- In that situation we embarked on a joint effort, with the Government and the employers' organisations, to alleviate the difficulties by signing extensive economic and incomes policy agreements, says Lauri Ihalainen, the President of SAK.

The current two-year period which is covered by such an agreement will expire on 15^th January 2000. On the positive side we can record that whilst this agreement has been in force, the Finnish unemployment rate has fallen to very near the European average and SAK has gained considerable respect within the otherwise rather conservative Finland.

- These agreements can quite honestly be described as incomes policy agreements since they led to the creation of 200,000 new jobs. As a result of this, many of our members were in a position to cease claiming social security benefit and to start earning a wage. But, although the unemployment figure in Finland has fallen so near to the European average, it is still unacceptably high, continues Lauri Ihalainen.

The Finnish incomes policy agreements have supported both economic growth and employment. Businesses have benefited from the agreements as they have improved stability and have eased the process of business forecasting. The consumer has benefited through increased purchasing power. This was achieved by the combination of three factors: moderate pay settlements, lower taxes on pay and the commitment to maintaining a low rate of inflation. This was an apt solution in the prevailing EMU circumstances. It has been estimated that during the last two years consumer purchasing power has risen by nearly four percent per annum. Lauri Ihalainen emphasises the fact that income distribution has also been fair on the basis of these agreements.

Finland is a welfare state where the social security net and the level of welfare services are set at a reasonable level. The wish to raise the rate of employment and also to maintain the status quo of the welfare services was an important objective of the incomes policy agreements. This would once again secure a sound financial footing for the welfare services which had been under severe threat from the consequences of mass unemployment. Furthermore, says Lauri Ihalainen, I would like to emphasise one aspect which does not always appear to be self-evident.

- SAK's voice in society is not limited to pay norms and employment terms alone. A responsible trade union movement is an element of society, which is listened to in a much wider context. The trade union movement is a channel through which employees as a group can exert their influence on matters of social consequence.

We in Finland are well aware that employment problems cannot be solved on a national basis alone, says Lauri Ihalainen, the President of SAK. The Finnish economy depends on exports and the level of our welfare is directly linked with the success of the export trade, on the state of the global market and on a variety of other factors around us.

A more concentrated coordination of economic and to some extent, of budgetary policies, in the EU member states, and particularly in the EMU countries, is necessary. The core issue is the rate of employment and European employment policy. It is of vital significance that, in addition to the respective national employment programmes, the European employment agreement process was successfully concluded, and its political framework created, at the EU summit which was held in Cologne. It is also of importance that this employment process is made more concrete, and is further developed during the term of the forthcoming Finnish Presidency.

Lauri Ihalainen is also of the opinion that the degree of confidence in the EU, and in its future development and enlargement, amongst the general public, will depend both on the level of success which is shown in the results of the economic policy, and particularly on the rate of employment.

Circumstances will be less favourable for the next incomes policy agreement

The positive results which are gained from the previous two incomes policy agreements could be expected to encourage the acceptance of a new agreement, says Lauri Ihalainen. The aim is to first establish, in early autumn, the pre-requisites for any new incomes policy agreement.

- A great deal is dependant on whether or not the employers are prepared to develop, both the working environment and the generally binding nature of the agreement, in such a way that common interests and benefits will be included. The Government has announced that it is prepared to consider the possibilities of lowering taxation on pay, always provided that a pay settlement which does not jeopardise the inflation target will be achieved.

Additionally, in some industries, there is currently an accumulation of problems which have mainly resulted from restructuring, and satisfactory solutions to these need to be found.

Lauri Ihalainen is of the opinion that it will soon be necessary to examine the system and to decide whether or not it would be possible to find solutions to the existing problems in industry, and to simultaneously develop an incomes policy which fulfils the EMU requirements. It will be necessary, in the near future, to give some hard thought to the extent of the flexibility to be incorporated in such agreements, says Lauri Ihalainen. He regards vocational training as a feasible element in a new agreement, since vocational competence and multiskilling, and the opportunities which these create, currently represent the best possible job security in this constantly changing working environment. Every employee should have the right to attend training written into their terms of employment, and it should not be regarded as a solely private pursuit, suggests Lauri Ihalainen.