IMF sees ageing of population to be a major risk for Finland

print this

The International Monetary Fund (IMF) is urging Finland to prepare for the rising average age of the population by upgrading the efficiency of its public services and by reforming its pension system.
      The increase in the average age in Finland is faster than in other parts of the European Union, said Subhash Thakur, the chairman of the IMF delegation in Helsinki on Tuesday.
      In its report on Finland, the IMF found many positive aspects as well. In many respects, development has been unique, and economic growth this year has been faster than average in the euro zone. The IMF predicts more than three percent growth for next year.
     
In the view of the IMF, the retirement of members of the postwar baby boom generation poses a major challenge particularly for the public sector; efficiency needs to be improved, and the IMF proposes a number of measures, including the privatisation of services.
      The IMF also recommends changes in Finland's tendency for solidarity in wage policy. The report says that the compressed wage structure has the effect of "preventing the economy from reaping its full benefits in terms of productivity."
      The broad-based wage agreement reached a year ago has, in the view of the IMF, secured moderate wage development, which in turn helps Finland retain its competitive position. In the future, more flexibility will be needed in wage policy.
      The annual statement is based on discussions that IMF experts have with Finnish officials, labour market figures, financial institutions, and research institutes.


Links:
  IMF October 25: Finland—2005 Article IV Consultation Concluding Statement of the Mission

Helsingin Sanomat