Finnish Politics – Death by a Thousand Cuts!

The government, together with the two employers’ unions, (EK and SY), have decided to face off the trade unions with major changes to worker’s rights, a cap on low income wages for workers not directly employed by the export sector, cuts in social benefits for low income folk, and possible increases in Value Added Taxes increases on food.

The language of the confrontation from a of the few government ministers cannot be described as “hard love” – they are more like crude insults!

In a small country like Finland it has been the unwritten rule that the trade unions talk with the employers’ unions and the government. That is called “Kolmekanta”  in Finnish which translates easily into the “Three Musketeers”.

Now this situation appears to be a new drama where we are seeing a country suffering from strikes because the government refuses to talk with the trade unions, but nothing stops the government from taking its cues from the two employers’ unions.

These leaves us taxpayers watching our economy suffering from a slow Death by a Thousand Cuts with the musketeers’ swishing swords around.

It is true that the trade unions have been intransigent and avoided accepting needed  reforms. The markets have changed and there are too many labour market practices that need to be changed because they stop our economy from thriving.

One example of union intransigence is their refusal to stop demanding 100% to 200% pay increases for workers on Sundays, evenings, and on public holidays. Family owners and single owners of companies do not get to enjoy these privileges. Many shops and hospitality places are closed when the rest of the population is not working and have time to enjoy themselves. We need to have a more flexible wage system that allow companies to stay open when customers and tourists are free…

Helsinki is dead at Easter, Christmas, mid-summer, etc… You cannot have a thriving investment in businesses when customers are queuing up outside closed doors.

On the other hand, we have an economy in which a handful of huge companies dominate the two employers’ unions where they can and do exercise monopoly power in their respective markets. These cartels need to be broken up to create more competition and that is something that the employers unions has stopped.

One example of a needed reform is that we face one of the most expensive grocery bills in Europe. You would expect that LIDL and ADLI would be making fast inroads to this market, but this is not the case. LIDL is alone here with prices around 30% lower that the two biggest chains, Kesko and S-Group, who own 80% of the market! LIDL has been here for two decades and only has a 10% market share since the best shopping spots have already been reserved.

The election of the present government was largely financed by these big companies that control the daily consumer retail markets, banking, insurance, pensions, forestry products, airlines, construction, media, and many types of consumer goods.

The Prime Minster has not commented much on the above dire labour market situation  except to say that he will go forward with the above new laws. He has let the ministers from the True Finns and his party colleague at the Ministry of Labour, to comment in depth on these “reforms”.

However, the situation has now developed into a harsh stand-off that is going to be very damaging to the economy, at a time when we have high interest rates with fast rising unemployment.

More than ever, we need smart leadership to de-escalate matters. It looks like that we must wait for 3.5 years for the next election for this, unless, of course the present government folds before then!

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