Vanhanen stresses close study of OECD recommendations

Minister of Finance Matti Vanhanen on Thursday said that the recommendations set out in the OECD’s Economic Survey of Finland should be closely studied, said an official press release.

“There is a great need for structural reform in our economy. And in this coronavirus year, Finland has demonstrated that we are able to act objectively, briskly, and with a focus on solutions. This same national spirit of pushing ahead must continue in the years to come,” said Vanhanen after the OECD published the recommendation on Thursday.

The OECD expects Finland’s economy to grow by just below two per cent in the next few years.

Finland should not be content with this, however, said Vanhanen. But achieving a higher level of growth will require flexibility in working life and higher productivity.

“Since the financial crisis, growth in the Finnish economy has been subdued. A sharp rise was not seen until 2015. A similar recovery period of almost ten years is something we can’t afford. We need to look at the period beyond the coronavirus crisis. In the spring, we must focus firmly on preparing measures to raise the employment rate and boost productivity and growth in the economy. Building up debt allows us only to buy time for bringing in the reforms,” said the finance minister.

Vanhanen pointed out that in the OECD’s view, Finland’s growth in the next few years will be low due to post-coronavirus uncertainty having an impact on investment decisions.

He consequently believes that working life reforms and funding solutions must be examined from the investment perspective in particular.

According to Vanhanen, Finland has, fortunately, already started to tackle some aspects of the OECD’s recommendations. For example, steps to strengthen the labour market position of people approaching retirement age are currently being considered by the government.

“Over the years, it has become common in Finnish workplaces to view employees nearing the age of 60 as the first who would be let go. Many think of this as making way for younger people. But we shouldn’t resort to this kind of zero-sum thinking. The employment rate should be raised across all age groups. We need to expand the size of the cake,” he added

The OECD, said Vanhanen, is right to draw attention to the need to raise productivity and cost-effectiveness in public services, for instance through health and social services reform and digital transformation.