Why Finland needs reforms

Why Finland needs reforms

The labor unions present a strong argument against why Finland's labor markets should not be reformed even under this government. They want to continue down the road of avoiding reforms and complicating business operations, primarily to protect their power, which Finland has followed for decades.

What is the need for reforms?

First, Finland's public finances are heavily indebted. We need more growth, cost-saving measures, and reforms that don't exacerbate the crisis in public finances. Unsustainable policymaking is unsustainable due to the constantly accumulating billions in debt year after year in a multi-generational approach to policymaking. Every reform that strengthens employment and reduces public expenses is worth its weight in gold.

Secondly, Finland is still experiencing high structural unemployment, despite developments in recent times. In Finland, the unemployment rate is around seven percent, while in Denmark, for example, it is about three percent. Structural reforms can only reduce the number of jobless people, leading to a reduction in unemployment.

In the past couple of years, Finland has lost around 10,000 employer entrepreneurs, about every eighth employer company. Small employers are closing down or transitioning to sole proprietorship due to the risk of hiring too much. It is not in the interests of employees if small employer companies disappear.

In addition, there are approximately 300,000 individuals, ages 25 and 59, who are either not employed or unemployed, which is a significant percentage of the workforce. We need increased incentives for labor force participation to guarantee that resources are available for those who can't participate in the workforce, for one reason or another. This is crucial as our dependency ratio worsens.

In a free society, individuals and businesses are equal before the law, regardless of their background or whether they are union members. In Finland's labor markets, equality is not achieved. We have two tiers, organized and unorganized labor. This cannot be done, as people should be treated equally under the law. In a free nation, one can be a member of a union, but one must also have the right not to belong.

While there is a lot to like about the government program, some aspects, such as local bargaining, fall short.

The program's success is crucial for restoring Finland's public finances and boosting employment. It is essential for small and medium-sized businesses as it provides them with a chance to compete.

When labor unions attack the government and its labor market reforms, they are also attacking Finnish businesses, as these reforms are essential for companies to thrive.

The best interests of workers are functional labor markets and competitive companies. The job security of an employer is at risk if they don't survive, even if their employer survives. Many are painfully aware of this right now, as numerous businesses face difficulties and bankruptcies are more frequent than in decades. This is a compelling reason to keep pushing for labor market reforms.

The authors, Mikael Pentikäinen, are the CEO of the Federation of Finnish Enterprises.