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Economy finland Investing

Finland Economy: Where is it going over the next two years?

Both Finland’s Central Bank and Finance Ministry have recently released updated forecasts for the next two years. The news isn’t great. In case you don’t understand subtlety, the Central Bank’s headlined their press release: Finland’s economic boom is over. A quote:

Finland’s economic boom is over and growth is temporarily losing momentum amid weaker global economic activity.

Will Finland’s economy crash? No. Even if finding a job in Finland will be more difficult than usual, these regular periods of slower growth and greater pressure on government finances tend to foster innovation and creativity. Instead of running to the hills maybe it’s time to look for an affordable investment opportunity? Of course, that’s if you can keep the cash coming in to pay your rent and buy food…

We’ll get into the details below. First, a little history on Finland’s economy.

Poor to rich

For most of the 1900s, Finland was a relatively poor country. Finland declared its independence in 1917. The following year, 1918, Finland had its own civil war. After that, Finland was a pretty stable, yet poor country until the Soviet Union attacked Finland in 1939. Finland fought two wars against the Soviet Union, the Winter War and the Continuation War. In 1945, after Finland had lost some of its Eastern parts to Soviet Union, the Continuation War ended.

Part of the peace treaty deal between Finland and the Soviet Union was that Finland had to pay war reparations to the Soviet Union. Finland managed to pay its reparations to Soviet Union on time which helped the development of various industries in Finland. Since the WW2, the economy of Finland has been growing quite steadily. According to the following statistic graph (from Tilastokeskus- Statistics Finland), the gross domestic product (GDP) of Finland has been growing steadily for the past decades.

However, there has been two major recessions during the last 50 years; the first one happened in the early 1990s and the second recession occurred after the Great Recession in 2008. Even though the Great Recession started in the United States, Finland, among other countries, suffered badly because of it.

Finland’s economy 2020 – 2022: Growth will slow

For the last 10 years, Finland has suffered economic challenges. After the Great Depression, a European Debt Crisis followed. It peaked between the years 2010 and 2012. Both of these crises affected Finland. Since 2009, Finland has had four different years when its gross domestic product (GDP) has declined: 2009 and 2012-2014. The highest growth in GDP occurred in 2016 (2.6%) and 2017 (3.1%).

However, the party doesn’t seem to last very long in Finland. The Bank of Finland forecast for Finnish GDP growth is less than 1% next year:

  • 1.3% – 2019
  • 0.9% – 2020
  • 1.1% – 2021
  • 1.3% – 2022

The Finance Ministry has a slightly different forecast, but basically the numbers show a consensus.

  • 1.6% – 2019
  • 1% -2020
  • 1.1% 2021
  • 1.2% 2022

It is always hard to predict the future, especially when there are so many uncertainties and factors that determine the global economy trend. As a small fish in the sea, Finland’s economy is prone to various global economic threats and risks. Finns have always relied on their export sectors which is also the reason why the Finnish economy goes hand in hand, up or down, with the global economy.

So want to know how the Finnish economy is going to do? Look at the global economic outlook.

Aging population & adventurous young professionals: Challenging mix

Finland will be facing many challenges in the future. One of the biggest challenge for Finland’s economy is the fact that our population is aging fast. After the WW2 in 1945-1955, there was a baby boom in Finland (and across Europe) and many children were born in that time period. In Finland, we call these people “the great generations” (baby boomers). These people are already retired or just retiring now. That means that there are lots of older people who need support and care.

Sunset on the Finnish economy for now?

While Finland is aging fast, the total fertility rate (TFR) per average woman reached a record low numbers in 2018 (1,41). It is hard to figure out all of the reasons why the average fertility rate per woman has declined in Finland during the past 10 years, but it will sure has its effects. As if it was not enough, more and more talented young professionals are moving abroad from Finland. There are many reasons for that, such as wanting to experience different cultures or pay less taxes. Luckily, professionals from other countries also come to Finland to work.

In order to keep Finland’s economy and welfare state strong and stable, we definitely need more workers here in Finland. There is great talent shortage especially in the tech and IT field, but we need workers in all kind of field (such as elderly care). There are just not enough young Finns anymore which is why we have to rely on foreign labor.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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Categories
finland

How to move to Finland

sulonorth is moving across the pond in January 2020. No, I don’t mean we’re moving to the United States. We’re moving to Lauttasaari, a beautiful wooded neighbourhood of Helsinki.

We aren’t the only ones moving in Finland.

In 2018, Finland had a deficit when it came to Finns moving abroad compared to those moving in.

Though the country’s overall population grew as foreigners immigrated, 3,578 more Finnish citizens moved abroad than moved in, according to Statistics Finland.

Is there so much happiness here, that Finns feel the need to escape?

Why are Finnish citizens moving?

According to the report Decoding Global Talent 2018 by Boston Consulting Group (BCG), 60-70% of Finnish respondents would be willing to move outside of Finland for work or already were abroad. Swedish citizens gave similar responses.

The reasons for moving are more multi-faceted than before. Finns used to move abroad mainly for economic reasons. Today, the search for adventure, learning new languages, and experiencing other cultures are among the many reasons for moving. International travel is relatively easy for anyone with a Finnish passport.

The most popular destinations for Finns to move to are the United Kingdom, Germany, the United States, and Sweden. Yes, Sweden. Many Finns can also speak Swedish fluently. Sweden, for them, is a very easy destination. Finns also tend to speak English relatively well, which partly explains why the United Kingdom and United States are among the top destinations. According to YLE, Swedish- speaking Finns are more eager to move abroad than Finnish-speaking Finns.

Finland’s population shortage

The problem for Finland is that most people who want to move out are educated young people – exactly the citizens Finland needs, given its aging population. Even as educated people move abroad, more and more educated professionals are retiring. Not enough children are being born to replace the retiring or globetrotting talent force and the tax money and talent that they represented.

How to stop the ‘exodus’?

The Ministry of Economic Affairs and Employment and Business Finland have been concerned enough about the lack of educated people to release -as part of the Talent Boost programme of the Government of Finland- a handbook entitled Cookbook Finland.

“Since sufficient skilled labour is not available in Finland to cover the demand, international talent is a needed solution. Make no mistake: companies need greater numbers of talented workers than Finland has to offer,” the handbook says.

Especially of concern are fields such as software and computer technology, which are lacking thousands of skilled workers.

Part of Finland’s problem with attracting skilled labour is the lack of good marketing. As a small country, it is not easy to compete with big fishes such as Germany, the United Kingdom and the Netherlands.

Finland’s international branding mainly focuses on self-deprecating humor, saunas, and nature. All of this is great, but casts Finland more as a cute holiday destination than a country to live and innovate in. Can Finland better market its international companies and make them more attractive to foreign workers with the needed skills?

Another issue is that even though Finland’s labour market has taken huge leaps in terms of internationality, it is still fairly old-fashioned when it comes to language requirements. Many big, Finnish companies with global operations still expect workers in Finland to speak Finnish, even if the job itself doesn’t require it.

Of course, the dark and cold winters don’t help either.

Solving the talent shortage

Better integration services would be beneficial for Finland and may help keep the already acquired talent in the country longer. For example, many letters from the Finnish Tax Office arrive only in Finnish or Swedish. This is difficult to navigate with limited local language skills.

The system and expectations regarding speaking Finnish are slowly changing though. More English language resources are available for those of you thinking about a move to Finland.

Networking is becoming easier with several expat groups and free co-working hubs such as Helsinki Think Company. In a future post, we will give more tips on landing your dream job in Helsinki. For now, our key tip is: network, network, network. Spend far more time networking than filling out applications on online job portals. Stop reading and go network!

  • Estimated number of jobs not filled due to the talent shortage in 2018: 60, 000
  • Finland needs approximately 34,000 immigrants per year to meet the labour shortage
  • Finland needs 53,000 tech experts by 2021 and over 10,000 new software developers in the next four years

Source

Why move back to Finland?

I was among the Finns that returned home during 2018. Why did I do it? I’ve lived in Sweden, Turkey, the United Arab Emirates, and the United Kingdom. What made Finland great again?

After three years in London and Oxford I was ready for a dramatic change of pace. Also, I wanted to be closer to family after 10 years abroad.

Did the Finnish social system place a role in my decision to return?

Yes. The security that the Finnish state offers is reassuring in this seemingly ever more volatile world. My family does well enough that we don’t normally need social benefits. Still, knowing that a sudden illness or lack of work won’t leave us destitute is comforting. Since we have small children, the affordable schooling and heavily subsidized healthcare are hugely helpful.

However, the key factor in the decision to return was, ironically, the sunnier climate. The summer of 2018 was incredibly sunny and warm in Finland. Visiting on holiday, I spent hours outside and noticed how the city had become more international and seemingly more colorful and happier since I left all those years ago. The business start-up scene was flourishing and the warmth suggested Finland was changing for the better.

Will I move abroad again when my children are older and have immune systems built up by a few years of exposure to nursery germs?

I don’t know. Maybe I will again become one of those Finns moving out of the country, fueling the deficit.

For now, Finland is home and it’s time to innovate.

Alina Lehtinen-Vela is sulonorth’s commander-in-chief. Follow her on Twitter: @alinalehtinen

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finland

Independence Day in Finland 2019, Will a Prime Minster Attend the Presidential Party?

Finland’s Independence Day (itsenäisyyspäivä) is on Friday – December 6. It’ll be one of my first Finnish Independence Days in Finland for over a decade. In recent years, I’ve celebrated at Finnish consulates and embassies in places like Istanbul and Abu Dhabi. Now back from living abroad, I admit Independence Day feels especially good. Finland has come far in its 102 years as an independent country.

When did Finland become Independent?

Finland became independent on December 6, 1917 in what could only be described as an anticlimactic political saga full of bureaucratic hurdles. It was a result of good timing and strategic planning by the political elite in Finland, such as Prime Minister Pehr Evind Svinhufvud and Finnish Minister–Secretary of State Carl Enckell. They saw an opportunity when the Bolsheviks overthrew the Russian government in November 1917. Finland had been part of Russia since 1809. Previously, it had been part of Sweden.  

The Finnish senate decided to use the chaos in Russia to their advantage and declared Finland as an independent country. The Finnish government approved the declaration on December 6, 1917. Afterwards, the Chief General Manager of the Kansallis-Osake-Pankki (KOP) bank Juho Kusti Paasikivi travelled to Sweden, Denmark and Norway to request the countries to accept the declaration. He was unsuccessful. The other Nordic countries were unwilling to recognize Finland as an independent nation until Finland had discussed the matter with Russia directly. 

Finland sent a delegation to Russia and Lenin accepted the request for independence. However, the verbal agreement was not followed by action. Finland needed to do some additional convincing by writing letters and sending another delegation to St. Petersburg in late December 1917. This delegation consisted of Enckell and Helsinki University Professor of International Law K. G. Idman. They met with Lenin on December 28 and he requested the Finnish government write yet (you guessed it!) another official letter that would be responded to immediately.

Svinhufvud, Enckell and Idman travelled back to St Petersburg with the new official letters requesting independence on December 30. More bureaucratic issues arose while they handed over the letters: the Secretary-General of the Russian Council of People’s Commissars complained that the letter given to them had been addressed to the Russian government and not to Council of People’s Commissars directly. Therefore, they couldn’t open it. Despite a request by Enckell to just change the address, the Finnish delegates were requested to write a whole new letter with the correct address. 

With yet another new letter and after some more waiting, the Finnish delegation got what they came to Russia for: a letter signed by the Russian Council of People’s Commissars accepting Finland’s request for independence. The Official confirmation for Finland’s independence came on January 4, 1918.

How is Independence Day celebrated in Finland?

Finland’s independence is a quiet celebration unless you get invited to the presidential palace, which organises an exclusive party for the Finnish elite. Good luck with that! Many people stay at home and make Finnish food like karjalanpaisti, light up white and blue candles and watch on TV as the presidential palace celebrates. Some Finns may go out to celebrate dressed in their finest clothing.

Needless to say, the celebrations are usually pretty formal if you go out, and pretty casual if you are at home. Pick your poison.

The Independence Day party at the presidential palace is controversial since it is financed by taxpayers and invitations are mainly sent to those who are rich and powerful. This year 1,700 people have been invited. Usually, the budget for the celebration is between EUR200,000 – 300,000.  

Why is Finland’s independence important?

Many Finns think independence shouldn’t be taken for granted. The older generation still remember the times when Finland’s independence felt like it was under a threat from Russia. Even if Finland initially gained independence without bloodshed, there was plenty of blood spilt later on during the Winter War and Continuation War. Finland lost a lot of its territory-such as Karelia- to Russia as a result of the war. 

Even though losing Karelia was a very bitter pill to swallow, the country managed to keep its independence. Finns learned to appreciate the value of being a sovereign nation from looking to other countries that were less unfortunate at the time, such as the Baltic nations.

Today, Russia is Finland’s Frenemy. You probably know that Finland’s Prime Minister was forced to resign earlier this week. He’s currently a caretaker PM. Many are wondering if he’ll dare show up at the presidential palace independence day party. We shall see.

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finland Politics

Finland’s Prime Minister Resigns…Rinne Home for Christmas

UPDATE 3 December 2200 HELSINKI: As expected, Antti Rinne has resigned as Finland’s Prime Minister. He’ll stay on to lead a caretaker government until a new PM is agreed, or in the unlikely event a snap election is called. See below for who we’re betting will be Finland’s next Prime Minister.

The Finnish Government is in deep trouble. It is very likely that Prime Minister Antti Rinne will be ‘home for Christmas,’ or perhaps we should say ‘by Christmas’. Rinne is currently under heavy scrutiny due to allegedly making false statements regarding the recent postal strike

In the early evening on December 2, the Centre Party (Finnish: Keskusta) expressed a lack of confidence and distrust in Rinne, who is a member of the Social Social Democratic Party (Finnish: Suomen sosialidemokraattinen puolue). The Centre and SDP are the main parties in the current coalition government. Other parties have previously expressed concerns over the PM’s behaviour also. 

However, the Centre Party is likely to proceed carefully as they don’t actually want another election, in which they may perform poorly. Instead, they are pushing the SDP to force Rinne out.

Background: Posti Strike controversy

The whole situation started when it was discovered that Rinne and the now ex-Minister of Local Government and Ownership Steering, Sirpa Paatero knew more than they had claimed about state-owned postal company Posti’s plans to cut pay for 700 workers. 

Both Paatero and Rinne claimed that they had no knowledge of Posti’s plans for pay cuts but the Postal Union Leader (PAU) Heidi Nieminen and Posti board member Markku Pohjola disputed those claims. 

“Posti informed the minister of our outsourcing plans during the preparation stage,” Pohjola was quoted as saying, according to Yle.

Helsingin Sanomat reported that Paatero received Posti’s plans to move 700 parcel sorters and 8,100 postal delivery workers to a different, cheaper employment contract on June 7, 2019. The Posti’s board members decided to put the plan into action after returning from a lavish trip to San Francisco in mid-August. Posti chiefs discussed the decision – which would decrease the salaries and benefits of 700 postal workers dramatically – with Paatero on August 21. She did not express any opposition to the plans, according to reports. 

A Posti delivery cart on the streets of Helsinki.

Too little, too late 

On September 3, Paatero announced a timeout regarding the employment contract transfer. This was too late, however, since 700 parcel sorters had already been moved under the new contract on September 1. 

On Nov 29, when Paatero announced her resignation, Rinne threw her under the bus claiming that she had not followed his orders. According to Rinne, Paatero should have stated her objections to changing the terms of employment for the Posti workers.

Rinne appears to be using Paatero as a scapegoat and as a last attempt to save his political skin. This will be unlikely to work. 

Push to shove?

If the Centre Party withdraws support from Rinne, the government will likely fall, should the SDP continues to support him. This would be too large of a risk for the SDP. The party has been losing support steadily since coming to power in Parliamentary elections in April this year. It is likely they will force Rinne out to save the government, hence keeping their position intact.

The SDP Party members held a party congress on the evening of December 2 at their main party office in Hakaniemi district’s iconic Ympyrätalo in Helsinki. They discussed Rinne’s situation and decided not to vote for his resignation at this time.  

Rinne made a very brief public appearance and commented on the situation, critising the Centre Party’s for being unclear with their demands. 

“If my way of communicating has been said to be unclear, I have to say that the Centre Party’s way of communicating is even more unclear, ” Rinne said.

“At the moment it is hard to know what they (the Centre Party) want in this situation. That is why tomorrow, for my due process, I want a Yes or No answer from them regarding if they want to continue working with me.”

Today (December 3) Rinne will be facing an interpellation organised by three opposition parties the Coalition Party (Finnish: Kokoomus), the Christian Democrats (Finnish: Kristillisdemokraatit) and the Movement Now (Finnish: Liike Nyt). That is, unless he has resigned before this happens. 

Vice President of the Social Democratic Party Sanna Marin seems to be the most likely choice to step into Rinne’s shoes following his nearly certain resignation.

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