People and shopping carts on an escalator in Sello Shopping Centre in Espoo, Southern Finland, on Saturday, 15 February 2025. The Finnish government has overstated the economic challenges facing the country, giving rise to a public sentiment that is detached from the economic reality, argue three economists interviewed by Helsingin Sanomat. (Emmi Korhonen – Lehtikuva)
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THE PAST COUPLE of years have been interspersed by serious warnings about the grave economic challenges facing Finland.
Helsingin Sanomat on Monday published an article where three economists view that the government-led effort to create a public sense of economic crisis has gone overboard, leading to a public sentiment that is gloomier than reality.
The pessimism can not only hinder the fragile economic recovery by compelling households to tighten their purse strings, but also have long-lasting effects on society.
“It’s outrageous if young people lose their confidence in future due to scare tactics that aren’t based on facts,” Mika Pantzar, a professor emeritus at the Consumer Society Research Centre of the University of Helsinki, said to Helsingin Sanomat.
“When crisis awareness is high, who has the courage to have children?”
Finnish policymakers, he argued, appear not to recognise the importance of consumer sentiment for the economy. With private consumption accounting for roughly half of gross domestic product, the fact that the economy has failed to begin a robust recovery can be attributed partly to the loss of consumer confidence.
Pantzar stated that policymakers have long resorted to scare tactics in the realm of economic policy because it makes it easier for them to justify painful decisions that could have an impact on voters at the ballot box. He expressed his disapproval particularly with statements that have sown doubt about the sustainability of the pension system and created a sense of intergenerational injustice, with some young people doubtful they will ever receive any pension.
“That’s shocking economic talk and an outrageous lie given that Finland has one of Europe’s best-funded pension systems,” he slammed.
Policymakers have also painted a bleak picture of the employment situation in spite of the fact that employment remains at a historically high level. “The ability of artificial intelligence to wipe away jobs has been overstated. Jobs will change, but jobs won’t disappear.”
Juho Saari, a professor of social and health policy at Tampere University, has become so frustrated with the barrage of doom and gloom that he has published a book, together with experts from 27 different fields, that lays down facts about what the situation actually is: Finland, it argues, has moved in a positive direction throughout the 2000s and ranks inside the global top-10 in many key indicators.
“The Finnish crisis discussion isn’t based on facts when it comes to what’s the situation in the national economy, society or let’s say the labour markets,” he argued.
That is not to deny there are problems, of course.
“It’s absolutely clear that we have problems in our public economy and that the national economy hasn’t grown. But Finland also has a lot of strengths on which you can build politics and future,” he said to Helsingin Sanomat.
Presently the public debate has focused only on shortcomings, partly because the media has focused on them – understandably so, given its mission, making them the primary fuel of policymaking, acknowledged Saari.
“It’s also clear that politicians know how their statements affect Finns’ attitudes and what Finns think about the welfare state or health care services, for example,” he commented.
Jaakko Kiander, the chief executive of the public sector pension fund Keva, is not surprised about the widespread sense of crisis given the amount of talk about the national economy not growing at all for 17 years. The talk, he estimated, has left the public with a slightly distorted view of the economic reality.
Kiander reminded that even though the gross domestic product per capita was roughly the same in 2023 as in 2008, in the interim the national economy also had a number of growth spurts. Employment, he highlighted, rose to an all-time high in 2023.
“The Finnish economy has always tried to grow, but we’ve had an exceptionally high number of external shocks that have stopped the growth,” he said, pointing to the financial crisis, the eurozone debt crisis, the coronavirus pandemic, and the inflation and interest rate spikes caused by the Russian war of aggression in Ukraine.
Similarly to Pantzar, Kiander said he is particularly concerned about the effects on young people. The 2000s, he reminded, have been full of crises since the financial crisis of 2008 both at home and abroad.
“The uncertainty is tangible particularly in the lives of young people. It slows down young people’s ability to get into working life, buy a home and start a family.”
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
