Finland's government on Wednesday approved a labour reform deal between trade unions and business representatives, hoping it will boost export competitiveness and job creation in the now-stagnant economy.
The agreement, expected to yield 35,000 new jobs, will replace a tougher government plan to cut worker benefits that triggered strikes and protests last year.
"This is a historic deal. I believe it has good prerequisites to turn around Finland's direction," Prime Minister Juha Sipila, who heads a centre-right government, told reporters.
The agreement will trim some benefits by lengthening annual working hours and lowering holiday bonuses, freezing wages, lifting pension contributions for workers and lowering them for employers and gradually shifting away from centralised wage-setting towards more company-level labour deals.
Sipila said that depending on how the deal is implemented, the government may also cancel some other austerity plans and implement income tax reductions as initially promised.
The reform is part of Sipila's campaign to cut spending by 10 billion euros ($10.84 billion) by 2030 with measures that also encompass health care and local government reforms.
The agreement still requires approval from the biggest union confederation SAK. Its decision is expected on Monday and is likely to be positive.