Roundup: Finnish PM concedes failure of effort to reduce production costs

Finnish Prime Minister Juha Sipila conceded Thursday evening that the government's effort together with the employers and workers' unions to reduce production costs and improve the competitive edge had failed.

The so-called societal agreement was a key part of the program of the government that was sworn in this past spring. The government had envisaged a 5 percent cut in production costs.

In the talks that continued until a fixed deadline this week, the workers' unions were reluctant, for example, to accept longer working hours without extra pay.

Described as "internal devaluation," the plan would have given the country the kind of benefits that were traditionally associated with currency devaluations.

Sipila said this is the first time since Finland joined the euro and Finland must improve its competitive edge in a situation of negative growth.

Following the demise of the joint effort, initial government statements indicated the government would start acting alone.

Finance Minister Alexander Stubb said the government will now have to "take more responsibility solving the country's problems."

Since 1960s, major economic issues have been worked out together with the labor market sides, and the government played the third partner at the bargaining table.

Sipila said that the government will begin work on an alternative program. Earlier in the spring he had said the alternative would be major further cuts in spending, but he said now other alternatives will be investigated as well.

Chairman of the Confederation of Finnish Industries Matti Alahuhta told national broadcaster Yle that there would have been a need for societal agreement. He said that exports are sluggish and Finland is not interesting as a target for investments.

On the other side, Chairman of the largest central organization SAK, Lauri Lyly underlined that in the future working life in Finland must continue to be developed on the tripartite basis.

From the political opposition, the chairman of the parliamentary group of the social democrats Antti Lindtman said the effort should not have been given up so easily. Lindtman underlined Finland should not bury its tradition of a society based on agreements, but the government should widen its view on the societal agreement.

The chairman of the Green Party Ville Niinisto said the government had consistently been on the side of the employers and the whole process was an effort by the government to make the unions responsible for the austerity policies. Niinisto described centrist Sipila as a "true right wing person." Endit