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PACT FOR EMPLOYMENT AND GROWTH 1. Introduction The capacity of the Finnish economy to support employment and opportunities to secure the economic growth required to finance an affluent society have been compromised due to continued international uncertainty, the immediate consequences of rapid restructuring, and a lack of competitiveness. The national labour and employer confederations have therefore agreed a long-term unifying pact that seeks to restore a healthy trend of economic growth by increasing employment, equitably boosting the purchasing power and earnings of all employees, and enhancing the prospects of businesses in global competition. The Pact also seeks to make the economic operating environment more predictable, and to ensure that improved cost competitiveness and growth in employment are realised in an optimally equitable manner. An attitude of restraint must therefore be adopted under prevailing economic conditions with respect to all increases in costs that are significant from the point of view of competitiveness. Businesses are also required to show responsibility and moderation in all remuneration. 2. Solutions for Collective Bargaining 2.1 Time span for bargaining policy The national labour market confederations of Finland propose a revision of collective agreements in two stages as follows. The first phase of the agreement period will be 24 months if the current collective agreement ends by no later than 31 December 2013. Otherwise the first phase will continue for 22 months. The second phase of the agreement period will end on a date to be determined by the collective bargaining parties between 1 November 2016 and 31 January 2017. The parties may nevertheless agree otherwise with respect to the end of the second phase of the agreement period if the first phase does not end before 1 November 2016. 2.2 Introduction of first phase and agreed increase for agreement period The agreement period and first phase under the Pact for Employment and Growth shall begin on expiry of the current collective agreement, or as of the end of the pay period in cases where a current collective agreement includes undecided wage settlements for the final period.

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The first agreed increase for the first agreement phase shall be EUR 20 per month or a corresponding increase in hourly rates according to industry custom and practice. The agreed increase shall be implemented 4 months after the starting date of the first agreement phase. The second agreed increase of the first agreement phase shall be 0.4 per cent. The second agreed increase shall be implemented 12 months after the first agreed increase. The increases shall be implemented across the board. The manner of implementing increases shall not affect local agreement practices after the agreement period ends. The term “agreed increase” shall denote salary adjustments and changes in terms and conditions of employment with cost impacts. Previously agreed salary systems and corresponding development programmes shall be implemented as agreed. 2.3 Agreed increase for second phase of agreement period The national labour market confederations of Finland shall meet in June 2015 to review progress in the general economic climate, implementation of structural reforms, employment, exports and competitiveness, and factors affecting this progress. This review will consult the Information Committee on Cost and Income Developments and external specialists as required. The review will provide a basis enabling the national labour market confederations to agree the cost impacts and implementation schedule of the second phase wage settlement. The wage settlement shall be dimensioned for a period of 12 months. The wage settlement shall be proportioned to the duration of the phase in industries where the second phase of the agreement period is longer or shorter than 12 months. 2.4 Termination of collective agreements If no consensus has been reached on or before 15 June 2015 in the foregoing negotiations between the national labour market confederations concerning an agreed increase for the second phase of the agreement period, then the parties to collective agreements shall be entitled to serve four months’ notice of termination of their agreements with effect from the end of the first agreement phase.

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3. Social insurance contributions in 2014-2016 3.1 Unemployment insurance contributions Unemployment insurance contributions for 2014 shall be reduced in accordance with the proposal adopted by the Unemployment Insurance Fund on 29 August 2013. 3.2 TyEL employment pension insurance contributions The TyEL employment pension insurance contribution shall be increased in accordance with the social policy package (21 January 2009), the working career agreement (22 March 2012) and the agreement on TyEL contributions in 2013 (14 November 2012). Based on the previous agreements, the following average earnings-related pension contributions shall be payable: 23.6 % in 2014 24.0 % in 2015 24.4 % in 2016 The contribution for 2016 may be otherwise agreed as part of the reform of earnings-related pensions referred to in clause 4.1. Earnings-related pension contributions in years after 2016 shall be agreed when negotiating the pension reform concerned. 4. Improvements in General Working Conditions 4.1 Reform of earnings-related pensions In accordance with the working career agreement (22 March 2012), the national labour market confederations shall negotiate a settlement for prolonging working careers for the next reform of earnings-related pensions. The earnings-related pension reform and associated settlement on contribution levels shall seek to promote employment, to assist in resolving the sustainability gap in public finances, to enhance long-term financial sustainability of the earnings-related pension system, and to ensure adequate pension security and intergenerational equity. The confederations shall negotiate a settlement for the pension reform by no later than autumn 2014. The issues pertaining to the equalisation provision and EMU buffers, and to modifications in old-age pension financing shall also be settled in the course of these negotiations.

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The objective is for all government bills concerning reform of the earnings-related pension system to be submitted to Parliament immediately after the 2015 parliamentary elections, with the reform taking effect by no later than the beginning of 2017. 4.2 Weekday public holidays The national labour market confederations shall work with representatives of the Church to investigate the prospects for moving Epiphany and Ascension Day to fixed Saturdays, thereby increasing the number of unbroken working weeks. This will be followed by a study of the impact of these changes on working time arrangements in various forms of working hours and an assessment of the prospects for implementing such arrangements. 4.3 Reform of the bargaining system A labour market organisation working group shall be appointed to assess the effectiveness and need for reform of the current bargaining system based on the Collective Agreements Act1 and the Act on Mediation in Labour Disputes2 by the end of 2014. The review shall focus particularly on the binding character of collective agreements, on compliance with such agreements, and on the sanctions incurred by various parties for breach of agreement. An assessment shall also be made of ways of improving the conciliation system and dispute resolution procedure, and of implementing wage increases in industries that are not covered by an agreement. Further preparatory work on any needs for reform identified by the working group shall be conducted by a tripartite procedure insofar as amendments to legislation may be required. 4.4 Facilitating acceptance of short-term employment Greater incentives will be provided for accepting brief employment opportunities by improving the regulations governing adjusted unemployment benefit. Together with earned income, the adjusted per diem allowance may not exceed the wage on which the said allowance is based. A protected monthly element of EUR 300 will be introduced in adjusted benefit. The amendments will be prepared on a Ministry of Social Affairs and Health working group chaired by Esko Salo. Up to 95 per cent of the increase in the adjusted benefit ceiling will be implemented as part of the cost-neutral comprehensive reform of unemployment security agreed in the national incomes policy framework settlement. The reform will take effect on 1 January 2014.

1 Työehtosopimuslaki, no. 436 of 1946 2 Laki työriitojen sovittelusta, no. 420 of 1962

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4.5 Reduced waiting period for unemployment benefit The waiting period for unemployment benefit will be reduced from seven days to five days. The reform will take effect on 1 January 2014. 4.6 Establishment of working time The parties agree that in certain cases working time becomes established as a binding term of employment that either supplements or supersedes the working time condition stipulated in the employment contract. The Parties find that the legal position in this respect is unclear. The Parties propose the appointment of a tripartite working group to study the conditions under which working time may be deemed to have become an established term of employment, and to propose the measures that are necessary for clarifying the situation. 4.7 Promoting employment of young adults A tripartite investigation of the following subject areas shall be conducted to promote employment of young adults: a) Elimination of obstacles to on-the-job learning b) Development of apprenticeship formats for young adults, including on the basis of the proposals made by the apprenticeship working group of labour market organisations in spring 2013 c) Simplification and enhancement of pay subsidies for young adults, simplified and expanded use of the Sanssi Card employment voucher, and better harmonisation of social security and working Specific proposals shall be made on these subject areas within the 8-week negotiating period referred to below. 5. Sectoral Collective Bargaining and Scope of the Pact The national labour and employer confederations propose a round of sectoral collective bargaining to be completed within 8 weeks, meaning by no later than 16.00 on 25 October 2013. In addition to other sectoral business, the confederations recommend sectoral negotiations on the following issues: - Improvement of productivity and job satisfaction by reorganising working

hours

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- Promotion of occupational health and welfare, and procedures seeking to reduce absenteeism due to illness and work-related accidents.

- Available collective bargaining instruments for safeguarding jobs, businesses and the operations of public sector entities when a business or public sector entity is subject to exceptional financial difficulties.

- To prolong working careers, the sectoral collective bargaining partners should investigate ways of promoting the use of age programmes and the formulation of individual career plans at workplaces.

Sectoral collective agreements may also be revised throughout the agreement period under the principle of continual collective bargaining. The parties to collective agreements must notify their own national confederations in writing of the conclusion of settlements complying with this Pact by no later than 16.00 on 25 October 2013. The national labour and employer confederations shall take measures of their own, and shall co-operate to promote optimally comprehensive implementation of this Pact in the labour market. The national labour and employer confederations shall assess the coverage of the Pact and the measures announced by the government in support of a pact for employment and growth on 25 October 2013, after which they shall jointly notify the Council of State of the said coverage. The parties to collective agreements shall be entitled to withdraw from settlements that they have concluded in line with the Pact if the coverage of the Pact or the government measures are insufficient and the national confederations accordingly decline to commit to the solutions specified in clauses 3–5. Helsinki, 30 August 2013 Confederation of Unions for Professional and Managerial Staff in Finland (Akava) Confederation of Finnish Industries (EK) Labour Market Organisation of the Church (KiT) Commission for Local Authority Employers (KT) Central Organisation of Finnish Trade Unions (SAK) Finnish Confederation of Salaried Employees (STTK) Office for the Government as Employer