Information Committee on Cost and Income Developments:
Employee purchasing power on the rise and competitiveness improving

Ministry of Finance 21.6.2018 13.00 | Published in English on 25.6.2018 at 13.29
Press release
Employee purchasing power on the rise and competitiveness improving

The Information Committee on Cost and Income Developments published its latest report on 21 June 2018. The report focuses on the outlook for wage formation. A separate study appended to the report examines the trend in household purchasing power in various socioeconomic groups during the period 2010–2016.

The national payroll is forecast to grow by 4.0 per cent in 2018 and by 3.5 per cent in 2019 and 2020. With the growth in the payroll, employee purchasing power is forecast to rise by 2.4 per cent in 2018 and 1.9 per cent in 2019. The growth in purchasing power will slow to 1.3 per cent in 2020, due to increases in employee social security contributions.

Negotiations on pay rises for 2018 and 2019 have been on a sector-specific basis. In essence, following the path set by the technology industries, the negotiations ended with increases in contractual pay that take into account the length of the agreement period.

Drop in unit labour costs improves competitiveness

Unit labour costs in Finland fell by 2.5 per cent in 2017 as a consequence of the Competitiveness Pact.

According to the European Commission’s forecast, the growth in unit labour costs in Finland will continue to be significantly lower than the euro area figure in 2018–2019. In all, Finland's unit labour costs are expected to decrease by approximately 5.5 per cent in comparison with the euro area over the period 2017–2019. As a result, Finland’s cost-competitiveness is improving considerably against the rest of the euro area.

The progress report on wage formation published by the Information Committee on Cost and Income Developments examines the recent trends and outlook for earnings, prices, purchasing power and competitiveness. In its assessments, the Committee makes use of the Ministry of Finance's economic forecast published on 18 June 2018 in the Economic Survey produced by the Ministry’s Economics Department.

Progress report on wage formation

Economic Survey, summer 2018

Inquiries:

Mikko Spolander, Director General, firstname.lastname@vm.fi, tel. +358 295 530006