The new challenges of the Finnish welfare state after 1980's

Résumé du document

Even though Finland experienced a similar GDP per capita as Chile or Uruguay in the 1950's, the GDP of the former has now tripled. The orientation of economic development, a constant economic growth, the rising of public sector and the emergence of compromises and consensus regarding political and social values explain the incredible Finnish evolution from backwardness to the welfare state stage. As the "Japan of Europe", Finland succeeded in combining solidarity towards underprivileged people, a governmental management of economy, universal values and the promotion of innovation and competent state policies. De facto, since the early 80's, we can consider that the Finnish conception of welfare state was achieved. Nevertheless, Finland has to face various challenges which permanently test the limits of its development model.

Extraits

[...] From 1980 to 2000, the new technologies sector employment increased in 80%. This evolution traduced the achievement of the economic transition final stage. Between 1995 and 1999, the electronics and communication equipment production rose in 250%. This exceptional growth was partially due to the takeoff of Nokia as the world leader in mobile communication. It expressed the fact that Finland chose to focus its economy on latest and leading sectors by a deliberately and voluntarist industrial policy. Moreover, in of the Finns were frequently using Internet. [...]

[...] The rest was due to cyclical unemployment which depended on level of economic uncertainty, conjuncture and economic circumstances. Some economists explained that on one hand, structural unemployment was partially encouraged by welfare policies and on the other hand, welfare state tried to limit cyclical unemployment which could permit a certain balance. The principal victims of recession were the young, the aged workers and low- educated people. Unemployment increased a lot for those categories and considerably weakened their position on labour market. [...]

[...] Finland's renewal rate is far below the rate for a constant population ( 2.1 In other words, a rise of the elderly population is provoking an increasing of health care expenditure. Pension system is expected to increase of 5 percentage points on the horizon 2030. This change in the age structure justifies the need to improve the employment rate in order to avoid a tax rising due to the welfare services costs for the elderly. The equilibrium of the Finnish welfare state is weakened. Family policies could boost the birth rate. This demographic evolution asks the question of immigration as a way to increase the active population. [...]

[...] Even during the last decade, the Finnish welfare structure is still weak. Welfare services tone down economic growth and efficiency. Social insurance encourages inflexibility in the labour market which seems nowadays incompatible with globalization. Moreover, the increasing size of public sector provoked a rising of taxation which exacerbated distorting effects of taxation and weakened the principle of equality. Lastly, budget deficits put into question the idea of solidarity in the sense that they encourage inequalities of economic responsibilities between generations. [...]

[...] Even if a convergence of the GDP proportion of social outlays in the European Union countries took place, the scope of public sector activities appears too important and unsustainable. Public sector provides educational and health services but also ensures housing policy, cultural matters and governed regional policy and income distribution. This wide scope presses down on the central government debt. As a burden, it reduces the governmental possibilities to act. As a consequence, carrying on public sector reforms is a essential policy. [...]