Finnish labour market reform in sight after key union agrees

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A key union in Finland says it has voted to join a government-proposed labor reform pact that aims to boost the stagnant economy by easing labor market rules and cutting workers' benefits.

Friday's decision by the Metalworkers' Union, which represents over 140,000 people and is the biggest for industrial workers, paves the way for the milestone deal, which other major unions and employer representatives have already approved.

Under the deal, the center-right government pledges to lower taxes and cancel planned spending cuts in return for an increase in work hours and pension contributions, lower holiday bonuses and a freeze on wages for a year.

A rigid labor market is seen as one reason for Finland's economic woes. The European Commission predicts the economy will grow 0.7 percent this year, less than any EU country apart from Greece.