Transcript Development of the Finnish Economy

Elinkeinoelämän keskusliitto
Finlands Näringsliv
Confederation of Finnish Industries
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1 EK/Eng/shs11.2004
EK represents
• The entire private sector and companies of all sizes
• 35 branch associations
• About 16,000 member companies, of which 96% are SMEs
• Over 70% of Finland’s GDP
• Over 95% of Finland’s exports
• About 950,000 employees in member companies
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Member Federations of EK
• Association of Finnish Furniture and Joinery
Industries
• Association of Logistic Enterprises in Finland
• Association of Social Services Employers and
Businesses
• Association of Support Service Industries, ASSI
• Chemical Industry Federation of Finland
• Coastal and Internal Waterway Employers’
Association
• Confederation of Finnish Construction Industries RT
• Employers’ Association for Transport and Special
Services
• Employers’ Association of Private Educational
Institutions
• Employers’ Association of the Special Branches
• Employers’ Federation of Road Transport
• Federation of Finnish Commerce
• Federation of Finnish Financial Services
• Federation of the Finnish Media Industry
• Finnish Association of Consulting Firms SKOL
• Finnish Energy Industries
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• Finnish Food and Drink Industries’ Federation
• Finnish Forest Industries Federation
• Finnish Hospitality Association
• Finnish Plastic Industries Federation
• Finnish Port Operators Association
• Finnish Shipowners’ Association
• Finnish Special Purpose Shipowners' Association
• General Industry Federation
• Kulutustavararyhmä
• Pharma Industry Finland
• Private Employment Agencies Association
• Private Healthservice Association
• Property Maintenance Association
• Technology Industries of Finland
• The Employers' Association TIKLI
• The Finnish Cosmetic, Toiletry and Detergent
Association
• The Rubber Manufacturers’ Association of Finland
• Ålands Arbetsgivareförening
EK activities
Business
Infrastructure
Business
Environment
• Logistics
• Energy
• Environment
• Business Law
• Competition
• Information
and Climate
• Sustainable
Development
Society
• Trade Policy
and
International
Relations
Communications
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Industrial
Relations
Economic Policy
•
•
•
•
Economy
Taxation
Employment
Finance and
Welfare
• Business
Cycles and
Trends
• Competitiveness
SME-Affairs
• Collective
•
•
•
•
Bargaining
Development
of Labour
Market
Labour and
Social law
Statistics and
Surveys
Corporate
Security
Regional Offices
Innovation
Environment
and Competences
• Business
•
•
•
•
Development
Education,
Training and
Qualification
Requirements
Labour and
Immigration
Research and
Technology
Business
Services and
Financing
EK Brussels
How has euro affected the Finnish
companies and economy?
27.4.2010
Simo Pinomaa
Senior Economist
Confederation of Finnish Industries EK
What happened to the price level
in 2002?
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Consumer prices
6
12-month change, %
5
4
United Kingdom
3
Germany
2
1
Sweden
0
Finland
-1
-2
2001
2002
2003
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Source:
OECD
11
19.4.2010/hiin3/jka/EKI Talousgraafit
2004
2005
2006
2007
2008
2009
2010
Consumer Price Index,
some commodity groups
132
128
Index, 2000=100
124
120
116
Food and
Recreation and culturenon-alcoholic bev erages
112
108
104
100
Housing, heat and lightTransport
96
92
2000
2001
2002
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Tekijä
Source:
Statistics Finland
12
14.4.2010/hiin9/jka/EKI Talousgraafit
2003
2004
2005
2006
2007
2008
2009
2010
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Why did consumers feel that the euro raised prices even
though statistics show otherwise?
• Consumers had expected prices to rise as a result of the euro
already before the transition had even taken place
• Consumers tend to remember price increases better than
decreases
• The prices of many cheap (cup of coffee) items tended to rise
affecting price perception although the real affect on prise level
was small
• The food prices in January 2002 increased 7.0 percent
• Rounded conversion rate in nearly all euro countries happened
to be higher than the precise rate –1.8 percent on average.
– In Finland the rounded conversion rate (6) is 0.9 percent higher than the
actual rate (5.94573).
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Impact on markets, sales and competition
•
•
•
•
•
•
Psychological prices (for example, 99 euros)
A dress costs Fim 299 (about 52 euro)
=> 49 euro (6 % reduction)
A candy bar costs Fim 10 (about 1,7 euro)
=> 1 euro (41 % reduction)
=> The company may have to modify its product design and
packing
=>
• Implications to production and procurement
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How has euro affected
Finnish economy?
Gross Domestic Product
170
Vol.index 1995=100, sa
160
150
140
Finland
130
USA
120
EU
110
Japan
100
90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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Source:
Eurostat
17
23.3.2010/kokn1/jka/EKI Talousgraafit
6. Domestic product
220
Indeksi, 1995=100
210
Finland, Gross domestic product at current market prices, Mrd EURO-FIM
Sweden, Gross domestic product at current market prices, Mrd SEK
200
190
180
170
160
150
140
130
120
110
100
90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
19.4.2010
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Industrial Production
180
Vol.index 1990=100, sa
170
160
Finland
150
Sweden
140
130
Germany
120
110
100
United Kingdom
90
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Source:
Eurostat
19
13.4.2010/teol5/jka/EKI Talousgraafit
Unemployment Rate*
20
*Seasonally adjusted
18
Finland
16
14
12
10
EU
8
USA
6
4
2
Japan
0
1990
1992
1994
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Source:
OECD
20
19.4.2010/tyot4/jka/EKI Talousgraafit
1996
1998
2000
2002
2004
2006
2008
2010
Unemployment Rate*
20
*Seasonally adjusted
18
Finland
16
14
12
Denmark
10
8
Sweden
(method break in 4/2005)
Norway
6
4
Iceland
2
0
1990
1992
1994
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Source:
OECD
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19.4.2010/tyot5/jka/EKI Talousgraafit
1996
1998
2000
2002
2004
2006
2008
2010
Manufacturing Investments in Finland 1975–2009
Fixed investments and R&D expenditure
EUR billion
9
8
7
6
Research and
development
5
4
3
2
Fixed investment
1
0
1975
1980
1985
1990
Source: Statistics Finland, years 2008–2009 EK Investment Survey
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r:/sb/sbwin/kalvot/investointikalvot/2 ENG
1995
2000
2005
08**
09**
R&D Expenditure in Some Countries
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What happened to interest rates?
3-Month Market Rates, %
18
16
14
12
Finland
10
8
USA
6
4
Germany
2
Japan
0
1990
1992
1994
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Source:
OECD
25
9.3.2010/kork2/jka/EKI Talousgraafit
1996
1998
2000
2002
2004
2006
2008
2010
Long Term Interest Rates, %
14
12
10
Finland, 10 y r.
8
USA, >10 y r.
6
Germany , 9-10 y r.
4
Japan, 10 y r.
2
0
1990
1992
1994
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1996
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Source:
OECD, Bank of Finland
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9.3.2010/kork3/jka/EKI Talousgraafit
1998
2000
2002
2004
2006
2008
2010
Is the stability and growth pact
difficult for small countries?
Government Fiscal Position in 2010
Per cent of GDP
Bulgaria
Estonia
Sweden
Hungary
Luxembourg
Malta
Finland
Denmark
Germ any
Italy
Czech Republic
Austria
Cy prus
Belgium
Slovakia
Netherlands
Romania
Slovenia
EU27
Poland
Portugal
France
Lithuania
Spain
Latvia
Greece
United Kingdom
Ireland
-16
-14
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-12
-10
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Source:
European Commission Forecast (10/2009)
28
3.12.2009/ennu6/jka/EKI Talousgraafit
-8
-6
-4
-2
0
General Government Consolidated
Gross Debt in 2010
Per cent of GDP
Greece
Italy
Belgium
Portugal
Ireland
France
United Kingdom
Hungary
EU27
Germ any
Austria
Malta
Spain
Netherlands
Cy prus
Poland
Latvia
Finland
Sweden
Slovenia
Lithuania
Czech Republic
Slovakia
Denmark
Romania
Luxembourg
Bulgaria
Estonia
0
20
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40
60
80
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Source:
European Commission Forecast (10/2009)
29
3.12.2009/ennu7/jka/EKI Talousgraafit
100
120
140
160
180
How labour markets have reacted?
- No
more devaluations
Finnish industrial relations model:
typical features
• Traditionally a high rate of organization – both employers and
employees (70 % of employees are members in trade unions)
• 90 % of employees are covered by collective agreements
• Branch-level collective agreements are generally binding
• Local bargaining today:
– Collective agreement is already today allowing local bargaining in many
cases on wage increases and working time arrangements
• Long traditions: employer and employee confederations (=social
partners) established over 100 years ago
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The need for more flexible wage system
• It should be possible to adjust wages and other labour costs to
cyclical variations. This would require that wage increases can
be determined more on the enterprise or division level.
• Variation of basic wages and salaries are often difficult to apply
because binding nature of the collective agreements.
• Therefore profit based bonuses have become fairly common in
Finland.
• Nowadays about 1/3 of manufacturing blue collar workers and
2/3 of white collar workers receive result based bonuses. In
terms of magnitude, they average 5 per cent of annual earnings.
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Share of employees received result and profit based
bonuses in industry 1994-2008
80
%
Blue-collar workers
70
White-collar workers
62,6
57,0
60
51,8
49,2
50
28,9
20
15,4
17,7
37,6
28,9
58,6
38,4
36,7
35,0
34,0
33,7
29,1
67,2
50,4
36,5
32,9
30
66,2
47,5
37,6
40
58,9
63,9
34,1
31,5
29,1
19,6
16,8
10
0
1994
1995
1996
1997
1998
1999
2000
Source: EK:s wage statistics. Result and profit based bonuses refer to extra bonuses
based on financial performance or other business achievements in companies.
Bonuses are determined outside collective agreements.
19.4.2010
Saukkonen
2001
2002
2003
2004
2005
2006
2007
2008
Future of collective bargaining in Finland
•
•
•
•
•
In the future, collective bargaining should:
– strengthen competitiveness,
– boost productivity,
– ensure better employment and balanced increase of purchasing power
EK will no longer negotiate comprehensive income policy agreements;
employers and employees will negotiate on sectoral level, shifting more and
more emphasis on workplace decision-making
Change of role, but EK’s role in
– drafting labour and social legislation in tripartite co-operation
– managing and revising social security schemes in tripartite co-operation
– bipartite negotiations with the trade unions
will remain the same
EK encourages wage determination at company level to reflect better
productivity and individual performance
Challenges:
– how to control the wage race better?
– how to improve internal and external coordination?
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Thank you!