Economic Council of Finland

The report provides a summary of socially responsible practices in case of redundancies and highlights a number ofcircumstances related to legislation and current policies that may hamper the more extensive adoption of therecommended measures in Finland.

Briefly, our assessment of the background to the crisis can be summed up as follows: the success ofthe Nokia-led ICT cluster maintained favourable, even deceptively favourable, economic growth inFinland for a long time. The budget surpluses were large and unemployment was on a downwardpath. As is now apparent, these conditions created a setting in which wages rose more – and publicspending grew faster – than was desirable in terms of sustainable development.With the collapse of the electronics industry, exports and output have declined sharply at the sametime as the contraction of the paper industry has continued and metals processing has suffered fromlow market prices. All this has been reflected in a deterioration of profitability in manufacturing.In the good years, Finland accumulated a high level of general-purpose expertise and internationalexperience, which the country should be able to utilise in future. Finland has the prerequisites toreturn to the pre-crisis growth path – if the crisis provokes an adequate response. There is no singleand fast way, however, to recover from the crisis and return to rapid growth. In economic policy, agoal-directed, long-term and patient approach is required.The state can make a real contribution to economic growth by improving general operatingconditions for business, promoting labour mobility and supporting research and innovation. We alsounderline the significance of high-growth enterprises in economic renewal and the public sector’srole in encouraging such enterprises.Anticipated public spending cannot be sustainably funded at the current tax rates. The growthobjective means that there is no scope for increasing taxation. The target level (services, incometransfers) of the welfare state must therefore be set in accordance with financial sustainability.Restating the promise of the welfare state would clarify both public and private decision-making. Itis important to try and improve the productivity of public services and to raise the labourparticipation rate.This time, the main reasons for Finland’s economic plight lie largely outside its borders; correctivemeasures, however, must be found at home. Raising productivity and accelerating economic growthis an imperative of Finland’s economic policy. Based on good preparation, economic policy mustmake painful choices, set targets in order of importance and act in accordance with priorities.

The impact of the climate on the Arctic plays a crucial role for Finland’s, as well as other Nordic countries’ current and future climatic conditions. Far-reaching and multi-faceted changes are taking place in the Arctic, which have profound consequences for the region’s economic and political significance in international relations. The review analyses the effects of climate change and likely climate abatement policies on the accessibility and value of natural resources in Northern Europe in the Arctic Sea area and on the logistical position of Northern Europe with a special emphasis on Finland.

This book is intended to serve as a resource for those who want to understand the recent reforms of local government organisation, tasks and funding in Finland, Denmark, Norway and Sweden. A special focus of the book is on Finnish local government and how the present Finnish situation compares with developments in other countries. However, this book also offers a more general view of localgovernment reforms and in the way that fiscal federalism has been affected by the global fiscal crisis.

The Growth Initiative working group, a working group seeking to strengthen long-term economicgrowth, proposes measures to boost productivity growth in Finland in the 2010s. In the long term,beyond the current economic cycle, growth in productivity will be the only driver of the nation'saverage income growth or GDP per capita. In the short term, improving the employment rate is alsoimportant.The Growth Initiative working group's final report begins by providing a brief introduction to issuesvital to productivity growth. It then presents the working group's policy recommendations, dividedunder the following ten headings: 1) Science and innovation policy, 2) Education policy, 3) Life phasepolicy, 4) Competition policy, 5) Enterprise policy, 6) Public sector operating policy, 7) Public sectorinformation system policy, 8) Public sector procurement policy and the general availability of publiclycollected information, 9) Broadband network and intelligent transport policy and 10) Transportinfrastructure policy.