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16 May 2019

Finland: winning centre-left wants to preserve welfare system and roll back unpopular labour market reforms

Negotiations for a new coalition government in Finland are focusing on labour market and socioeconomic items. The social democratic party that is in charge of the ongoing talks aims to reverse several reforms enacted by the outgoing government. In theory, there should be sufficient backing for such proposals, as a majority of the newly elected parliamentarians has a background as a trade union member.

After elections, with no party winning more than 20% of the vote and deep divisions within all mainstream parties over the future of the country’s widely admired welfare system, the political outlook for Finland is quite unclear. The centre-left SDP has the lead in forming a government, probably with parties of the left and centre-right. The SDP wants to preserve the socioeconomic and welfare system by increasing taxes, whilst the right is looking for cost reduction. The newly elected parliament should in principle have sympathy for these ideas as, according to trade union sources, a majority of the elected MPs, spread over the whole political spectrum, has a trade union background.

The SDP-leader, Antti Rinne, a former union leader is promising not only to raise taxes to fund welfare, but also to combat economic inequality, which he says has risen under the outgoing centre-right coalition. In his May Day speech, he clearly suggested to roll back the unpopular labour market reforms of the recent past. In this respect, he referred to the outgoing government’s so-called social contract that saw government transfer some social payments from employers to employees, lengthen working hours and cut holidays in the public sector in a bid to boost business competitiveness by cutting unit labour costs. Rinne also repeated a pledge to introduce a 100-euro pension increase for low-income pensioners.

The SDP started the first orientation towards coalition talks with a list of questions covering 11 key areas to all parliamentary groups. The list of key issues focusses on areas such as equality, spending on education and the economy. These themes were central to the election campaign and formed the backbone of election promises to remedy massive cuts in education spending and to reduce inequality. Another item is the improvement of services and social benefits by possible tax hikes or by curbing spending in other areas. Important for the trade union movement are issues related to employment and the labour market. This concerns the will to seriously cooperate with unions and employer organisations and the maintenance of universally binding collective agreements.

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