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1. The Committee notes the Government's report for the period ending June 1994, as well as the comments made by the Central Organization of Finnish Trade Unions (SAK) and the Confederation of Unions for Academic Professionals (AKAVA), which were transmitted with the report. It also notes the useful documentation attached to the report.

2. The information provided by the Government shows the continued deterioration during the reporting period of the worrying employment situation noted by the Committee in its previous observation. Unemployment rose rapidly in all sectors bringing the level of unemployment to around 19 per cent at the end of the period, compared with 12 per cent in 1992 and 3.5 per cent in 1990. However, the Government states that unemployment should decline slowly in 1994, as confirmed by the OECD in its survey published in February 1995. The SAK emphasizes that unemployment has quintupled since 1990 and has therefore grown more rapidly in Finland than in any other industrialized country. The AKAVA states that unemployment is also now affecting the public sector. The Government adds that one-third of young persons under 25 years of age are unemployed and that one unemployed person in five has been out of work for more than a year.

3. The Government reports various factors which have caused this sudden and unprecedented decline in economic activity and employment, such as the combined impact of the collapse of the export market to the ex-USSR, the recession on Western markets, and high interest rates. It considers that excessive borrowing and poor competitiveness forced the various sectors to reduce their demand for labour in order to maintain their profitability. The Government states that as a consequence the central aim of its economic policy is to reinforce the competitiveness of enterprises and put a stop to the growth in public expenditure. These objectives have been achieved in part as a result of the devaluation of the currency. However, the SAK considers that the Government has abandoned the long-term objective of employment policy, as illustrated by the replacement of the objective of full employment in its programme by that of "a high employment rate". The SAK also alleges that the Government knowingly allowed unemployment to increase to help achieve its objectives of reducing the deficit and inflation.

4. The Committee notes that the employment strategy of the labour administration "in a transition period", as explained by the Government, in recognition that Finland is drawing away from the ideal of a society with full employment, identifies youth and long-term unemployment as the most serious social problems. With regard to policy choices, according to the Government strategy established for the 1990s, priority has to be given to combating the segmentation of the labour market, which gives rise to exclusion, by affording particular attention to the difficulties encountered by older workers in adapting to structural changes and by young persons in seeking their first job. The role of the labour administration has now to be to encourage the adaptation of the labour supply, particularly through training measures, to the changing demand for labour, while at the same time adopting selective measures to influence the supply of labour. Furthermore, to promote demand for labour, the flexibility of the labour market has to be increased by modifying policy on hours of work and seeking new forms of work sharing. In this context of difficult adjustments, the services of the labour administration will have to respond to growing demand through greater local autonomy and the effective reallocation of their staff resources.

5. The Committee notes this general information on the reorientation of the labour market policy. However, it notes that the information provided on the training measures for the labour market which have actually been implemented does not show a significant increase during the reporting period in the resources allocated to such measures. It notes in this respect that, according to the SAK, the proportion of GDP allocated to active policy measures, which has only grown from 1 per cent in 1990 to 1.7 per cent in 1994, has not risen in proportion to the difficulties experienced, and particularly the rise in long-term unemployment. The SAK points out that the law has been changed to reduce the obligations of the State in this field. In this respect the Committee notes that the obligations established under the Employment Act of 1987, requiring the State and local authorities to provide temporary employment to unemployed youth and the long-term unemployed, which it noted in its previous observation had been substantially reduced, have since been completely abolished on the grounds that their cost was judged to be excessive.

6. The Government states that all important issues relating to employment policy are discussed with the social partners before political decisions are taken in the context of tripartite advisory bodies, such as the Council for Labour Affairs established under the Ministry of Labour and the Advisory Committee for Employment Policy. With reference to its previous observation, the Committee recalls that it would like the Government to provide information on any substantive debate that may have taken place on the position of the objective of full employment in its general economic policy. Noting the comments of the SAK, the Committee observes that the priority that has been given to reducing the deficit has resulted in the abolition of the measures established under the Employment Act of 1987, which were a major component of the employment policy pursued up to then. The Committee is bound to emphasize the importance, particularly in a context of recession and structural adjustment, of giving full effect to the provisions of Article 3 of the Convention, which requires the consultation of the representatives of the persons affected by the employment policy measures to be taken "with a view to taking fully into account their experience and views and securing their full cooperation in formulating and enlisting support for such policies". The Committee requests the Government to supply more detailed information in its next report on the consultations held, the opinions gathered and the manner in which they have been taken into account. In more general terms, the Committee hopes that the Government will be able to explain in its next report the manner in which its decisions in the field of economic policy, particularly in relation to budgetary and monetary policies, industrial and trade policies, and prices, incomes and wages policies have contributed, "as a major goal", to the promotion of full, productive and freely chosen employment.