An economic boom without any employees, please

PERSPECTIVE

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By Olavi Koistinen
     
      The bleak employment figures from the United States weighed on stock prices around the world over the summer. Investors were worried about people who do not have jobs, or, to be more precise, people who cannot afford to consume.
      This cause for concern is a bit odd, because that is exactly what investors have wanted all along.
      Listed corporations have more or less competed at beating down their staff numbers over the past few years. A part of the companies have acted under the pressure of financial difficulties, but not nearly all.
     
Forest industry giant UPM announced on Monday a need to cut 750 jobs. The bottom of the coffers is definitely not looming for a company that distributed 393 million euros in dividends to its owners last spring. The annual wages of the employees whose jobs are now on the line amount to a few tens of millions of euros.
      On stock exchanges, dismissals are normally awarded with a rise in share prices. The stock price of UPM also nudged upward slightly after the news on Monday.
      With this sentiment, it seems to be a good idea to hand out pink slips, after all, it just leads to an increased valuation for the firm. Then when the unemployment rate does not improve, people wonder how that is possible. Wasn't the next boom supposed to have already started?
      And then the share prices tumble.
     
The wish list of investors evidently includes an economic boom where no one needs to hire any employees. They dream of a shiny brand-new economy where everyone is unemployed, but consuming fearlessly nevertheless.
      These people do not earn any wage income. The money just appears in their wallets out of thin air.
     
Helsingin Sanomat / First published in print 3.9.2004


Previously in HS International Edition:
  Metso Paper to cut more than 100 jobs from each of its main factories (3.9.2004)
  Forest industry giant UPM to eliminate hundreds of jobs (31.8.2004)

OLAVI KOISTINEN / Helsingin Sanomat
olavi.koistinen@hs.fi