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Finnish labour market reform in sight after key union agrees

HELSINKI – Finland’s biggest labour union says it has voted to join a government-proposed labour reform pact that aims to boost the stagnant economy by easing labour market rules and cutting workers’ benefits.

Friday’s decision by the Metalworkers’ Union, which represents over 140,000 workers, paves the way for the milestone deal, which other major unions and employer representatives have already approved.

Under the deal, the centre-right government pledges to lower taxes and cancel planned spending cuts in return for an increase in work hours and pension contributions, lower holiday bonuses and a freeze on wages for a year.

A rigid labour market is seen as one reason for Finland’s economic woes. The European Commission predicts the economy will grow 0.7 per cent this year, less than any EU country apart from Greece.