Finnish labor organizations reach agreement on social contracts

Finland's employers and employees have reached a major agreement in social contract negotiations and handed over the results to the government for approval, local media reported Monday.

The so-called social contract is a key part of the Finnish government's program aiming to improve the competence of the Finnish economy. The government has hoped to cut 5 percent of production costs.

The labor market representatives finally found a solution on Monday, following failures in four rounds of negotiations in 2015.

The new solution aims at improving the competitiveness of enterprises by freezing salaries, increasing annual working time by 24 hours, cutting public sector's holiday pay by 30 percent, raising employees' pension contribution by 1.2 percent and so on, according to the Finnish daily Helsingin Sanomat.

Meanwhile, the employee organizations required the government to abandon its plan of 1.5 billion euros (1.63 billion U.S. dollars) of additional spending cuts and tax hikes, as well as to implement tax relief of 1 billion euros.

The agreement is expected to replace the alternative means proposed by the government last autumn, including shortening holidays, reducing pay for overtime work, Sunday work and sick leave through legislation.

The government will assess the result of the negotiations on Monday evening, said Finnish national broadcaster Yle.

The social contract was initiated by the current Finnish government after it assumed office last May. Endit