Ministry of Finance expects incomes agreement and tax cuts to bring job growth

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The Ministry of Finance predicts that the government’s tax cuts combined with the broad-based incomes agreement could lead to a considerable increase in employment in the coming two years.
      According to the ministry’s forecast, the moves could lead to the creation of between 35,000 and 45,000 new jobs in 2005-2007.
     
The employment level would go up to about 68.5%, which is 1.5 percentage points higher than now.
      The figures are from a revision of the ministry’s stabilisation programme. The new figures, updated on the basis of the recent incomes agreement, were added to the introduction of the document.
      The document is an annual report submitted to the European Union on the state of the national economy. The EU uses the information to keep tabs on the sustainability of the financial politics of its member states.
     
The calculations are conditional. The Finance Ministry says that they are valid only if a sufficient number of unions join the broad-based incomes agreement, which is a precondition for the implementation of the planned tax cuts in 2006 and 2007.
      "Raising the employment level to 68.5% would mean that half of the government’s goal would be met", calculates Markus Sovala, head of the economic policy unit of the Ministry of Finance.
      The government’s target is to create 100,000 new jobs by the end of the present Parliamentary term. Sovala calculates that if conditions are right, this goal could be attained by the end of the decade.
     
The revised stabilisation programme did not contain great changes compared with a year back, as the figures have been calculated without the impact of the incomes agreement or the tax cuts.
      The document did note, however, that economic growth this year and next is expected to be greater than had been predicted a year ago.
      Finland’s public finances in 2005 - 2008 are anticipated to show a surplus of about two percent in relation to overall production. The figure is good compared with other EU countries.


See also:
  Incomes agreement to go now to individual sectors for approval (30.11.2004)

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