Finnish trade unions and employers organizations on Monday signed a two-year labor contract that raises wages by some 4.3 percent for more than 2 million people, or 94 percent of the country's working population.
Finnish Prime Minister Jyrki Katainen described the deal as "historic," saying that stability in the labor market was crucial in the current European financial crisis, especially for Finland's highly export-dependent economy.
"This was important for Finland. Last year, we were already aware that this autumn would be a very unstable time," Katainen told reporters. "That's why the government was very resolute in encouraging the labor market to reach agreement on the pact."
The government says it will supplement the pact with measures to promote economic growth and investments and by helping workers with tax cuts, higher unemployment pay and benefits for part-time workers.
The agreement was reached after weeks of tough talks that threatened to break down and likely would have caused nationwide strikes. The central trade union organization and employers federation had outlined a framework for the pact on Oct. 13 that requited approval from major unions and management.
Centralized labor contracts were common in Finland for decades until 2007, when employers and union members began favoring agreements at local level. However, this year they have returned to national negotiations.