The negotiations for a centralised
incomes policy have been given a vigorous start, confirm both unions and employers.
Nevertheless, the size of the pay rises of next year and the year following, remain an
open question. Both of the social partners are currently seeking, through a centralised
incomes policy, an increase in employee purchasing power, a low level of inflation and an
improved rate of employment. Finland is enjoying the seventh consecutive year of economic
growth, and it is the aim of the Government to achieve, in these conditions, an even
higher standard of living.It may be that in the current year the growth in the
purchasing power of the Finnish consumer will remain below 1%, as annual inflation is
presently running at 3%. Reductions in the taxes on earned income have been promised for
next year, and these would have a similar effect as would a 3% pay increase. SAK, however,
will not agree to any increase in purchasing power being funded by reductions in the rates
of taxation. SAK is due to determine its pay targets on the 24th of October.
The leaders of both sides of industry expect that reaching agreement on the size of the
pay increases will be one of the trickiest items on the agenda, during this incomes policy
bargaining. The growth in productivity varies greatly in industry, from sector to sector,
and it is the view of the employers that the scope of the pay rises cannot be based on the
average growth in productivity. Equally however, Lauri Ihalainen, the President of SAK,
emphasises that pay rises cannot be measured only by the least productive sector, as this
would halt any incomes development.
The current centralised incomes policy negotiations are the very first since Finland
joined the EMU and adopted the euro. A centralised income and employment policy solution
has not always been possible to reach during the years of economic boom, and this has
accelerated inflation. Lauri Ihalainen points out that a centralised incomes policy is not
a model which is only applicable in a time of crisis. He wishes to underline that it is an
effective labour market model which is particularly suitable at the present time, when
inflation should be kept low because of the demands made by the EMU membership.
It is the intention of the central organisations, to conclude the bargaining process
for a centralised incomes policy agreement, around the end of October or in early
November, after which the trade unions and the employers' federations will adapt the
agreement to suit each separate sector of industry. The actual agreement will be signed in
early December, should the negotiations proceed according to plan. This would mean that in
Finland, the future development of wages and salaries, at least until the end of the year
2002, would be known. An added factor is that of industrial peace being guaranteed, as any
industrial action would be most unlikely.
