September 8, 2015 / 2:41 PM / 2 years ago

Finnish government says to reduce holidays to boost competitiveness

HELSINKI (Reuters) - Finland’s centre-right government on Tuesday proposed labour market reforms including reductions in holidays to boost competitiveness in the sputtering economy, prompting a hostile reaction from trade union representatives.

The country has fallen 10-20 percent in export competitiveness since 2007 relative to Germany, the rest of the euro zone and non-euro member Sweden, data shows, as labour costs have climbed despite a poor economic performance.

Prime Minister Juha Sipila told a news conference the government’s plans include lowering the number of vacation days in the public sector, reducing the amount of extra pay for employees working on Sunday and converting two public holidays into working days. If implemented, the measures would lower unit labour costs by 5 percent, he said.

But Antti Palola, chairman of the STTK trade union, called the government’s proposals an “attack on the Finnish model” and said they “could lead to unrest in the whole of society.”

Sipila has struggled to broker a deal between employers and unions to help cut labour costs. Negotiations on a deal broke down last month after some trade unions refused to accept an increase in working hours.

Sipila said the government planned to estimate in 2017 whether the measures were having the desired effect, and if so, the government would subsequently lower taxes by 1 billion euros.

Finland’s economy has been shrinking for three years due to weak demand from European and Russian markets and problems affecting its main export industries including technology.

Reporting By Anna Ercanbrack; Editing by Jussi Rosendahl/Hugh Lawson

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