New incomes policy period has began

Pay rises effective as of 1 March

Finland's new incomes policy settlement for 2005-2007 took effect 16.2.2005. The first pay rises under the new settlement will be effective as of 1 March The settlement will result in an average pay increase of 2.5 per cent this year. Combined with a tax cut that took effect at the start of January, the incomes policy settlement increase will mean a rise of EUR 38 in the take-home pay of an average employee earning 2,500 per month. It is estimated that the purchasing power of employees will increase by about three per cent this year.

The incomes policy settlement also improves the security of employees under conditions of enterprise and industrial restructuring. Employees now enjoy a right to use the period of notice for employment measures such as retraining. Statutory employee security amendments are currently being prepared on such aspects as personal employment programmes and increased unemployment benefit. The aim is for the entire employee security package to take effect as of the beginning of July.

The new incomes policy settlement is now a historic third consecutive comprehensive agreement of this kind. It means that employees in Finland are now enjoying a record continuous period of nearly seven years under national incomes policy settlements.

An extra 61 euros a month for the average family

The combined impact of pay rises and tax cuts will bring an extra 61 euros a month to the average family in industries organised by trade unions affiliated to SAK, where the working spouses earn EUR 2,400 and EUR 1,900 a month.

The general pay rise agreed in the national settlement is 18 cents per hour or EUR 30.06 per month as of the beginning of March, and must be no less than 1.9 per cent. In addition to the general rise, pay will also increase by an industry-specific element of 0.6 per cent, the impact of which will vary according to the details of the collective agreement concerned. This mixture of flat rate and percentage rises means that the income of the low paid will increase by a greater proportion than that of higher paid employees.

The payroll cost impact of the incomes policy settlement will be 2.1 per cent in 2006. The 2006 pay rise is scheduled to take effect at the beginning of June.

More than 800,000 employees working in industries organised by SAK affiliates are covered by the incomes policy settlement. More than 90 per cent of all employees in Finland are similarly included. The incomes policy settlement will continue until 30 September 2007.