Finnish unions, businesses moving closer to labour deal: Minister

Reforms would boost competition, restart growth

HELSINKI (Reuters) —  Finnish trade unions and employers' representatives are edging closer to a labour reform deal aimed at boosting competitiveness and restarting growth in the recession-hit Nordic country, Economy Minister Olli Rehn said on Tuesday.

The centre-right government's plan to cut unit costs sparked strikes and demonstrations last year as talks with unions failed, but prospects for a deal have improved, Rehn said.

"The negotiations ... have taken a crucial step forward in the last few days," he told Reuters by telephone.

"I don't see such difficulties that could prevent a solution (being reached)."

The reforms are expected to include cuts in workers' benefits, a wage agreement with a zero pay rise and a plan to move toward more company-level labour deals in the longer term.

The Finnish economy has seen no growth over the past four years and is expected to perform worse than any other country in the European Union except Greece this year.

Reasons range from high labour costs and a fast-ageing population to a decline in the handset business at the country's flagship company Nokia, as well as a recession in neighbouring Russia.

The government has said failure to reach a common labour deal would lead to more spending cuts and tax hikes. It is also expected to result in more strikes and tougher wage rounds ahead as well as possible credit rating downgrades.

The labour deal is part of the government's push to cut spending by 10 billion euros by 2030 with measures that also include health care and local government reforms.

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