Positive economic factors promote government employment goals
Good times, rather than government policies, promote job creation
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The positive economic trend is the most important reason why the goal set by the government for employment for this Parliamentary term would seem to be very close to realisation.
When the government was formed in 2003 it set as its goal to create 100,000 new jobs during the four-year parliamentary term. However, economic experts interviewed by Helsingin Sanomat say that positive cyclical factors, rather than the government’s own actions, are the main reasons for the positive development. Nevertheless, tax cuts are seen to have a role in the matter.
"And the government has not made any great mistakes", notes Pertti Parmanne, head economist at the Central Organisation of Finnish Trade Unions (SAK).
The Ministry of Finance says that new jobs have emerged especially in the service sector and in construction. Even in manufacturing, where employment has long been in decline, jobs have seen a slight improvement in recent months.
The Finance Ministry reports that last year about 50,000 new jobs were created, and according to the ministry’s forecast, there will be more than 30,000 new jobs this year.
The government predicts that the number of new jobs during its time in office will exceed the number of lost jobs by 65,000.
"Domestic demand is strong, and exports are growing", says Finance ministry official Pentti Vesterinen.
According to figures put out by the SAK in January, only four out of ten jobs that had lasted for less than a year were continuous, full-time positions.
The greatest increase has been in so-called non-typical jobs; six out of ten people who have been employed during the past year were constantly doing part-time work, or were in various fixed-term positions.
Jussi Mustonen of the Confederation of Finnish Industry (EK) confirms that as conditions improve, the increase in jobs first affects part-time and fixed-term positions, and that part-time jobs have been increasing in recent times.
Mustonen says that economic growth has begun to stabilise so that the improvement in employment also extends to full-time work.
Tax cuts enacted by the government of Prime Minister Matti Vanhanen also seem to have had a positive effect on employment.
"Vanhanen’s government was lucky, in that tax cuts were implemented immediately, keeping consumer demand high, in spite of a slight cyclical downturn", SAK’s Parmanne says.
According to the government’s own calculations, tax cuts this electoral term total about EUR 3.5 billion.
Pasi Sorjonen, head of forecasts at the Research Institute of the Finnish Economy (ETLA), says that a cyclical survey to be published this week suggests that the state still would have room to cut taxes more than it had planned.
"The financing capacity of the public economy is better than imagined", Sorjonen says.
Finance Minister Eero Heinäluoma (SDP) said last autumn that the government will not be making any more significant tax cuts during the present electoral term. However, more tax cuts are expected from coming governments.
Mustonen of EK feels that in addition to tax cuts, increases in domestic investments are crucial for employment. Taking the same view is Merja Kauhanen, special researcher at the Labour Institute of Economic Research.
"Finland’s investment level has been low in recent years. Increasing investments in Finland is important for employment."
Kauhanen also feels that it is important to promote measures to prevent exhaustion at work, so that people might be willing to stay at work for as long as possible.
The experts agree that measures of employment policy cannot raise overall employment. Their task is to deal with long-term unemployment, which is not affected by positive cyclical conditions.
Although job creation measures have been criticised as fairly inefficient, even extensive structural unemployment has started to go down in recent years - although not by much.
Helsingin Sanomat
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| 20.3.2006 - TODAY |
 Positive economic factors promote government employment goals
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