The collective agreements for April 1972-March 1973 The Bank of Finland Board of Management of the Bank of Finland Finland borrows DM 100 million in the Federal Republic of Germany Rainer von Fieandt Bank of Finland foreign exchange reserve, 1967-1972 MiII.mk 3500 3000 ,,,. 2500 ,, 1. Total gold and .r:,... ",'j 2000 foreign exchange I"'V 2. Gold and can· 1500 .-r1 ~-. vertible currencies !.:=--- ~ .&t' 1000 ~2 V- ~.. 3. Other currencies 500 ~.... .... _L o "' 3_ - --- ""'-.r- - 500 -1000 lJJlIlllll1 .111"" II " 11111111111 IIIn'IIIII 1111111111' 1967 1968 ""'"""1969 1970 1971 1972 Bank of Finland's position in regard to the banks, 1967-1972 Mill. mkr------..,-------,-------r-----,------.--------, 1200r----~----_+----_+----~----~---~ 1. Net claims on the banks 2. Discounted and rediscounted bills Seasonallyadjust­ ed end-of-month figures Balance of payments current account surplus/deficit, 1966-1971 Mil 200 100 0 Seasonally adjust- -100 ed quarterly fig- ures -200 -300 -400 -500 THE COLLECTIVE AGREEMENTS FOR APRIL 1972- MARCH 1973 The stabilization policy which was first im­ The average increase in the index of salary and plemented in March 1968 was continued wage earnings was 15.0 per cent from the successfully until the end of 1970. In 1969 and last quarter of 1970 to the first quarter of 1972. 1970 the rise in prices in Finland was very whereas the rise in the cost of living index over small in comparison with that in other OECD the same period was 8.9 per cent. The real countries; in both years it was under 3 per cent increase in earnings was 5.6 per cent during measured by the cost of living index. The this period; this figure exceeds the estimated increases in wages were also kept - partly rise in productivity by approximately 3 per­ because of the economic upswing - in line centage points. with the increase in productivity. An agreement was reached between the The stabilization policy pursued in 1971. which Finnish Employers' Confederation and the was based on the comprehensive incomes Confederation of Finnish Trade Unions on policy agreement in force until the end of March 17. 1972 which provided guidelines for March 1972. was not as successful. and the wage and salary agreements for the period increase in prices accelerated substantially. April 1. 1972-March 31. 1973. The recom­ The rise in nominal wages based on the agree­ mendations serve not only the member unions ments concluded in the early part of the year of the central organizations who signed the caused marked cost pressures as the rise in document but also other trade unions. The productivity in the first half of 1971 was less agreement called for the continuation of the than had been expected. Further. the rise in the Special Economic Powers Act. The relevant international price level and foreign exchange law was passed by Parliament on March 28. rates. and the measures taken by the public 1972. The act has three major provisions: it (1 ) sector-mainly the introduction of the supple­ forbids index linkages. (2) authorizes the mentary turnover tax and raising the general government to control rents and (3) empowers level of interest rates - designed to reduce the government to control prices in a way the balance of payments deficit contributed similar to that of previous stabilization laws. to the rise in prices. The price index of GOP The law will remain in force until the end of at market prices rose by 8 per cent on average March 1973. in 1971 and the cost of living index by 6.5 per cent. The rise in the cost of living index from The recommendations on wage increases December 1970 to December 1971 was 8.7 agreed by the Finnish Employers' Confedera­ per cent. tion and the Confederation of Finnish Trade Unions are designed to reduce income dif­ The increase in nominal wages in 1971 was ferentials and thus to carryon the precedent considerably greater than the rise in produc­ of previous years. Some social reforms were tivity. According to preliminary figures. the set forth as well. The period which must elapse average increase in wages and salaries was before sickness compensation is paid was 12.8 per cent in 1971. Of this. about 4 per­ shortened. and it was agreed that this compen­ centage points were due to wage drift. The rise sation would be paid for three weeks from the in the level of wages was 15.2 per cent and beginning of 1973. In addition. various types that in the level of salaries 9.4 per cent. The of pensions were increased. The general share of earnings in national income reached increase in wages was 25 pennies per hour. 56.3 per cent in comparison with 54.4 per cent Moreover. 3 per cent of the wages bill in each in 1970. sector was to be used for increasing wages 1 10550-72 and wage rates. The distribution of this part of age by 7.6 per cent from April 1. 1972 onwards. the increase is agreed on within each sector. Of this. 3.2 percentage points were meant to A special compensation to be paid after the compensate farmers for the rise in production annual holidays. amounting to 10 per cent of costs in agriculture and 4.4 percentage points holiday pay. is included in this. The minimum to secure the development of agricultural wage was raised from 550 marks to 602 marks income. Regional subsidies were increased and per month. acreage subsidies were raised in line with the rise in target prices. Apart from this. 21 million The collective agreements made by the end of marks will be distributed as additional regional April covered more than 1 170000 persons. subsidies. It was also decided to appoint a Collective bargaining is still going on for about committee to revise legislation on the develop­ 170 000 employees. ment of agricultural income for the period The increases in the collective agreements have starting April 1. 1973. The committee has now slightly exceeded those proposed in the general begun its work and is expected to submit its recommendations. The general hourly rise has report by the end of October 1 972. tended to vary between 25 pennies and 50 pennies and the monthly increase between 43 The 7.6 per cent rise in the target prices was marks and 100 marks. or 4 per cent of the distributed between milk. beef. eggs and rye. monthly salary. However. the rise in target prices is not passed on entirely to food prices because the state A new agreement was also reached on agri­ will pay for the rise in the price of rye and use cultural income for the period 1972-1973. about 70 million marks to subsidize the price It was signed by the government and the of butter. It has been estimated that. after the Central Union of Agricultural Producers on state subsidies are taken into account. the rise March 20. 1972. According to the agreement in agricultural prices will push up the cost of target prices in agriculture were raised on aver- living index by 0.9 per cent. May 2. 1972 2 BANK OF FINLAND Mill. mk 1971 1972 Apr. 30 Dec. 31 Apr. 7 Apr. 14 Apr. 21 Apr. 28 Assets Gold and other foreign assets 2131 2 776 3 224 3 263 3194 3256 .... _-_. ....... .............. --._--------_.. ..... _-_. __ .. _.... Gold 121 205 205 205 205 205 ........ __ .... Special drawing rights 192 197 282 282 282 282 --------_... ----------- IMF gold tranche 272 268 268 268 268 268 "-------_ .... Foreign exchange 1 425 1 950 2289 2331 2204 2324 ... _--------------- Foreign bills 85 119 113 110 102 105 Foreign bonds 36 37 67 67 133 72 Claims on domestic banks 864 849 705 596 839 813 ... -- _.- Discounted bills 856 848 701 589 825 807 ---- ... --------- .. ----_.. __ .. _-- ...... -------.. --- Rediscounted bills 1 1 1 1 1 Cheque accounts 7 3 6 13 5 ..... _--------_.- Other lending 228 340 317 320 316 317 Inland bills discounted In foreign currency .... _--_ ...... __ .. _. - ---_ ...__ .. _----_... - In Finnish marks 93 121 88 89 85 85 Loans 135 219 229 231 231 232 Other assets 703 597 638 654 658 645 .. -._--------- -_.- --- .-.... Finnish bonds 144 38 69 83 87 72 ---- Finnish coin 13 14 23 25 25 .... _-_.- 26 Currency subscription to Finland's quota in the IMF 526 530 530 530 530 530 - _ ... _----------------- Other claims 20 15 16 16 16 17 ... _----------_.. ....... _-_ ... _----------------_.. Total 3926 4562 4884 4833 5007 5031 Liabilities Notes in circulation 1 259 1 479 1 361 1 378 1 374 1 451 -- ...... _----------_... _-- Liabilities payable on demand 102 358 561 498 726 630 ....... __ ._--_.. _--_ ... ---_ .. _--- --------------_ .. --_ .. _---------_. Foreign exchange accounts 76 297 316 351 346 333 Mark accounts of holders abroad 11 30 39 37 32 39 Cheque accounts Treasury 2 2 30 26 50 37 ....... _-----_.. __ ... Post Office Bank o 2 162 62 281 207 Private banks 9 ..... -.. --------.. -.. --...-- ---::2,--------------3--------------=-2-- biher 8 6 3 Other sight liabilities 11 15 12 14 11 11 ........ _--_ .. __ .... ---. -_ .... _------------- ." ........ _--_ ... _------ ... ..... -------_... __._------- ... Term liabilities 764 905 1 087 1 08--=-3--1-0-78 1076 Foreign Domestic 764 905 1087 1083 1 078 1076 1M F mark accounts 526 530 530 530 530 530 ._-----_.. ---' ....... _-- Allocations of special drawing rights 173 174 258 258 258 258 .... _... _--_ .. _-------------.... ------_..... _.. ............_-------- Equalization accounts 418 400 347 345 298 341 Bank's own funds 684 716 740 741 743 745 ......_--_.