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Finnish report Finnish report
by Euro Reporter
2014-01-08 11:24:16
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Major change underway in Finland

In his New Year's message to the nation, Prime Minister Jyrkki Katainen said that decision-makers need to focus less on regulating society and more on creating opportunities and encouraging people and communities to build their own futures. The Prime Minister pointed out that Finland has traditionally been built as dictated by the authorities, in a hierarchical manner from top to bottom.  "We no longer consider it right that someone above us makes key life choices on our behalf. Instead of patronage, we want to be the decision-makers of our own lives when we have the capacity to be so," said Katainen.

The Prime Minister added that the issue is not just about what reforms are made in Finland, but more about how they are made. "The ability of people to make their own choices and decisions must be recognised in decision-making. People's capacity and ability to make choices will vary, of course, according to age and health for example, and society must support those who need help," said Katainen. Katainen described the fact that Finns are increasingly embracing individual solutions and freedom of choice as "a major conceptual change". Prime Minister Katainen attributed the "strong winds of change" that again shook Finland in the year just ending partly to European and global economic difficulties, and partly to changes in Finnish society and the Finnish economy.

Finland has all that it takes to succeed in a changing world, according to Katainen, as long as it utilises its strengths. Among what he sees as the cornerstones of development, he listed highly developed expertise, hard work and an entrepreneurial spirit. However, progress, he noted, does not come automatically. "Finns should be able to trust in the fact that education and work always pay off. These have been the keys to Finland's success so far, and we must be able to build on these in future. Hard-working, skilled people and entrepreneurs are the engines of innovation and development. And if we want more innovation in Finland, then Finland must be a country in which entrepreneurship is welcomed," stated Katainan.

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Bank of Finland warns debt level poised to double

The Bank of Finland is warning that the euro area’s best-rated economy risks sliding down a path that could see its debt burden rival Italy’s.  Finland has little room to deviate from a proposal to fill a 9 billion-euro ($12.3 billion) gap in Europe’s fastest-aging economy if it’s to avoid debt levels doubling in the next decade and a half, according to the central bank.

The northernmost euro member risks joining the bloc’s most indebted nations if the government fails to reform spending, according to calculations by the Helsinki-based Bank of Finland. Without the measures, debt could exceed 110 percent of gross domestic product by 2030, according to the bank. The ratio was 53.6 percent in 2012. Success with the plan would help restrain debt levels to about 70 percent by 2030, the bank said.

The central bank’s assessment shows that the government’s plan would have a “real impact,” Finance Minister Jutta Urpilainen said in an e-mailed response to questions via her aide. Structural reforms are needed if “the Finnish welfare state has a chance to survive,” she said.

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Finland must increase immigration

Finns still haven't woken up to looming workforce shortages and the pressing need to attract more immigrants, according to the Confederation of Finnish Industries (the EK). It's trying to push what it sees as a critical issue higher on the Finnish agenda. At present unemployment and general economic woes are stealing the limelight. Yet according to the Confederation of Finnish industries these problems pale in comparison with the detrimental effects if Finns continue to be blasé about the large number of workers who’ll be retiring in coming years.  The Ministry of Finance, which plans widespread structural reforms to retirement and the pension system, also says immigrants are needed, and fast.

Chief economist for the EK, Jussi Mustonen, thinks that Finns will more fully wake up to the problems of an aging population and en masse retirement in about a year, but that we should be already be paying more attention to the issue. “When we go a little further forward in time, the scarcity of labour will lower our standard of living and restrict opportunities for growth,” says Mustonen. “It demands a bit of sacrifice now, in terms of the standard of living that we’re currently accustomed to.” The economist says that in 2014 the majority of Finns are not ready to accept widespread structural changes in society, but in a year's time we'll already be on the brink of crisis. It's then that the changes will begin.

Ilkka Kajaste, deputy head of the Finance Ministry also says the impending retirement bomb is no laughing matter. It's long been recognised as something that will hit the country fast and hard – a double-edged sword of less workers and increased spending on health care. Kajaste believes, however, that it is possible to alleviate the situation through good management. “Ten years ago, Germany was the ailing man of Europe. Now Germany is an example to others and it was in rather large part due to structural reforms carried out in Germany,” he says. The central organisation of Finnish trade unions doesn't think immigration is the solution. It's concerned that following the EK's recommendations would lead to two labour markets. In turn, the EK argues that Finland’s own growth is not enough to generate a quick solution. Immigration is sorely needed, it says, because today’s newborns won’t be entering the workforce for another twenty years.

 


          
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