This creates trust in the future and keeps the domestic market wheels rolling. The solution improves our competitiveness and adds to export opportunities." All in all these factors will act as a bulwark against the rise in unemployment.

Read more:

- Government settles on "painful" structural reforms (Yle News 30.08.2013)

Heikki Jokinen

Written by: SYSTEM