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Finland should view the current economic upswing as an opportunity to implement further structural reforms, say Mikko Spolander and Sami Yläoutinen of the Ministry of Finance.
Finland should view the current economic upswing as an opportunity to implement further structural reforms, say Mikko Spolander and Sami Yläoutinen of the Ministry of Finance.

 

Finland’s expected economic growth rate will not suffice to maintain the statutory benefits and services of citizens in the long term, remind two senior officials from the Ministry of Finance, Mikko Spolander and Sami Yläoutinen.

“The imbalance in the public economy is a structural problem that will not be resolved by a cyclical upswing,” they wrote in a guest contribution to Helsingin Sanomat on Saturday.

“That is why we need new solutions that increase the revenues and decrease the costs of the public economy,” they stated, calling especially for measures to raise the employment rate and promote the productivity of the service sector.

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Spolander and Yläoutinen emphasised that the economic resources available must be utilised on a wider scale, because it will only be possible to fund the benefits and services of the welfare state if productivity and employment increase.

“The share of working-age people funding the welfare state is notably higher elsewhere in the Nordics than in Finland,” they highlighted.

“This inter-generational contract is at risk of crumbling unless the employment rate increases here.”

Housing and unemployment benefits, for example, continue to create inactivity traps that discourage job-seekers from applying for low-skill jobs, according to Spolander and Yläoutinen. They also argued that the limitations imposed on the use of foreign labour are difficult to justify and that certain sectors are protected from competition on grounds that are unsustainable from the viewpoint of consumers and taxpayers.

“We must not loosen our grip now, no matter how much we want to believe that the cyclical upswing will take care of the rest. It won’t,” they wrote.

The International Monetary Fund (IMF) has similarly urged the country to continue implementing structural reforms – especially to increase the flexibility of the labour markets.

Aleksi Teivainen – HT
Photo: Antti Aimo-Koivisto – Lehtikuva
Source: Uusi Suomi