Toppsemi: Societal reforms are needed for achieving growth in Finland
“There has been zero growth in Finland for 12 years – we are at about the same level as at the end of 2008 when everyone was talking about an annual growth of three percent. The EU average is currently a growth of 1.8% per year, and also this is far from the world record. This means that it is not just small things that have gone wrong.”
According to Wahlroos, the problem does not lie in how companies are managed or in the lack of innovations. He also praised the entrepreneurial spirit of the young people. The problem lies in political decisions made over a longer period of time.
“Well-run companies do not invest in Finland, and this applies in particular to industry, but also to the service sector. The high taxation is not attractive for companies. Reforms in social policy would also be needed to remove the sources of incentives.”
There are several reasons behind the decisions that do not support growth.
“Politicians are wary of making difficult decisions because they fear not being re-elected. We have gone so far in the distribution of the income that voters are afraid that reforms in public spending will hit them. According to EU’s surveys on the public opinion in different countries, the atmosphere in Finland has turned out to be more to the left compared for example to Sweden.”
Some reasons behind the politics that does not support growth are, again, historical.
“When we joined the euro area, it was agreed that structural reforms would be made. However, Nokia performed so well from 1995 to 2005 that no one bothered to do them,” Wahlroos mentions as one example.
What comes after the stimulus packages?
The program also included a panel discussion moderated by media entrepreneur Jens Berg with Nina Kopola (Director General & CEO, Business Finland), Lars Peter Lindfors (Senior Vice President, Neste) and Antti Mäkinen (CEO, Solidium).
Stimulus packages have been a way of publicly supporting demand during the pandemic. This has meant that Business Finland, which offers funding for research, product development and business development for companies, has granted support for an exceptionally large number of projects. In the future, according to Kopola, Finland can, however, not continue with a policy which requires to take more loan.
“We need a tax policy that supports investment and growth. Companies must be able to become rich on the investments they make,” Kopola stated, in line with Wahlroos.
Kopola also emphasised the need for more investment in research and innovation.
All three panelists felt that more cooperation was needed between business and universities – according to Mäkinen, also so Finland could react more quickly to changes in the world.
According to the panelists, now is the time to bravely bring the climate-smart products developed in Finland to the market around the world – even though this does not solve all the economic problems in Finland.
“There is a huge craving for climate-smart solutions right now. It is worth asking how we can get all the innovative products developed by Finnish companies in this field to customers around the world without them moving abroad with their ideas, stated Lindfors, who has extensive experience of leading development projects towards renewable solutions at Neste.
The seminar was organised by the Helsinki Chamber of Commerce, the Economic Society of Finland and Hanken School of Economics.
