Helsinki (11.08.2000 - Juhani Artto) At the end of June there were 326,000 unemployed job-seekers registered at employment offices in Finland. Despite rapid economic growth since 1994 the unemployment rate still exceeds ten per cent.
Recently the Ministry of Labour published a study estimating that society loses FIM 36 billion (EUR 1 = FIM 5.95) annually due to unemployment. This figure comprises public financial support to the unemployed and lost tax revenues.
In Spring 1995 the newly appointed government of Prime Minister Paavo Lipponen set itself the target of halving the unemployment rate. When the Lipponen government began its second term of office in Spring 1999 it still had a long way to go before reaching this objective. The number of unemployed workers must still be reduced by a further 100,000.
Is the goal realistic or has high unemployment come to stay?
The first condition for further clear reductions in unemployment is continuation of the economic boom. In this respect the prospects are good, at least until the end of 2001. The competitiveness of the Finnish economy is currently stronger than it has been at almost any other time. However, even this will not guarantee further reductions in the unemployment rate if global economic growth slows down because of the increased international dependency of the Finnish economy. In the 1990s the percentage of foreign trade in the country's GDP leaped to nearly 40 per cent. This means that a great deal depends on external factors which are beyond the control of Finnish decision makers.
What most worries experts and politicians on the domestic scene are structural weaknesses in job development. In a recent article on regional aspects of Finnish unemployment researcher Petri Bockerman notes that over the last few decades the structural weaknesses in the job creation base have become more serious. Export-led growth creates new jobs mainly in Southern Finland and around the City of Oulu in Northern Finland where the high-technology sector is concentrated.
Polarisation of the labour force has become more pronounced. Some industries, especially developers and manufacturers of high-technology equipment such as the Nokia Group, already complain of difficulties in recruiting qualified staff. Certain low pay service sector industries such as cleaning and social welfare care services have encountered local labour supply shortages. At the same time the unemployment rate in large areas of Northern and Eastern Finland remains stubbornly close to 20 per cent. "Internal migration does not effectively even out the employment gaps in Finland", Bockerman notes.
Much of this phenomenon arises from the fact that the qualifications of the unemployed are poorly matched to the demands of growing industrial sectors. In a recent interview for the magazine Socius Researcher Asko Suikkanen calls attention to an ILO recommendation that ten per cent of the labour force should participate in long-term training courses annually. Finland falls far below this standard. Instead of a quarter of a million participants, long-term retraining and supplementary training courses are attended by only 10,000 - 25,000 workers annually.
Suikkanen points out that the job profile of a country changes so rapidly nowadays that it is no longer enough to train employees merely to meet the demands of their present work and enterprises. Instead training must provide the skills needed for placement in other jobs as well. He emphasises that the approaching retirement of the baby boom generation will not suffice as a response to the threat of labour force marginalisation.
"Repeated returns both to training and the labour market should be made genuinely possible", Suikkanen insists. He says that the problem does not only concern young people facing difficulties in entering the labour market or older workers with inadequate qualifications, but also employed middle-aged workers.
The hardest problem to solve, however, is that of the long-term unemployed. At the end of June there were 90,000 people who had not had a job in more than a year. Even with the gradually sinking unemployment rate their number has remained persistently high. Although the government has concentrated its active employment policy measures on the most serious unemployment regions of Northern and Eastern Finland, this has eased the problem only marginally.
One further major topic remains: the cost of employing a new recruit. Several politicians and other participants in the discussion have long argued that the cost of creating a new job is too high. By comparison with major competitor countries in Western Europe this claim is not based on hard facts. It begins to look more plausible when comparing the Finnish situation with that of the USA, where the tax rate and mandatory employer social security contributions are much lower.
It is in any case clear that the lower the cost of a new recruit becomes for the employer, the more new jobs will be created – especially in the service sector. This is not a Finland-specific issue, but a question which is being vigorously debated throughout the welfare States of Western Europe. The trade union movement in Finland has reacted cautiously to this argument, as it comes close to jeopardising the very basis of the welfare State.
In the midst of difficult unemployment problems there is one trend that justifies slight optimism. This is the growth in the number of jobs. From January 1995 to January 2000 this number increased by 248,000. Even with a possible weakening of this trend, unemployment will gradually fall to the level adopted as the official target five years ago. The path to this objective is strewn with obstacles, however, of which the trade unions are only too well aware. The major challenge is to play a constructive role in safeguarding continued rapid economic growth. How this relates to the trade union movement's efforts to achieve justice for low income groups is another question.