Public finances Ministry of Finance: Implementation of the municipal wage requirement would increase public spending by EUR 7.5 billion annually

The calculation estimates that the entire municipal sector will receive 3.6 per cent more wages than other wage earners for five years.

Ministry of Finance According to preliminary calculations, public spending will increase by several billion euros if the municipal sector gets through its demand for significantly higher wage increases than in other sectors.

Tehy and Super, who represent social and health care workers, have put forward a pay program that will increase pay in the industry by 3.6 percent more than the average pay increase on average over five years.

This year, the overall increase has been about two percent.

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Ministry of Finance according to preliminary estimates, the impact on the general government deficit would be around € 7.5 billion per year after five years and beyond.

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It would therefore be an additional billion billion in additional expenditure for public finances. The public sector should finance it either by borrowing an additional € 7.5 billion each year, raising taxes significantly or cutting other spending.

The most likely option is that municipalities, among others, should take all these steps. It would also mean that it would probably be difficult to create new posts.

The calculation has been made by the Ministry of Foreign Affairs’ Economic Policy Coordinator, Director General Lauri Kajanoja.

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In the calculation not only direct wage costs but also increases in index-linked benefit expenditure, tax revenue and social security contributions have been taken into account.

In the Ministry of Foreign Affairs’ calculation, it has been assumed that the additional increase will apply to employees in the entire municipal sector, because according to the logic of the labor market, it is somewhat impossible to obtain higher increases for others in the same negotiations.

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