Social Contract – a leap towards better employment


The Confederation of Finnish Industries EK is satisfied that the prolonged negotiations on the Social Contract have at last concluded with a reasonable result. Although the organisations did not reach the target set by the government, an agreement is nevertheless a good start towards better competitiveness and higher employment.

– This solution will provide Finnish companies with better opportunities to succeed in competition and to offer jobs in Finland. It will also bring stability, and hopefully it will safeguard industrial peace, which is important in terms of competitiveness, EK’s Director General Jyri Häkämies points out.

– During the last ten years Finland has significantly fallen behind in competition in comparison to European benchmark countries.  This Contract helps catch up only a part of the handicap, so much work remains to be done.

EK emphasizes that all the changes based on the outcome of negotiations will be introduced extensively in the collective agreements. All parties must commit.

The negotiation result achieved by the confederations 1) extends working time by 24 hours per year, 2) relieves social security contributions paid by enterprises, and 3) includes a zero percent wage increases for 2017.

Over the next five years, the unit labour costs for enterprises will be on average over 3 percentage points lower than they would have been without these jointly agreed measures. The zero percent wage increases will also bring a calculated improvement of 0.5 percentage points to competitiveness for next year.

In EK’s view, this decision will provide the government with an opportunity to relieve taxation and cancel the looming additional savings measures, while tax cuts would be an important stimulus to purchasing power.

According to the negotiation result, the further development of local bargaining would mainly remain the responsibility of branch level employer federations and trade unions.

– Workplaces need agility and flexibility, as well as the opportunity to collectively seek means to survive in a crisis situation, Häkämies underlines.

The central level labour market organisations also propose a tripartite preparation of the legislative amendments in order to place non-organised companies in the same position in local bargaining as organised enterprises.

Infographics on the effect of the Social Contract