The idea of a reverse kiky is also a place for careful consideration, writes Juha Ristamäki.
At the beginning of August, SAK chairman Jarkko Eloranta presented in an interview with Iltalehtithat in a situation of accelerating inflation, efforts would be made to secure the purchasing power of wage earners with a reverse kiky solution.
– In the Kiky solution, side costs were transferred from employers to wage earners. Now the opposite would be done, i.e. they would be transferred back to the employers. In this way, the purchasing power of the wage earner is supported, and the state is not in the purse. We are concerned about the balance of the state economy and indebtedness, Eloranta said at the time.
Since the end of autumn, the rate of inflation has been wild. On Thursday, Eloranta repeated the same idea In an interview with Yle. Now it had evolved into a “purchasing power agreement”. The agreement would be negotiated between wage earners’ and employers’ central organizations.
In the competitiveness agreement signed by Juha Sipilä of the center in 2016, side costs of wages were transferred from employers to wage earners in the amount of approximately two billion euros. In addition, the employees were satisfied with zero wage increases.
According to Eloranta, the transfer of side costs would ease the pressure for salary increases.
– Together, salary increases and the transfer of payments would improve the purchasing power of wage earners. The state purse would not be used for this solution, Eloranta said in an interview with Yle.
Inflation in Finland is predicted to be around six percent this year. Inflation can be much bigger for an individual person or family, depending on the destinations. In 2023, inflation is predicted to drop to around four percent, but everyone understands that at this stage the outlook is quite foggy.
On the employee side, the pressure for significant wage increases is strong, inflation has already punished many with a heavy hand. For example, almost half of the Duna people who responded to the purchasing power survey of Teollisuusliitto’s member panel said that they have had to compromise on their basic needs.
The fact that Finland is predicted to drift into a mild recession at the end of this year must be added to the deal. For example, according to Etla’s forecast, gross domestic product growth will remain close to zero next year, in 2024 the growth will be around 1.7 percent.
It would therefore make sense that the wage negotiations in the most important export sectors, which are now underway, end up with moderate wage increases. This goal is underlined by the fact that wage increases in the export sectors have been unfortunately linked to a wage settlement in the municipal sector. After all, next year’s wage increases in the municipal sector will be 1.2 percentage points higher than wage increases in the private sector.
That’s why the idea of a reverse kiky is also a place for careful consideration.
However, industrial employers do not warm to the idea. Of course, this is also a negotiation tactic, but Eloranta’s idea is not to my liking anyway. On the employer’s side, it is considered that the matters agreed in the kiky settlement made during Sipilä are permanent, and they cannot be torn open at one point.
On the employer’s side, we look in the direction of the country’s government. The idea is that the government could respond with income tax relief, if the unions’ wage negotiations end up with moderate increases.
Finance Minister Annika Saarikko (Centre) hinted at this possibility in August, but now the situation may be different. The indebtedness of the public sector has been drastic and support packages worth hundreds of millions of euros for agriculture and social and health services are in the pipeline. The Ay-movement opposes this idea of a visit with the “state purse”.
The most important thing is that the competitiveness of Finnish industry is not hampered by too large a wage settlement. It is equally important that the purchasing power of Finns remains at a reasonable level beyond this energy crisis and inflation.
Therefore, all ideas must be on the table where the salary level for the next 1-2 years is decided. If it requires the conclusion of a purchasing power or social contract, then the labor market organizations must also have the readiness and wisdom for that.