Workers have a strong argument that 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, a path Finland has followed for decades.
Why is there a pressing need for reforms?
In addition, Finland's public finances are heavily indebted. We need more robust growth, cost-reducing measures, and reforms that don't exacerbate the crisis in public finances. In a multi-generational approach to policymaking, constantly accumulating billions in debt year after year is unsustainable. Every reform that strengthens employment and saves public expenses is worth its weight in gold.
Secondly, Finland is still experiencing high unemployment, even though it has been improving in recent times. Finland's structural unemployment rate is about seven percent, while in Denmark, for example, it is about three percent. structural reforms can reduce structural unemployment.
Thirdly, Finland has lost around 10,000 employer entrepreneurs over the past few years, about every eighth employer company. Many small employers are closing down or transitioning to sole proprietorship because the risk of hiring has become too great. It is not in the interest of employees if small employer companies disappear.
Of those, about 300,000 people between the ages of 25 and 59 are not employed or unemployed, and the total employment rate is between 25 and 59 percent. 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. This is vital 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, it is not possible to achieve equality in the labor markets. We have two tiers: organized and unorganized labor. This cannot happen, as people should be treated equally under the law. In a free nation, one may belong to a union, but one must also have the right not to belong.
While there are numerous structural reforms, some aspects, such as local bargaining, fall short of the government program.
The program's goal is to restore the health of Finland's public finances and boost employment. It is crucial for small and medium-sized enterprises as it enables them to compete.
When unions attack the government and its labor market reforms, they are also attacking Finnish businesses, as these reforms are crucial for companies to thrive.
Workers' interests are also at the forefront of functional labor markets and competitive companies. If a company fails to perform, job security is in jeopardy. Many are painfully aware of this right now, as numerous businesses encounter difficulties, and bankruptcies are more frequent than in decades. A compelling argument for labor market reforms can be found in the evidence of many years of pursuing reforms.
The author, Mikael Pentikäinen, is the CEO of the Federation of Finnish Enterprises.