Why labor market reforms should not be changed

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Why labor market reforms should not be changed

The labor unions maintain a strong argument that Finland's labor markets should not be transformed under this government. They want to continue down the path of avoiding reforms and complicated business operations, primarily to protect their power, a path Finland has followed for decades.

What is the need for reforms?

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

Secondly, Finland is still experiencing high structural unemployment, even despite developments in the past few years. Finland's structural unemployment rate is around seven percent, while Denmark's for example is about three percent. Structural reforms can only reduce 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 because the risk of hiring has gone too high. Small employer companies are not in the interest of employees, they say.

As of this time, there are approximately 300,000 individuals who are outside of the labor market, either unemployed or unemployed, both of which are within the age range of 25 to 59. We need more incentives for labor force participation to ensure resources are available for those who truly cannot participate in the workforce, for one reason or another. The dependency ratio is increasing, and this is essential as our dependence 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, inequality 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 country, a union may exist, but it should also have the right not to belong.

While the government's program has several structural changes, some aspects, such as local bargaining, fall short.

Finland's public finances and employment are impacted by the program, which is essential for the program to restore the health of Finland's public finances. It's crucial for small and medium-sized enterprises as it equips them to compete.

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

Laborers are also in the interest of functional labor markets and competitive companies. If a company fails to create employment opportunities, job security is in jeopardy. Many are painfully aware of this right now, as many businesses encounter difficulties, and bankruptcies are more frequent than in decades. The objective of labor market reforms is a compelling reason for pursuing such reforms.

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