17/09/2015 11:26
Finland is facing its biggest strike in decades as the fight between the unions and a government aiming to drag the Nordic country out of recession through tough reforms, heats up.
Unions representing more than 2.2m people — in a country of 5.5m — will strike on Friday in protest over government proposals to abolish two public holidays while reducing pay for overtime and Sunday working.
“I know that now is the last chance to get Finland back into shape?.?.?.?Finland is in an exceptionally serious situation,” prime minister Juha Sipila said late on Wednesday in the first such televised address since 1993.
Finland has been mired in recession for three years and most economists expect a fourth consecutive year after it recorded the lowest growth in the eurozone in the second quarter.
The country is struggling from the decline of its paper industry and of the technology group Nokia, as well as the slowdown in neighbouring Russia and what politicians see as a drastic loss of competitiveness compared with Sweden and Germany.
Olli Rehn, the former EU commissioner who is now Finland’s economy minister, said the situation today differed from the last crisis in the 1990s when the country came close to needing IMF support.
“It is a crisis in slow motion?.?.?.?In the 1990s it was clear to everyone that we were facing a crisis situation. Now we have the stability provided by the euro, which gives us a false sense of safety. We shouldn’t give in to any sense of complacency,” he told the Financial Times.
The new centre-right coalition — in power since May with three parties including the populist True Finns — has been compared with Margaret Thatcher’s government of the 1980s by some journalists over its willingness to confront the unions.
But Mr Sipila made his proposals to cut labour costs by 5 per cent only after two failed attempts to make unions and employers sign up to a so-called social contract to boost competitiveness. Even this week, he has left the door open saying the proposals could be abandoned if unions agreed to extend the working day by 20 minutes or give up half of holiday pay.
Aleksi Kuusisto, adviser at the Finnish trade union confederation SAK, said: “We find it totally unacceptable that the government is unilaterally imposing cuts on wages and benefits that were established through collective agreements.”
He argued that the measures would worsen Finland’s slump by lowering purchasing power by almost 3 per cent and would hit certain groups such as women in the public sector especially hard.
Finland has also been harmed in recent years by its inability to pass reforms, with the blame focused particularly on the former left-right coalition. Business leaders are hoping the current government will prove more successful. “The signs are good so far but they need to stick the course. They can’t give in as the situation is unbelievably serious,” said the chief executive of one of Finland’s biggest companies.
During the euro crisis Finland became known as an enthusiastic backer of austerity, earning harsh criticism from the likes of Greece and Portugal for its insistence on tough cuts and collateral before agreeing to international bailouts.
Timo Soini, leader of the EU-sceptical True Finns and foreign minister, told the Financial Times it was time for the country to do some hard work. “If you messed things up yourselves, you must clean it up yourselves. Now we must take strong medicine,” he said.
Pasi Sorjonen, economist at Nordea, expects things to get worse before getting better, with unemployment set to rise to 10.3 per cent in 2017 from 8.7 per cent last year, while debt-to-GDP will close in on 70 per cent — above the EU’s 60 per cent target.
“The lack of a growth outlook and one of the weakest sentiments in the EU are a toxic mix for investments and employment in Finland,” he added.
Mr Rehn dismissed criticism that the government was overly concerned with competitiveness with its focus on reducing labour costs. “The internationalisation of financial markets and economic globalisation has meant that the Nordic model needs to reform itself to be viable. Denmark and Sweden have done it in different periods but we are a laggard and have to take decisive action.”
Finland’s last major labour protests date back more than 20 years with a one-day protest in 1992 drawing 300,000 people. But the last declared general strike was even further back in 1956, gathering 400,000 protesters.
Unions representing more than 2.2m people — in a country of 5.5m — will strike on Friday in protest over government proposals to abolish two public holidays while reducing pay for overtime and Sunday working.
“I know that now is the last chance to get Finland back into shape?.?.?.?Finland is in an exceptionally serious situation,” prime minister Juha Sipila said late on Wednesday in the first such televised address since 1993.
Finland has been mired in recession for three years and most economists expect a fourth consecutive year after it recorded the lowest growth in the eurozone in the second quarter.
The country is struggling from the decline of its paper industry and of the technology group Nokia, as well as the slowdown in neighbouring Russia and what politicians see as a drastic loss of competitiveness compared with Sweden and Germany.
Olli Rehn, the former EU commissioner who is now Finland’s economy minister, said the situation today differed from the last crisis in the 1990s when the country came close to needing IMF support.
“It is a crisis in slow motion?.?.?.?In the 1990s it was clear to everyone that we were facing a crisis situation. Now we have the stability provided by the euro, which gives us a false sense of safety. We shouldn’t give in to any sense of complacency,” he told the Financial Times.
The new centre-right coalition — in power since May with three parties including the populist True Finns — has been compared with Margaret Thatcher’s government of the 1980s by some journalists over its willingness to confront the unions.
But Mr Sipila made his proposals to cut labour costs by 5 per cent only after two failed attempts to make unions and employers sign up to a so-called social contract to boost competitiveness. Even this week, he has left the door open saying the proposals could be abandoned if unions agreed to extend the working day by 20 minutes or give up half of holiday pay.
Aleksi Kuusisto, adviser at the Finnish trade union confederation SAK, said: “We find it totally unacceptable that the government is unilaterally imposing cuts on wages and benefits that were established through collective agreements.”
He argued that the measures would worsen Finland’s slump by lowering purchasing power by almost 3 per cent and would hit certain groups such as women in the public sector especially hard.
Finland has also been harmed in recent years by its inability to pass reforms, with the blame focused particularly on the former left-right coalition. Business leaders are hoping the current government will prove more successful. “The signs are good so far but they need to stick the course. They can’t give in as the situation is unbelievably serious,” said the chief executive of one of Finland’s biggest companies.
During the euro crisis Finland became known as an enthusiastic backer of austerity, earning harsh criticism from the likes of Greece and Portugal for its insistence on tough cuts and collateral before agreeing to international bailouts.
Timo Soini, leader of the EU-sceptical True Finns and foreign minister, told the Financial Times it was time for the country to do some hard work. “If you messed things up yourselves, you must clean it up yourselves. Now we must take strong medicine,” he said.
Pasi Sorjonen, economist at Nordea, expects things to get worse before getting better, with unemployment set to rise to 10.3 per cent in 2017 from 8.7 per cent last year, while debt-to-GDP will close in on 70 per cent — above the EU’s 60 per cent target.
“The lack of a growth outlook and one of the weakest sentiments in the EU are a toxic mix for investments and employment in Finland,” he added.
Mr Rehn dismissed criticism that the government was overly concerned with competitiveness with its focus on reducing labour costs. “The internationalisation of financial markets and economic globalisation has meant that the Nordic model needs to reform itself to be viable. Denmark and Sweden have done it in different periods but we are a laggard and have to take decisive action.”
Finland’s last major labour protests date back more than 20 years with a one-day protest in 1992 drawing 300,000 people. But the last declared general strike was even further back in 1956, gathering 400,000 protesters.
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