HELSINKI: Finland’s centre-right government announced on Monday plans to cut the cost of labour by 5 per cent to boost competitiveness and revive Finland’s slumping economy.

“The goal is to improve competitiveness by reducing unit labour costs by 5pc and to improve employee security” in dismissal situations, Prime Minister Juha Sipila said at a press conference.

Unit labour cost is an economic indicator used by the Organisation for Economic Cooperation and Develop­ment (OECD), and it measures the average cost of labour per unit of output.

Sipila’s pro-austerity government summoned Fin­land’s major labour unions to negotiate the measures needed to achieve the intended 5pc cut, as a possible deal could include cutting back employees’ holidays and extending working hours without compensation.

Sipila said the harsh measures were necessary as Finland was “in the midst of one of the weakest periods of its economic history.”

Sipila also warned the Nordic eurozone member’s competitiveness had slumped to a level where it was “up to 15pc lower than that of key competing countries”, such as Sweden and Germany.

But in order to achieve the leap, the government still needs to convince the reluctant labour unions to participate in the deal it has dubbed a “Social Contract”.

Sipila said the government would not dictate the measures to be taken, and has asked the unions to come up with own proposals.

Published in Dawn, August 4th, 2015

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