Helsinki Times

There, but for the grace of God

IT is easy to point fingers at our troubled European neighbours. They got themselves into a mess, and we were forced to bail them out. We were the good businessmen and good politicians who kept Finland in great shape. But, in truth, it is not that simple.

FOR some people, Greece is a morality tale. They lied about their financial situation, refused to reform their economy, fell into trouble, and now we have to bail them out. They had seen the signs of trouble and pretended not to see anything. This is true, to an extent. But instead of shaking our disapproving finger at Greece, we should be thanking them. They showed Finland what could happen. Right now, we are seeing signs of trouble in Finland. This is our opportunity to do something before it is too late. Because there, but for the grace of God, goes Finland.

TO begin, Finland is no longer a trade powerhouse. We need to get this out of our heads and face reality. In 2000, we had almost €13 billion in trade surplus. By 2005, our surplus was €5 billion. In 2010 it was €1 billion, and last year we had a €3.6 billion trade deficit.

IT is not likely to get better any time soon: our competitiveness indicator has plummeted since 2008. Our hourly labour costs have grown much faster than in the eurozone since 2003. When it comes to trade, we are no longer in Germany’s league and we have to stop pretending that we are. This is serious, and we need to take serious actions.

BUT it is not all bad news. The Finnish economy is hanging in there, by some measures. Our unemployment rate is better than the European average. Our government seems to be proactive in regards to our public finances, and Bank of Finland predictions say that our deficit should begin to moderate. If we don’t fall back into recession, that is.

THERE are also some signs that the government is looking at more reforms. They recently announced that they will consider selling part of their stake in Finnair. This is an excellent idea. It would free up public resources and could force the airline to be more competitive. They also need to sell off most of their other stakes in businesses the government has no valid reason to own.

A more pressing issue is taking steps to make our economy more competitive. The labour market must be opened to make it easier for companies to hire and fire. This is the single-most important reform we can make, I believe.

WE also need to reform our pension system. Once again, there are rumours of talks to increase our retirement age. This needs to be done, but with the Social Democrats in the ruling coalition I have my doubts. The best system, I think, would be one based upon life expectancy.

RIGHT now we can see storm clouds on the horizon. We have demographic and competitiveness problems. So did Greece. We know what happened to them, so now is our opportunity to help ourselves, before we are also forced to ask for bailouts in the years to come.

David J. Cord
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