“We don’t see any fiscal problems or
budgetary problems. But there are long-term structural problems. The
question is what can be done to fix them,” says Henric Braconier, one
of the authors of the OECD’s survey of Finland.
Finland has taken longer than others to get out of the financial
crisis and Nokia’s transformation has grave consequences for the social
economy. Unemployment may be down, but the OECD predicts the trend
could turn.
A lot to do
Braconier finds it worrying that Finland’s labour authorities take
so much longer than other countries to target activation measures at
the unemployed. This takes twice as long in Finland as in Denmark.
“More can be done here.”
OECD’s experts are waiting for the government to execute the planned
restructuring of local authorities which will mean the number of
municipalities will be reduced by one third or more from today’s 336.
While the government says 70 to 100 municipalities will remain, the
OECD suggests 30 to 50 municipalities would suffice.
The municipal restructuring should make the health sector more
efficient, which in turn should reduce government spending. The level
of care should be improved across the board to reduce regional health
inequalities between socio-economic groups and regions, which are high
by OECD standards. Finland’s health sector is not up to speed with the
rest of the rich world, neither when it comes to productivity nor the
ability to maintain a healthy population.
Work for longer
Braconier hopes the government will be able to deliver what it has
promised. He also points out that Finland has greater problems with an
ageing population than the rest of Europe, and therefore there is a
need to increase the retirement age to 65 soon. The current retirement
age is flexible, between 63 and 68.
In conclusion the OECD encourages the Finnish government to cut
public spending further and to increase taxes in the face of a too
rapidly growing public deficit. This is a serious threat in the long
term in view of the country’s demographic ageing.
The OECD’s views will not come as a surprise to the Ministry of Finance
in Helsinki since these suggestions have already been presented to the
innermost circle and the problem are all well-known and well-discussed.
Yet there is still a considerable way to go before all this results in
concrete decisions.
