Finlândia - Tópico principal

[Lark]

Finland's Problem Is The Same As Greece's; Neither Should Be In The Euro As Krugman Says


Finland’s central bank governor, Erkki Liikanen, tells us that Finland is going to have to work hard to get through this current difficult economic situation. The country’s GDP is still significantly below pre-crisis levels and it’s likely to be a number of years before there’s a full recovery. But the real point behind this story is that it just doesn’t have to be this way. As Paul Krugman has been pointing out recently and as many others of us have been shouting for years. Finland simply should never have joined the euro, as Greece should not have. As, in fact, pretty much most of the current members should not have joined the single currency. Further, none of this is a surprise. It’s inherent in the very design of said currency, indeed it was pointed to by Robert Mundell, the man who worked out the economics of single currencies.

That it would all go wrong is exactly what the warning about the euro was. It is going wrong, has gone wrong, and for exactly the reason predicted:

Finland is in trouble, and in the words of the central bank this week, the situation is “grave”. While France has often been branded Europe’s “sick man” and Greece’s problems are well known, Finland’s economy is still 5pc smaller than before the financial crisis. The country will barely crawl out of a three-year recession this year, while unemployment is forecast by the OECD to grow in 2015.
Faced with a bloated state, below-par growth, and prices and costs that have risen at a much faster pace than the rest of the eurozone, the medicine is a familiar one.

What Finland has to do is have an internal devaluation. That is, it’s got to force down labour prices. That’s something that is difficult and something that can only be done with considerable economic pain. It’s also what Spain, Portugal and the extreme case of Greece have all also had to do. And the reason is that they’re in the euro. As Paul Krugman points out:


What’s going on? Well, in the case of Finland we’re seeing the classic problems of asymmetric shocks in a currency area that isn’t optimal. Finland’s two main export sectors, forest products and Nokia , have tanked; this creates the need for a sharp fall in relative wages to make up for the lost markets, but because Finland doesn’t have its own currency anymore this adjustment must take the form of a slow, grinding internal devaluation (which is, by the way, why the garbled discussion of wages turns the story into nonsense).

Krugman again:

Why can’t Finland recover this time? Debt is not a problem; borrowing costs are very low. But it’s all about the euro straitjacket. In 1990 the country could and did devalue, achieving a rapid gain in competitiveness. This time not, so that there is no quick way to adjust to adverse shocks………This shouldn’t come as a surprise; it’s the core of the classic Milton Friedman argument for flexible exchange rates, and in turn for the tradeoff at the core of optimum currency area theory. The trouble in Finland is what everyone expected to go wrong with the euro.

Krugman’s making exactly the correct point here. This isn’t something that’s taken us all by surprise. We knew this would happen. If a single currency area is too large then when an asymmetric shock hits then the areas badly affected by it must undergo that internal devaluation given that they can no longer devalue their currency. Both methods end up in the same place. Where labour is now repriced and is competitive again. Devaluing the currency takes a week and no one minds all that much. Internal devaluation takes years and requires substantial unemployment to grind wages down. This is not a right wing point by the way, this is pointed out by Keynes in his noting that we really, really, don’t like declines in nominal wages. It’s the major insight at the heart of New Keynesian theory, those sticky prices, that wages are sticky downwards. But if both methods get us to the same place, one is easy and one is hard, then why on earth have we all ended up with this single currency that forces places like Finland to do it the hard way?

Quite. The eurozone is simply too large, too many countries joined the euro, countries that really should not have. And as above, this isn’t a surprise. The euro is failing and it’s failing for exactly the reason that we all said it would. It’s too large a currency area to be optimal.

tim worstall/forbes

penso que já tinha postado isto no tópico da grécia, mas aqui fica melhor.

L

[Lark]

Não sei, não tenho nenhuma ideia de reformas precisas agora. Mas se vão passar por uma crise aguda, certamente que precisarão de reformas. Por ex, se devido a uma contracção forte no PIB deixam de poder pagar o estado social tão bom como agora, farão cortes no mesmo, sem o destruírem. Mas farão os cortes necessários e o povo perceberá e aceitará os sacrifícios, e se tiverem lá um TC, ele vai deixar passar os cortes, como na Alemanha também deixou. Dá vontade de dizer que são mais adultos do que cá. Isso estende-se a políticos, a juízes do TC e a muitos outros dirigentes. Esses países desenvolvidos têm precisamente isso, tolerância ao sacrifício e reformas bem pensadas, e população com outra mentalidade. É por isso que ficaram desenvolvidos.

Cá poder-se-ia fazer o mesmo, com uma mudança de atitudes e mentalidades muito profunda. Provavelmente seria necessário um exército de comentadores televisivos a explicar estas coisas às pessoas, com todo o detalhe, e suprimir ao mesmo tempo o futebol e telenovelas. Assim talvez se conseguisse. Não estou a dizer que o pessoal cá é incapaz, acho que iria lá com as mudanças culturais certas.

ok vamos ver.
podemos ir aqui acompanhando alguns parâmetros da economia finlandesa.
por acaso andava à procura da evolução do rating da finlandia e não encontrei.
encontrei os ratings de agora, mas histórico não.

L

[Lark]

penso que foi o inc que deixo este link

One-firm economies
The Nokia effect

Finland’s fortunes are affected by one firm. What about other countries?

NOKIA contributed a quarter of Finnish growth from 1998 to 2007, according to figures from the Research Institute of the Finnish Economy (ETLA). Over the same period, the mobile-phone manufacturer’s spending on research and development made up 30% of the country’s total, and it generated nearly a fifth of Finland’s exports. In the decade to 2007, Nokia was sometimes paying as much as 23% of all Finnish corporation tax. No wonder that a decline in its fortunes—Nokia’s share price has fallen by 90% since 2007, thanks partly to Apple’s ascent—has clouded Finland’s outlook.

Are any other economies so reliant on one company? The researchers at ETLA calculate Nokia’s value-added to work out its importance to Finland, but such data are not widely available. A look at firms’ sales as a percentage of GDP (see table) offers a cruder indication of clout. We used the Dow Jones Global Index to identify firms whose revenues ranked highest in the country of their listing.

Firms like ArcelorMittal, Essar Energy and China Mobile make the top ten because of their choice of domicile; their economic activity mainly takes place elsewhere. Oil-and-gas firms feature heavily, although that may simply show that certain economies are dependent on a certain type of activity rather than a specific firm. Lower down the list the presence of Sands China, a casino developer and operator whose sales are 13% of Macao’s GDP, reflects the importance of gambling to the territory.

Strip these sorts of firms from the list and only one resembles Nokia: Taiwan’s Hon Hai, an electronics manufacturer. Yet Nokia made 27% of Finnish patent applications last year; the corresponding figure for Hon Hai was 8%. Although numbers are falling, Finland is home to the greatest number of Nokia employees; Hon Hai’s staff is mostly in China. It is a similar story with other firms. Sales of Nestlé, a consumer-goods company, weigh in at 15% of Swiss GDP but its share of Swiss jobs is punier than Nokia’s in Finland. Samsung, whose revenues are twice Nokia’s, has half its clout as a share of GDP: South Korea’s economy is more diversified. The importance of Nokia to Finland looks like a one-off.

economist

[Incognitus]

O que é que o Krugman diz de o mesmo efeito afectar Estados dos EUA?

[Visitante]

Qual é o problema da Finlândia no que toca ao sector da floresta e papel? É certo que representa 20% das exportações, mas não parece haver nada de anormal com o sector, de acordo com o outlook abaixo. O sector em Portugal também não está mal.

http://www.metla.fi/julkaisut/isbn/978-951-40-2493-1/Outlook-Summary-14.pdf

[Incognitus]

Qual é o problema da Finlândia no que toca ao sector da floresta e papel? É certo que representa 20% das exportações, mas não parece haver nada de anormal com o sector, de acordo com o outlook abaixo. O sector em Portugal também não está mal.

http://www.metla.fi/julkaisut/isbn/978-951-40-2493-1/Outlook-Summary-14.pdf

O papel deve ser a maior parte e estava negativo em volumes e preços. Mas não é, pelo menos já, nenhuma catástrofe. Só que um sector grande a encolher é logo um problema quando o que se quer é crescimento no global.

[Lark]

Business leaders and analysts aren't the only ones anxious to find out more about the incoming government's economic programme. Organisations that provide support services like food and counseling for those hit hardest by the poor economy, also have a keen interest in the outcomes. They're hoping that society's most vulnerable won't find themselves facing further hardship.

Heikki Hursti’s food distribution station is a welcome oasis for people struggling to make ends meet in Helsinki. Hursti, who took over the charity programme when his father died ten years ago, said that he’s seen a disturbing increase in the number of people turning up at the Helsinginkatu food bank for help.

”When we check with this counter, we have had some 2,700 – 2,800 people on each distribution day. And we continually see new people joining the line to get food. And it just tells us that the situation in Finland is not changing for the better,” Hursti said, showing the small mechanical device he uses to count the number of heads coming in.

Within the first hour of our visit to the food bank he had already counted more than 600 individuals receiving food donations. According to Hursti, ten years ago, charity workers would have distributed food to that many people in two days.  He said that on occasion, the number of patrons has edged closer to 3,000 and even reached as high as 3,200 in one day.

The rising numbers of patrons aren’t the only cause for concern, Hursti said. He noted that the composition of the queues has also changed over the years.

”There are pensioners, people on disability pensions, the unemployed, people working on short term contracts, and as you can see there are families who come with their children to get food – and naturally we try to give them a bit more than we would give to single people,” Hursti added.

The bread line isn’t just for those who’ve lost their jobs or who have aged out of productive work.

”We also have working people, and since rents are so high for the people who live in the capital area and salaries are small so they simply run out of money and they have to get help from somewhere,” Hursti pointed out.

Increasing demand for charity services

Less than one kilometre from Hursti's food depot, Helsinki's Deaconess Institute provides social and health care services to those in need. Laura Häkökangas is a director of community and volunteer services and currently runs a volunteer team of 600 – a fact that speaks to the need for services to supplement state-run safety net programmes.

”It does seem that young people with difficult issues have found us as a place where they can get help. So the numbers have actually skyrocketed in the past couple of years,” Häkökangas said.

”But also it’s quite clear that the most vulnerable people whatever their age are seeking help and there is a greater number of them, because some of the services directed to them have been cut. So they need more support from somewhere else,” she added.

The incoming government is still hammering out a detailed plan for managing the economy. Prime Minister-designate Juha Sipilä has already hinted at indirect cuts such as a freeze on index increases paid on social benefits.

Häkökangas said that there are concerns that possible social spending cuts – direct or indirect – could put an additional squeeze on vulnerable groups in society.

”I think everyone is concerned that if and when there are cuts, they might focus on the same people who are already at risk of becoming socially excluded or are extremely vulnerable, such as householder families or single people who have been unemployed for a long time,” Häkökangas noted.

”So if the new government should cut unemployment benefits or housing benefits for instance at the same time, that would be a great blow to those families and people and it would actually throw their economies off-balance,” the community worker added.

Food bank dependent on public generosity

Back on Helsinginkatu, Hursti is also worried about how he’ll be able to continue to make a difference for those who have nowhere else to turn to for help.

”When we think about the government negotiations that are going on now, there’s some harsh language about compulsory cuts. And when those cuts are done of course they will affect everyone, but they will most affect low income earners and I think that’s very sad. And that will probably increase the number of people in these food lines,” Hursti said.

Hursti’s charity programme runs entirely on the goodwill of corporate and individual sponsors. Small private donors may contribute 10 euros a month, while large food retailers donate much of the food items that are distributed three times weekly, he noted. Apart from support from the city of Helsinki, which pays rent for the food bank premises, Hursti said the operation has no state support.

”We haven’t got a single euro from the state,” he concluded.

fonte

[D. Antunes]

Até na Escandinávia a "caridadezinha" fora do estado é necessária.

[Lark]

a finlândia e o euro

L

[Lark]

Finland is the poster child for why the euro doesn’t work
By Matt O'Brien July 23 

Sometimes bad things happen to good economies.

Take Finland. Its schools are among the best in the world, its government is among the least corrupt, and, for rich countries, its public debt is among the lowest. But despite the fact that the fundamentals of its economy are strong, its economy is not, in fact, strong. Finland is actually stuck in its longest recession in living memory. Why? Well, the short story is the euro.

The slightly longer version is Finland has had some bad luck that the euro has turned into a bad recession, or at least a worse one that it had to be. It started when Apple made Nokia go from being synonymous with smartphones to being synonymous with old smartphones.

As Finland found out, it isn't easy to replace a company that, at its peak, made up 4 percent of your economy. Obsolescence came for the timber companies next. There was nothing they could do to make people need as much paper, which until now had been a major export, in a post-paper world.

And, on top of that, Finland has felt the effects of Russia, one of its biggest trading partners, staggering under the weight of low oil prices and Western sanctions. Put it all together, and Finland was always going to have a tough time. But it's been tougher than it needed to be, since Finland hasn't been able to do what a country would normally do in this situation: devalue its currency. That's because Finland doesn't have a currency to devalue. It has the euro.

But how would a cheaper currency return Nokia to relevancy? Well, it wouldn't. What it would do, though, is make the rest of Finland's economy competitive enough that things that aren't strengths today would become ones tomorrow. It would also keep inflation from falling too much—it's actually negative now—which, in turn, would make debts a little easier to pay back and keep households spending and businesses investing a little more.

Think about it like this. Anytime a shock hits, whether that's banks failing or an industry dying, the economy needs to cut costs to regain competitiveness. There are only two ways to do that: cut the value of the currency so wages aren't worth as much, or cut wages themselves.

Now, this might sound like a distinction without a difference, but it's not. It's a lot easier to cut one price (the exchange rate) than it is to cut millions of prices (people's wages). And it's a lot less painful, too. You don't have to fire anyone to devalue the currency, but you do to make people take pay cuts.

Here's where things get tricky, though. How much should we blame the euro for Finland's problems, and how much we should blame, well, the problems themselves. After all, it's not like the common currency had anything to do with the iPhone turning Nokia's flip phones into little more than cultural artifacts.

Although, on the other hand, it has had something to do with how long it's taken Finland to adjust to this new reality. There's no easy answer here. But what we can do, as Paul Krugman points out, is compare how Finland has done to a similar country that doesn't use the euro—a country like Sweden.

And that, as you can see below, is a pretty ugly picture. Finland and Sweden grew almost identical amounts between 1989 and 2008, before diverging 20 percent since then.



The fairest conclusion is that, given that so much has befallen it, Finland would have fallen behind even if it'd kept its old currency, the markka, but that it's fallen even more than that because the euro has taken away its ability to do anything about everything that has happened to it. All it can do is try to cut costs ever more religiously.

But facts are no match for faith, and Finland has plenty of that in its economic strategy. Finnish finance minister Alexander Stubb told the New York Times' Neil Irwin that "devaluation is a little like doping in sports" in that "it gives you a short-term boost, but in the long run, it's not beneficial." 

The problem is that although this sounds like a cost-benefit analysis, it's more a moral one. It's really pooh-poohing devaluation as the easy way out. But why shouldn't we want that? The two best things about the easy way out are that it's easy and is, in fact, a way out. Finland could use one of those given that its economy is still 5 percent smaller than it was in 2008.

The only way the euro could possibly be worth it is if it helped Finland more before the crash than it's hurt Finland since. That's a hard case to make, though, considering that Sweden did just as well without the euro as Finland did with it during that time.

Bad things have always happened to good economies, and they always will. Such are the vicissitudes of life. That's not fair, but at least governments can make it a little more so by doing something about it—unless, of course, they're part of the euro. Then their only recourse is punishing themselves again and again and again.

Morale still hasn't improved. Neither has the economy.

Matt O'Brien / wapo

[Kin2010]

Não me parece que o euro explique os problemas dos vários países em crise. Se perdem competitividade porque o euro é forte, então por que sobem os salários e pensões em demasia? O que causou esses problemas de competitividade foram as subidas excessivas de salários e pensões no tempo das vacas gordas. Ou seja, foi a má governação. Se não se subir de forma excessiva -- e é fácil evitá-lo, basta que se mantenha um current account equilibrada, e se o rácio dívida / PIB for razoavelmente baixo (<50% ou isso) uma economia pode manter-se sem perder competitividade durante décadas, mesmo no euro e com este a não inflaccionar. Os estados americanos estão todos no dólar, uns têm um PIB per capita muito maior do que outros, e mantêm-se viáveis.

[tommy]

Como é óbvio. A finlândia tem alguns problemas na economia, como acontece a todos de forma ciclica. É preciso utilizar umas palas bem grandes para começar a culpar o euro, só porque o euro não permite políticas venezuelanas de imprimir moeda para fingir que valemos alguma coisa.

[Haroun Al Poussah]

Finland becomes weakest EU economy
By Raine Tiessalo, Bloomberg News
Bloomberg
 
HELSINKI — Finland is emerging as the European Union's weakest economy because of its failure to build a competitive labor market, according to Finance Minister Alexander Stubb.

The economy of the northernmost euro member is set to contract for a fourth consecutive year, Stubb said at a conference of Finnish diplomats in Helsinki on Monday. He described the development as "worrying."

The government has so far failed to persuade Finns to accept pay cuts it says are necessary to compete with its trading partners. Stubb warned Monday that the nation's economic plight isn't only linked to market shocks but is structural, meaning only a program of reform can jolt the nation out of its sclerosis.

Aktia, a Finnish bank, estimates gross domestic product will contract 0.5 percent in 2015, after shrinking every year since 2011. Both exports and investments are seen contracting, according to the bank. Any reform program should target bringing about "quick relief" for an economy that has been hobbled by its lack of competitiveness, Aktia said.

Finland, which has stood shoulder-to-shoulder with Germany through the darkest hours of Europe's debt crisis to advocate the wisdom of austerity, now risks seeing its own ratings tarnished by its economic decline. Moody's Investors Service, which still rates Finland Aaa, said last week the country's weak economic prospects were "credit-negative." Standard & Poor's stripped Finland of its top rating in October.

Prime Minister Juha Sipila said a press conference in Helsinki Monday that the government is preparing a proposal to improve competitiveness that will be presented by the end of September. If the nation had its own currency, a devaluation would now be considered, he said.

"We have to live inside the euro area, I don't have another option concerning the currency," he said. "I don't even think about other options, so now we must find the measures so we will be competitive inside the euro."

fonte

[Haroun Al Poussah]

o indíce finlandês - HEX ou OMX Helsinki 25

H

[Lark]

Since you asked: Un-Scandinavian lessons in balancing Finland’s economy
Martin Sandbu

‘Finland . . . is proposing scrapping two bank holidays and cutting pay for sick leave, overtime and Sunday working.’
FT September, 9.

That doesn’t sound very Scandinavian, does it?

Actually Finland is not technically in Scandinavia.

Not very Nordic, then. You know what I mean.

Sorry. You mean the Nordic model — welfare states, equality, and all that.

Exactly. Even the austerity-obsessed UK government wouldn’t get away with scrapping bank holidays. So how come the happy shiny people of a progressive Scandi-land do it?


Not Scandi . . .

Stop it.

Right. The government thinks it is necessary to reboot the Finnish economy.

Is it doing so badly?

It has not really grown for five years, unemployment has gone up and the export surplus has vanished.

Ouch. What happened?

It has a lot to do with the sort of things Finland makes. It has big forests, which are good for producing pulp and paper. But as any newspaper journalist will tell you, that is not a hot commodity.

They should produce digital devices instead! There’s a big future in that.

Er, they were. But I bet you are not reading this on a Nokia phone.

Oh yeah. Talk about putting all your eggs in one basket. I don’t think Nokia failed because the Finns take long holidays, though.

Then there’s geography: Finland happens to be next to Russia, which is a lousy trading partner ever since the EU finally slammed sanctions on it.

Pretty unlucky. But how are these not-very-Nordic policies going to help?

The government is very big on competitiveness, or “unit labour costs”. They blame the problem on rising ULCs and predict that if they come down the economy will recover.

You’re too technical. Say it the way the politicians explain it to the people.

Er, that’s what they say.

Are you kidding me?

No. According to Reuters, Juha Sipilä, prime minister, says the goal is to lower ULCs by 5 per cent.

And this is a government that includes populists! How would a technocratic one look? OK, explain ULCs.

It is the cost of labour that goes into producing one unit of something. How much a company spends on wages and benefits to make one roll of paper or one Nokia phone, say. If its ULC is too high, it won’t be able to sell the paper or the phone at a price that makes a profit. Others will undercut it and send it out of business.

That makes sense.

For a company, yes. For a country, not so much.

Why not?

Because countries do not go out of business, for one. Every generation, a brilliant economist teaches this to the world, which then proceeds to forget it. Last time was 20 years ago, when Paul Krugman shot down the “dangerous obsession” with competitiveness.

But countries have to sell stuff to others. If you export much less than you import, you’re uncompetitive.

You have to sell enough to pay for your imports over time. Finland does that just fine. It had huge surpluses in the boom. They have gone, but its trade balance is basically zero.

I don’t understand how lower ULCs would resurrect Nokia anyway. That had to do with a failure to innovate, not wage costs.

Indeed. Here’s another thing. What’s the ULC for the whole economy?

The cost of labour needed to produce a unit of all that the whole economy makes?

Sort of. It is the total wage bill divided by GDP.

But that’s just the workers’ share of the economy! That’s redistribution, not “competitiveness”.

I see you’re getting it. ULCs are a pretty bad measure of anything that policy should care about. And while a single company can cut labour costs without affecting its own sales, cutting the labour share in the whole economy easily reduces domestic demand.

They had better be right exports will go up, then. Should we be confident?

Hard to tell. Greece has cut labour costs enormously but not seen a big export gain. Spain’s exports are booming without any boost to “competitiveness”.

What’s with the euro countries’ self-flagellation? They seem to yearn for the competitive devaluations it was meant to overcome.

It is funny, isn’t it? Alex Stubb, finance minister, says “devaluation is . . . like doping in sports: it can give a short-term boost, but in the long run it is not beneficial.” But this policy aims for exactly the same thing .

So they treat the economy like a business and try to replicate devaluations they had given up because they did more harm than good.

What do you expect with a former businessman as PM and a smart alec for finance minister?

His name is Alex . . . 

Don’t be one yourself now.

ft

[Lark]

COPENHAGEN, Denmark (AP) — A one-day strike in Finland halted public transportation and shut down ports nationwide on Friday as workers protested against government cutbacks aimed at trying to drag the Nordic country out of a three-year economic downturn.

Trains and city buses were not running. Finnair, the national carrier, cancelled about two dozen domestic flights and there were delays at airports, such as in Helsinki, where security staff briefly walked off. However, ferries, including those to Sweden and Estonia, were running normally.

Some shops were closed during protest rallies in Helsinki and major Finnish cities. Up to 30,000 protesters gathered peacefully outside the capital's main train station in pouring rain.

The strike comes after talks on a collective agreement on wages and working hours collapsed. Three unions claiming to represent some 2.2 million people — nearly half of Finland's population of 5.5 million — are protesting government cutbacks, including limits to holiday benefits and overtime pay.

On Friday, Prime Minister Juha Sipila tweeted that he would give unions and employers more time, until Sept. 30, to come forward with proposals.

Sipila's three-party ruling coalition announced "painful decisions" after taking office in May. His government includes the Finns Party that had voiced strong opposition to the financial bailout of other European countries and advocated the ouster of Greece from the eurozone.

"I consider our economic situation a smaller problem" than the influx of migrants and asylum-seekers to Finland, Sipila was quoted as saying by Finnish broadcaster YLE.

He said some 1,000 asylum seekers were expected to arrive in Finland on Friday, after some 500 migrants, mainly Iraqis, entered via Sweden on Thursday.

Finnish officials have said the Nordic country may see up to 30,000 asylum-seekers this year, compared with just 3,651 last year.

Many fear that Finland's economic downturn could enter a fourth year after recording the lowest growth in the eurozone in the second quarter. Unemployment in Finland is expected to rise. In July, it was 8.4 percent, up from 7 percent a year earlier.

fonte

[Lark]

Wahlroos: Finland would have to devalue by 30%
 
“We must re-establish Finland as a market economy,” Björn Wahlroos stated during an advertising event in Helsinki on Tuesday.
Björn Wahlroos, the chairman of the board at Sampo, Nordea and UPM, has described next Friday as an eye-opener.

The outspoken banker has little sympathy for the massive demonstration to be mounted by trade unions. “A considerable part of the country doesn't seem to be of the opinion that Finland must do something to generate economic growth,” he lamented.

“Friday can end up costing us half-a-billion euros. The group organising [the demonstration] claims to have Finland's best interests in mind,” Wahlroos stated in his address at Advertising Day in Helsinki on Tuesday.

He especially shot down claims that the freedom of contract is under threat.

“The first Government in living memory is about to take action to solve the massive problems of Finland, and it comes under criticism for violating the freedom of contract. The greatest violation of the freedom of contract is the general applicability of collective agreements we've enacted in law,” he stated.

The economic conditions in Finland are dire, Wahlroos reminded. “Finland is going to hell in a hand basket. We'd have to devalue by 30 per cent, if we still had our own currency. We're at the brink of a massive price change in the labour markets.”

“Friday's stoppage will hopefully help the Government and industries understand that every single proposal drawn up by the Government has to be implemented and that much more is needed. What's currently on the table is but a start to solving our problems.”

Wahlroos also urged the Government to urgently come up with measures to enhance the functionality of the labour markets. “Our labour markets are made up by five men. We must re-establish Finland as a market economy,” he proclaimed.

He believes the general applicability of collective agreements must be abolished and the unemployment security system overhauled in a way that encourages employment. “Unemployment security has a discouraging effect and is way too long; too low at the beginning and too high at the end. It doesn't encourage job-seeking.”

helsinkytimes

[Kin2010]

Esta crise finlandesa vai ser épica. Mas acho que agora é que se vai ver como eles são diferentes dos gregos. Vão aceitar muito mais reformas e medidas difíceis e vão dar a volta por cima. É a minha previsão. Têm outra mentalidade, mais responsável e que não foge da admissão das dificuldades e da necessidade de sacrifícios.

[Lark]

Finland – the social contract to wreck the welfare state

Last week, over 30 000 people gathered in the centre of Helsinki, Finland to demonstrate against the Finnish Government’s labour market reforms and welfare cuts. For a country with less than 6 million people overall, that’s a pretty good turnout. Trains weren’t running, shops were empty, factories went quiet. This was the biggest strike Finland has faced in two decades.

Finland has a reputation as one of the beacons of social democracy in a laissez-faire world where a bunch of ranty Eton boys run one of the most powerful countries in the Europe, and Donald Trump might become President. We have the baby box, a solid welfare state and a society built on strong trade unionism. Our northern European haven is seen as such a good place to live, that we often describe being born there as equivalent to “winning the lottery”. This isn’t entirely untrue either – Finnish average net earnings are among the highest in Europe, with a single person without children making a salary of nearly 30,000 (EUR) per year.

The benefits of Finland’s social democratic tradition is widely recognised elsewhere. During the Scottish independence referendum campaign, the SNP and others reached out to become part of the Nordic club.

Finns are proud of this recognition – we see ourselves as a society where the collective works together to create a good life for everyone. If you asked most Finnish people what they think about David Cameron’s vicious cuts to housing benefit for young people or the attempts to curtail union rights, and the response would, until recently anyway, been one of horrified bemusement. “That would never happen in Finland”.

But it is happening. As of last May 2015, Finland has a new coalition Government composed of the centre-right agrarian party Keskusta, the neoliberal Kokoomus and an extreme right populist party, the True Finns. In a country with a number of mainstream left parties, and a tradition of coalition Government, it is rare for Finland to be led entirely by right-wing parties.

Now, we are getting fed the same story that’s been repeated around Europe over the past few years – the country’s economy is in crisis, we’ve lived beyond our means and we must pull together and make savings. And Finland is buying into it.

The new Prime Minister Juha Sipilä, a millionaire businessman with a friendly everyman persona, embarked on his reform programme with one clear goal – a 5% increase in productivity that would pull Finland out of deficit, give a boost to our export-oriented industries and put our country back into the race to the top.

Sipilä started his term with arms wide open for whole country to get on board his reform agenda. He wanted to make a new “social contract”, with employers, workers and the Government agreeing on labour market reforms that would improve productivity and cut back costs. After numerous failed attempts, the Government admitted a few weeks ago that it couldn’t bring the workers’ representatives on board. Sipilä then went on to decide that he didn’t care too much about his “social contract” after all, and was ready to push reforms through unilaterally, whether the unions liked it or not.

The reluctance of the workers’  unions to buy into the Government savings programme should hardly have come as a surprise to the Prime Minister. The Government believe that the 5% increase in productivity will be created by cutting back on unit production costs. And where else would you cut from but the cost of labour?

There are cuts to Sunday pay and pay for overtime; there is a proposal to reduce annual leave and to reduce employer contribution to national insurance; and there is a decision to make the first day of sick leave unwaged. All of this is coupled with harsh cuts to education, welfare and healthcare. Some might call it wrecking the Nordic model of society; others, like PM Sipilä, call it and attempt to save the Finnish welfare state.

As expected, a growing number of commentators are calling into question the basic rationale of the Government’s 5% productivity target. The focus on increasing productivity and competitiveness in export-oriented sectors seems odd when, as Left Alliance MP Anna Kontula recently pointed out, Finnish export industries already have lower wages than our European competitors. Union leaders are arguing that wage moderation exercised by the Finnish workforce over the past few years has already improved productivity, but this cut to costs for businesses has not resulted in more jobs. The Government’s claim that excessive labour costs are damaging our competitiveness doesn’t seem well-founded.

Criticism of Sipilä’s austerity strategy isn’t just coming from the political left either – economist and head of research at Helsinki University, Mika Pantzar, has pointed out that the Finnish economy is already in recovery. According to Pantzar, further cuts are simply not needed, and Finland should instead exercise neutral economic policy and allow for the growth to continue.

And yet, Friday’s  demonstration has faced a huge wave of critique from the Government, from the employers’ representatives and from parts of the Finnish public. Those taking part in the walkout have been accused of holding the country back, shattering the economy and damaging Finland’s international reputation as a trusted business partner. Workers are accused of acting like spoilt kids, having lived the good life for too long.

Many seem persuaded by the Sipilä’s call for the country to pull together and make some sacrifices. After all, the number of holidays per year and the exact level of wages need to be determined somehow. Who is to say the proposed cut of Sunday pay to 175% isn’t a decent, proper level for the times we live in? Finns already have higher incomes and better terms and conditions than most people in this world – what’s all the fuss about?

Focusing on what constitutes a fair level of Sunday pay or benefits is, however, ignoring the real game-changer in Sipilä’s proposals. The big shock over the past few weeks has arguably not been the cuts themselves, even though they will hit many waged workers hard. The tipping point has been the shift in the balance of power in Finnish society.

For decades, terms and conditions in the Finnish labour market have been negotiated at national level, with the employers, workers and Government representatives around the same table. In this way, the three parties have arrived at “national income policy agreements”, which set practice on a large number of issues, ranging from wages and working hours to pensions and benefits. The agreements are voluntary, not legislative, but cover virtually all waged workers in the country. All parties have had to make compromises in negotiations, but that’s been the Finnish way.

Sipilä’s decision to forge ahead with reforms without consensus means that his Government will legislate on maximum benefits and wages and limit unions’ and employers’ ability to determine terms and conditions. An individual worker can still negotiate terms with their employer, but the big collective agreements Finland’s workers are used to cannot secure the workforce higher benefits than what the law dictates.

If Sipilä goes ahead and pushed through with his unilateral “social contract”, he will take a dangerous step away from the Finnish tradition of cooperation and into a realm where his Government are breaking internationally recognised labour rights.

Yes, you heard right. Finland, the beacon of social democracy in Europe, may soon come face to face with the EU and the ILO, as the new reforms may breech basic rights to collective bargaining which are set out in a number of international instruments and agreements that the country has ratified. The proposed restrictions to collective bargaining are unheard of in Finland – legal professionals have highlighted that there is no precedent to what Sipilä is proposing to do in Finnish history, or even in Europe.  These are radical Government actions that will make fundamental changes to the way in which our politics operates.

So what happens to the social democratic light of Norther Europe, the collaborative, reasonable Finnish welfare state? Sipilä and his Government are starting to seem like they don’t want to play with anyone. They don’t want to give leeway to the unions; they don’t want to follow international rules that we’ve signed up to with (quite a few) other countries; and they most definitely don’t want to join the workers on the picket lines.

Unless Sipilä’s Government realise they need to return to the negotiating table, the myth of a country of socially minded team-players is looking increasingly frail.

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[Lark]

Ministry forecast: Unemployment to worsen in Finland

The unemployment rate in Finland could rise to 9.5 percent this year. According to a fresh forecast by the Ministry of Employment and the Economy, growing numbers of out of work people are falling into the category of the long term unemployed.

According to the advisory issued Monday, employment in even the service sector has slowed and the number of unemployed jobseekers is approaching a record high since the year 2000. This year they will number 355,000 on average and will climb to 370,000 next year.

In its last publication of labour market data, Statistics Finland put the number of jobless people looking for work at the September at 225,000, compared to the Ministry’s 337,000 for the same period.

Data from both bodies differ because the Ministry pulls its figures from actual jobseekers registered with local employment offices, while Statistics Finland bases its findings on statistical samples.

More jobseekers becoming long term unemployed

The Ministry said that the growth of employment figures this year would be negative or close to zero in all job sectors. The labour market forecast further predicted that unemployment this year would rise to 9.5 percent.

The Ministry’s review indicated that the unemployment rate would continue to rise this year and that the trend would continue into next year. Senior civil servant Johanna Alatalo also noted that economic growth would not be robust enough to promote employment next year either.

According to the outlook, growing numbers of jobseekers can be classified as the long term unemployed. This year some 110,000 people were considered to be among the long term unemployment, while the number is forecast to grow to 130,000 next year. The Ministry pointed out that nowadays this group no longer includes only the elderly and the poorly educated.

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