A social contract to improve Finland's cost competitiveness is one of the key objectives in the Government's program which was published this spring. The Government and the central employer and employee organizations have been trying to conclude the social contract since the summer. The Government's plans have now suffered a setback as the negotiations for the social contract ended in early December when the labor market parties failed to reach a consensus on whether to join the social contract or not.

While the negotiations have continued throughout the fall, the Government has in parallel continued to draft the preparatory works regarding its proposals for changes in employment legislation. The Government published its proposals in September 2015, after a first round of negotiations for the social contract had ended. The Government's proposals contain exceptional changes to employment legislation, regarding e.g. imposing maximum limits for annual holiday accrual as well as reducing the amount of holiday bonuses and paid sick leave. The proposed changes would also limit freedom of contract for trade unions and employer organizations.

A draft government bill concerning the proposed changes was sent for comments to e.g. Government ministries, labor organizations and other interested parties in November. The deadline for submitting comments to the proposals was on 9 December 2015, following which the Government will continue the preparations for the legislative reforms.

The government bill is intended to be passed to the Parliament in February 2016 if the Government and the labor market parties are not able to reach an agreement on the social contract before that. The legislation would enter into force in the summer of 2016.