Incomes agreement to go now to individual sectors for approval

Tax cuts agreed over three years

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Finland’s main labour market organisations ironed out their differences on Monday and reached agreement on a broad-based incomes contract. The settlement is to cover more than two and a half years - a record duration for such an agreement.
      Next, details of the application of the broader agreement in individual sectors will be discussed by individual unions and employers’ groups, who are expected to complete their talks by mid-December.
     
The contract calls for wage increases totalling 2.5% as of March 2005, and another 2.1% as of June 2006.
      The Construction Trade Union, one of the affiliate members of the Central Organisation of Finnish Trade Unions (SAK) confirmed earlier reports that it was opting out of the centralised agreement. The Transport Workers’ Union (AKT) also said that it would not commit to the agreement. However, all unions gave their support to the negotiated settlement.
      On the employers’ side, Leif Fagernäs, Director-General of the Confederation of Finnish Industry, said that the agreement was better than what could have been achieved in separate talks with individual unions.
     
As part of the deal, the government agreed to cut state income taxes in each of the coming three years. However, next year the benefit of the tax cuts will be eaten up by increases in social security contributions and higher municipal taxes in many areas.
      Finance Minister Antti Kalliomäki (SDP) said that the government’s decisions amount to a reduction of half a percentage point in taxation next year, one percentage point in 2006, and slightly more than half a point in 2007.
      Details of the workings of the tax cuts are to be given later, but Kalliomäki said that the focus would be on those earning lower incomes.
     
The contract includes a number of benefits to be extended to employees whose jobs are to be cut.
      Under the contract, an employee who is to be terminated will be entitled to 5 - 20 days of paid leave to search for a new job. The duration of the leave depends on the length of employment.
      The contract includes an incentive for the unemployed to improve their professional skills. Those who take up extra training will be entitled to a higher level of unemployment benefits for 20 - 185 days. The payment is to be just under 20% higher than the ordinary income-linked unemployment benefit. The percentage is lower for incomes of more than EUR 2000 a month.
      Eligible for the benefit are all employees with at least three years of work behind them and ten months’ membership in an unemployment fund. The funding of the benefit is to be paid by Finnish employers collectively.


Previously in HS International Edition:
  BREAKING NEWS: Broad-based incomes agreement reached early Monday afternoon (29.11.2004)

Links:
  SAK web site: Comprehensive incomes policy settlement reached in Finland

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