Economic output in Finland is substantially lower than in the rest of the Nordics and the European Union, according to the Organisation for Economic Co-operation and Development (OECD).
Although the level of income and well-being remains high in the country, the output has decreased as a result of the global economic downturn, the decline of the electronics and paper industries, and the recession in Russia, the OECD states in its latest economic survey of Finland.
The OECD identifies the labour status of young women as one of the underlying problems of the labour markets of Finland, highlighting that labour force participation among mothers with children below six years of age is the lowest in the Nordics – “almost 20 percentage points below that of Sweden and Denmark”.
“The home-care allowance and the associated supplements reduce work incentives, especially for women with low potential earnings,” it states.
Mari Kiviniemi (Centre), a deputy secretary-general at the OECD, called attention to the issue at the launch event of the country report in Helsinki on Thursday. “The employment rate of mothers with children below three years of age is 51 per cent in Finland, one of the lowest among OECD countries,” she said according to Helsingin Sanomat.
OECD's forecast for Finland
- GDP to grow by 1.1 per cent in 2016 and by 1.6 per cent in 2017
- Exports to increase by 3.3 per cent in 2016 and by 4.0 per cent in 2017
- Unemployment rate to creep up to 9.7 per cent in 2016 and to 9.8 per cent in 2017
- Gross government debt, as a percentage of GDP, to rise to 62.7 per cent in 2016 and to 65.0 per cent in 2017
Finland, the OECD recommends, should “reduce the combined duration of parental leave and the home-care allowance to encourage female labour market participation”.
Alexander Stubb, the Minister of Finance, affirmed in his address at the launch event that he shares the OECD's concerns about “the relatively low rate of employment in Finland that – also according to the OECD's analysis – is a consequence of rigid labour markets, inactivity traps and labour skills”.
“We must integrate more Finns into the labour force in order to be able to maintain our welfare system,” Stubb said, according to a bulletin published by the Ministry of Finance.
Stubb also estimated that the country report corroborates the measures laid out by the Finnish Government.
The objective of the measures is clear, he said: “To create more jobs in Finland. We want to ensure working and employing are more rewarding than today. That can be achieved by, for example, lowering unit labour costs and encouraging bargaining on wages and other terms and conditions of employment at workplaces.”
The Government, he added, must also tear down obstacles to hiring by lengthening probationary employment periods, facilitating part-time employment and adjusting the re-employment obligation associated with personnel reductions. “In addition, we must increase the appeal of accepting job offers by lowering labour taxation and reducing the duration of earnings-related unemployment benefits,” Stubb stated.
The OECD estimates similarly that unemployment spells in Finland are prolonged because the benefits and activation measures do not encourage a quick return to the labour force. It proposes that Finland raise indirect taxation, lower labour taxation and slash unemployment benefits in order to balance the public economy and spur economic growth.
Aleksi Teivainen – HT
Photo: Mikko Stig – Lehtikuva
Source: Uusi Suomi