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Minister Stubb: Support from OECD for Government’s position – concerns about Finland’s employment rate appropriate

Ministry of Finance
28.1.2016 11.06
Press release

Minister of Finance Alexander Stubb considers the OECD's assessment of Finland’s economy to be apposite and hopes that the recommendations will be taken seriously. Like the OECD, Stubb is concerned about Finland’s comparatively low employment rate which, according to the OECD’s analysis, stems from an inflexible labour market, incentive traps and labour skills. The Minister commented on the OECD’s Economic Survey of Finland at a launch event held in Helsinki today.

– The OECD’s main message for Finland is that we need to get more Finns into work so that we can hold on to our welfare model. According to the OECD, this requires a reduction of taxes on labour, the removal of incentive traps, strengthening of skills and increased labour market flexibility. I agree with this analysis. That is why the Government has prioritised work in its decision-making, says Stubb.

According to the OECD, periods of unemployment in Finland are prolonged because benefits and activation measures do not encourage a rapid return to the labour market. Challenges for Finland include, for example, labour market inflexibility, the impact of parental leave on labour force participation among women, high taxation on labour, too strict eligibility requirements, and adaptability of workers’ skills to structural change.

– The OECD report confirms our view on the depth of the challenges facing Finland and on the solutions necessary. This is a structural problem that can only be solved by restructuring, says Stubb.

– The Government’s position is clear: more work in Finland. We want to make work and the offering of work more rewarding. Lowering unit labour costs and promoting the agreement of working conditions and pay at the workplace will help achieve this. Hiring of workers should be made easier by, for example, lengthening the probationary period for employees, facilitating the agreement of fixed-term employment contracts and easing the obligation to re-employ workers in the event of redundancies. In addition, we will make accepting work more attractive, for example by reducing taxation on labour and reducing the period earnings-related unemployment benefit. Everything is focused on getting more Finns into work, says Stubb.

Inquiries:

Suvi Aherto, Special Adviser,  tel. +358 50 349 6121

Alexander Stubb Economic Policy