The Government has now decided to reverse its plan to reduce Sunday and overtime pay, replacing those measures with a 30 per cent cut in holiday pay instead.
Holiday pay is the 50 per cent bonus that is paid to almost all Finnish wage and salary earners for their annual vacation: for a six weeks holiday you get nine weeks salary.
The feedback the right-wing Government received for its original plans to cut Sunday and overtime pay was loud and clear. The plan would have meant cutting the incomes of low-paid workers for the most part, often part-time employed women working in professions like health care and services.
At the same time it would leave untouched those with better incomes and regular working hours. This was too much and too unfair even for some of those who had voted for the Government parties, in particular women.
To cut holiday pay will, however, be legally challenging. As it is not stipulated by law but included in the 300 collective agreements, the Government shall first pass a law giving holiday pay to all and then cut it by 30 per cent.
The other measures that the Government proposed earlier will remain in place. These include shortening annual leave, eliminating two bank holidays and making the first day of sick leave unpaid.
SAK propose to freeze wages
Prime Minister Juha Sipilä has obviously begun to realise that Government interference in labour market negotiations will not work. He is asking the labour market organisations to draft a package which will have the same effect as the Government austerity measures.
If this succeeds, the Government’s plans might be withdrawn. The Prime Minister is, however, sticking firmly to the goal he wants reached, a five per cent reduction in unit labour costs.
At the moment the employer and trade union federations are negotiating to find a solution. This will not be easy as the Government seems to handing the employers' EK Federation more or less everything on its wish list, for free, without negotiations.
But even EK knows that without an acceptable agreement the next round of collective bargaining at the end of 2016 will be extremely difficult.
The Trade Union Confederations SAK, Akava and STTK have made their own alternative proposals as how to best stimulate the ailing Finnish economy.
"SAK will give the employers an opportunity to agree to a wage freeze for 2017, with export sectors setting the ceiling pay for increases in 2018", says SAK Chairperson Lauri Lyly.
But the government will have to abandon its planned mandatory legislative proposals, Lyly stresses.
STTK chair Antti Palola is glad that the door for negotiations is still being kept open. The goal is to find an even-handed and reasonable solution for all wage and salary earners.
Akava chairperson Sture Fjäder is very pleased that negotiations have resumed.
"The deadlock has been very difficult to resolve as the basis of the Government proposal suits one party more than well."
All three confederations stress that lasting solutions need negotiations and agreements, not heavy-handed one-sided measures. As part of the solution they all are prepared to moderate pay rises.