The budget-balancing measures agreed so far are insufficient, Prime Minister Petteri Orpo (NCP) said on Saturday.
Speaking on Yle's Ykkösaamu talk show, he said that more spending cuts will be needed, as the government intends to stick to its goals of balancing the public finances and reining in the state debt.
So far the right-wing cabinet has agreed that state finances must be adjusted by six billion euros during this four-year legislative period. That is based on estimates from the Finance Ministry, headed by Finns Party chair and deputy PM Riikka Purra.
“We are briskly advancing these agreed measures. Forecasts regarding the economic cycle must also be evaluated, and if the expected growth is slower than it looks now, we must be able to decide on additional measures,” said Orpo.
The government will make its final estimates of the need for further cuts based on economic forecasts to be published next week by the Finance Ministry and the Bank of Finland.
Take-home earnings “will not decrease"
The premier suggested that public finances could be adjusted, for example, by increasing labour productivity. Meanwhile tax increases and cuts in services are both deeply unpopular.
“Just as in the government formation negotiations, we have to look at the entire budget and seek possible savings. Regarding possible tax hikes, we are not going to raise taxation on work salaries,” said Orpo.
Finance Minister Purra has floated the idea of raising the value-added tax on food, citing slowing inflation. She made the comment on Monday to the financial daily Taloussanomat, which noted that the current VAT on food, 14 percent, is twice as high as the EU average.
Orpo declined to say whether the NCP, the main government party, would back such a move.
“The government will go through the options when the time is right. The starting point for the NCP is that the amount left over [in take-home pay] from work will not decrease, i.e. we will not tighten taxation on wages,” he promised.
"No understanding" of labour federation stance
The PM was asked about Thursday’s widespread political strike staged by labour unions to protest the government’s planned social services cuts and moves to curtail workers' rights.
Orpo said he had "no understanding" of the stance of the main blue-collar federation, the SAK, which is demanding negotiations with the government on the issues. The SAK, which claims to represent more than 800,000 workers, has close ties with the main opposition Social Democratic Party, led until September by Orpo’s predecessor, Sanna Marin.
“I find it regrettable that the SAK on Wednesday broke off the discussions between the organisations, which had clearly started constructively. For instance, the public sector wage earners' organisations and employers would have been ready to continue and deepen negotiations,” he said.
According to Orpo, the labour market partners now have an opportunity to demonstrate that they are capable of negotiating with each other and finding mutually acceptable solutions – without government involvement.
“I still hope that the organisations will continue their negotiations to create a sustainable labour market model,” he said.
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