Why labor market reforms should be reformed

Why labor market reforms should be reformed

Should Finland's labor markets be transformed even under this government, labor unions have a strong argument to argue that it should not be reformed. It wants to continue along the path of avoiding reforms and complicating business operations, primarily to safeguard their authority, a path Finland has followed for decades.

Why there is a need for reforms?

First of all, Finland's public finances are heavily indebted. We urgently need stronger growth, cost-reducing measures, and reforms that do not exacerbate the crisis in public finances. The multi-generational approach to policymaking is insufficient and unsustainable, with constantly accumulating billions in debt year after year. Every reform that enhances employment and saves public expenses is worth its weight in gold.

Secondly, Finland is still experiencing high structural unemployment, despite progress in recent years. The unemployment rate in Finland is about seven percent, whereas in Denmark, for example, it is about three percent. Structural reforms can only reduce unemployment.

Thirdly, Finland has lost almost 10,000 employer entrepreneurs in the past several years, about every eighth employer company. Many small employers are closing or transitioning to sole proprietorship because the risk of hiring has gone too high. Small employer corporations are not in the interest of employees, and it is not in the interest of employees.

In addition, about 300,000 individuals between the ages of 25 and 59 are outside the labor market, neither employed nor unemployed. We need stronger incentives for labor force participation to guarantee that resources are available to those who genuinely cannot participate in the workforce for one reason or another. The dependency ratio is increasing as we become more dependent.

In a free society, individuals and businesses are equal before the law, regardless of their background or whether they are union members. In Finland, there is no equality in the labor markets. We have two levels of labor, organized and unorganized. This cannot be possible, as people should be treated equally under the law. In a free country, one may be allowed to join a union, but one should also have the right not to belong.

While the government program is a lot of fun, some aspects, such as local bargaining, fall short.

The program's success is crucial for restoring the health of Finland's public finances and boosting employment. Small and medium-sized businesses must also be protected from competition by enabling them to compete.

The unions attack the government and its labor market reforms, attacking Finland's businesses, as these reforms are essential for companies to thrive.

Workers benefit from functional labor markets and competitive companies. If your employer's performance is not up to par, your job security is at risk. Many are painfully aware of this now, as numerous businesses are grappling with difficulties, and bankruptcies are more frequent than in decades. To keep pushing for labor market reforms is a persuasive argument for continued efforts to reform the labor market.

The writer, Mikael Pentikäinen, is the CEO of the Federation of Finnish Enterprises.