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Elinkeinoelämän keskusliitto

Finlands Näringsliv

Confederation of Finnish Industries

1 EK/Eng/shs11.2004

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EK represents

• The entire private sector and companies of all sizes

• 35 branch associations

• About 16,000 member companies, of which 96% are SMEs

• Over 70% of Finland’s GDP

• Over 95% of Finland’s exports

• About 950,000 employees in member companies

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Member Federations of EK

• Association of Finnish Furniture and Joinery Industries

• Association of Logistic Enterprises in Finland• Association of Social Services Employers and

Businesses• Association of Support Service Industries, ASSI• Chemical Industry Federation of Finland• Coastal and Internal Waterway Employers’

Association• Confederation of Finnish Construction Industries RT• Employers’ Association for Transport and Special

Services• Employers’ Association of Private Educational

Institutions• Employers’ Association of the Special Branches• Employers’ Federation of Road Transport• Federation of Finnish Commerce • Federation of Finnish Financial Services• Federation of the Finnish Media Industry• Finnish Association of Consulting Firms SKOL• Finnish Energy Industries

• Finnish Food and Drink Industries’ Federation• Finnish Forest Industries Federation• Finnish Hospitality Association• Finnish Plastic Industries Federation• Finnish Port Operators Association• Finnish Shipowners’ Association• Finnish Special Purpose Shipowners' Association• General Industry Federation• Kulutustavararyhmä• Pharma Industry Finland• Private Employment Agencies Association• Private Healthservice Association• Property Maintenance Association• Technology Industries of Finland• The Employers' Association TIKLI• The Finnish Cosmetic, Toiletry and Detergent

Association• The Rubber Manufacturers’ Association of Finland• Ålands Arbetsgivareförening

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EK activitiesEK activities

Regional Offices Regional Offices

EK BrusselsEK Brussels

• Logistics• Energy• Environment

and Climate• Sustainable

Development

• Business Law• Competition• Information

Society• Trade Policy

and International Relations

• Economy• Taxation• Employment• Finance and

Welfare• Business

Cycles and Trends

• Competitive-ness

• Collective Bargaining

• Development of Labour Market

• Labour and Social law

• Statistics and Surveys

• Corporate Security

• Business Development

• Education, Training and Qualification Requirements

• Labour and Immigration

• Research and Technology

• Business Services and Financing

CommunicationsCommunications

BusinessInfrastructure

Business Environment

Economic Policy IndustrialRelations

Innovation Environment

and Competences

SME-Affairs SME-Affairs

How has euro affected the Finnish companies and economy?

27.4.2010

Simo Pinomaa Senior EconomistConfederation of Finnish Industries EK

What happened to the price level in 2002?

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-2

-1

0

1

2

3

4

5

6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Consumer prices

12-month change, %

United Kingdom

Germany

Sweden

Finland

Source: OECD

19.4.2010/hiin3/jka/EKI Talousgraafit

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92

96

100

104

108

112

116

120

124

128

132

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Consumer Price Index, some commodity groups

Food andnon-alcoholic beverages

Housing, heat and light Transport

Recreation and culture

Index, 2000=100

Source: Statistics Finland

14.4.2010/hiin9/jka/EKI Talousgraafit

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Why did consumers feel that the euro raised prices even though statistics show otherwise?

• Consumers had expected prices to rise as a result of the euro already before the transition had even taken place

• Consumers tend to remember price increases better than decreases

• The prices of many cheap (cup of coffee) items tended to rise affecting price perception although the real affect on prise level was small

• The food prices in January 2002 increased 7.0 percent• Rounded conversion rate in nearly all euro countries happened

to be higher than the precise rate –1.8 percent on average. – In Finland the rounded conversion rate (6) is 0.9 percent higher than the

actual rate (5.94573).

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Impact on markets, sales and competition

• Psychological prices (for example, 99 euros)• A dress costs Fim 299 (about 52 euro)• => 49 euro (6 % reduction)• A candy bar costs Fim 10 (about 1,7 euro)• => 1 euro (41 % reduction)• => The company may have to modify its product design and

packing

=>

• Implications to production and procurement

How has euro affected Finnish economy?

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90

100

110

120

130

140

150

160

170

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Gross Domestic Product

Vol.index 1995=100, sa

Finland

USA

Japan

EU

Source: Eurostat

23.3.2010/kokn1/jka/EKI Talousgraafit

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90

100

110

120

130

140

150

160

170

180

190

200

210

220

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

6. Domestic product

ä

Finland, Gross domestic product at current market prices, Mrd EURO-FIMSweden, Gross domestic product at current market prices, Mrd SEK

19.4.2010

Indeksi, 1995=100

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80

90

100

110

120

130

140

150

160

170

180

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Industrial Production

Vol.index 1990=100, sa

Finland

Sweden

Germany

United Kingdom

Source: Eurostat

13.4.2010/teol5/jka/EKI Talousgraafit

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0

2

4

6

8

10

12

14

16

18

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Unemployment Rate*

*Seasonally adjusted

Finland

USA

Japan

EU

Source: OECD

19.4.2010/tyot4/jka/EKI Talousgraafit

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0

2

4

6

8

10

12

14

16

18

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Unemployment Rate*

*Seasonally adjusted

Finland

Iceland

NorwaySweden(method break in 4/2005)

Denmark

Source: OECD

19.4.2010/tyot5/jka/EKI Talousgraafit

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Manufacturing Investments in Finland 1975–2009

0

1

2

3

4

5

6

7

8

9

1975 1980 1985 1990 1995 2000 2005 08**09**

EUR billion

Research and development

Fixed investment

Source: Statistics Finland, years 2008–2009 EK Investment Survey

r:/sb/sbwin/kalvot/investointikalvot/2 ENG

Fixed investments and R&D expenditure

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R&D Expenditure in Some Countries

What happened to interest rates?

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0

2

4

6

8

10

12

14

16

18

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

3-Month Market Rates, %

Finland

USA

Japan

Germany

Source: OECD

9.3.2010/kork2/jka/EKI Talousgraafit

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0

2

4

6

8

10

12

14

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Long Term Interest Rates, %

Finland, 10 yr.

USA, >10 yr.

Japan, 10 yr.

Germany, 9-10 yr.

Source: OECD, Bank of Finland

9.3.2010/kork3/jka/EKI Talousgraafit

Is the stability and growth pact difficult for small countries?

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-16 -14 -12 -10 -8 -6 -4 -2 0

Government Fiscal Position in 2010

IrelandUnited Kingdom

GreeceLatviaSpain

LithuaniaFrance

PortugalPolandEU27

SloveniaRomania

NetherlandsSlovakiaBelgium

CyprusAustria

Czech RepublicItaly

GermanyDenmark

FinlandMalta

LuxembourgHungarySwedenEstonia

BulgariaPer cent of GDP

Source: European Commission Forecast (10/2009)

3.12.2009/ennu6/jka/EKI Talousgraafit

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0 20 40 60 80 100 120 140 160 180

General Government ConsolidatedGross Debt in 2010

EstoniaBulgaria

LuxembourgRomaniaDenmarkSlovakia

Czech RepublicLithuaniaSloveniaSwedenFinland

LatviaPolandCyprus

NetherlandsSpainMalta

AustriaGermany

EU27Hungary

United KingdomFranceIreland

PortugalBelgium

ItalyGreece

Per cent of GDP

Source: European Commission Forecast (10/2009)

3.12.2009/ennu7/jka/EKI Talousgraafit

How labour markets have reacted?

- No more devaluations

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Finnish industrial relations model: typical features

• Traditionally a high rate of organization – both employers and employees (70 % of employees are members in trade unions)

• 90 % of employees are covered by collective agreements

• Branch-level collective agreements are generally binding

• Local bargaining today:– Collective agreement is already today allowing local bargaining in many

cases on wage increases and working time arrangements

• Long traditions: employer and employee confederations (=social partners) established over 100 years ago

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The need for more flexible wage system

• It should be possible to adjust wages and other labour costs to cyclical variations. This would require that wage increases can be determined more on the enterprise or division level.

• Variation of basic wages and salaries are often difficult to apply because binding nature of the collective agreements.

• Therefore profit based bonuses have become fairly common in Finland.

• Nowadays about 1/3 of manufacturing blue collar workers and 2/3 of white collar workers receive result based bonuses. In terms of magnitude, they average 5 per cent of annual earnings.

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15,417,7 16,8

19,6

28,9 29,1

33,736,5 37,6 36,7

34,0

38,4

31,535,0 34,1

28,9 29,132,9

37,6

49,247,5

51,8 50,4

57,058,9 58,6

62,6 63,966,2 67,2

0

10

20

30

40

50

60

70

80

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Blue-collar workers White-collar workers

Share of employees received result and profit based bonuses in industry 1994-2008

Source: EK:s wage statistics. Result and profit based bonuses refer to extra bonuses based on financial performance or other business achievements in companies. Bonuses are determined outside collective agreements.

Saukkonen

19.4.2010

%

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Future of collective bargaining in Finland

• In the future, collective bargaining should: – strengthen competitiveness, – boost productivity, – ensure better employment and balanced increase of purchasing power

• EK will no longer negotiate comprehensive income policy agreements; employers and employees will negotiate on sectoral level, shifting more and more emphasis on workplace decision-making

• Change of role, but EK’s role in – drafting labour and social legislation in tripartite co-operation– managing and revising social security schemes in tripartite co-operation– bipartite negotiations with the trade unions

will remain the same• EK encourages wage determination at company level to reflect better

productivity and individual performance • Challenges:

– how to control the wage race better?– how to improve internal and external coordination?

Thank you!