People around the world are making their resolutions for the coming year, yet I believe this annual goal-setting could be taken further and be applied to entire countries. For a number of years I have published my suggested resolutions for Finland in the Helsinki Times newspaper and here are my proposed national resolutions for 2016.
1) Promote digital security as an industry. Finland has funding programs to promote innovation and entrepreneurship in specific industries where we have special strengths, such as health tech or mobile tech. There is a huge global demand for digital privacy and security and we already have a powerhouse in that industry thanks to F-Secure. Tekes had dabbled in this with their Cyber Security program but we could and should do much more.
2) Approach asylum seekers as a long-term investment. The governor of the Bank of Finland, Erkki Liikanen, has explained that our current influx of refugees could help finance the welfare state. This is because Finland’s working age population is shrinking and we will eventually need new workers – one estimate by the Confederation of Finnish Industries says we will need about 10,000 new workers annually. Some Finnish towns are offering cash bonuses for people to move there or for current residents to have babies. Meanwhile we have thousands of people begging to get into the country. It will take work to get them trained to fit the economy’s needs, but here is a problem solved.
3) Reform the retirement system. Weak compromise measures will no longer suffice. We must tie the retirement age to life expectancy and make strenuous efforts to encourage individuals to make use of private retirement accounts.
4) Improve our capital markets. So much depends on capital, and our capital markets are dying. Entrepreneurs complain about the domestic venture capital market, and the Helsinki Stock Exchange seems to be comatose. The best way to do this is to simplify tax laws, lower tax rates for investors and encourage equity investments by private persons.
5) Sell our stakes in unnecessary state-owned companies. Finland does not need to own retail stores, airlines, real estate firms and insurance companies which compete against private corporations. The money these sales would generate would be better served elsewhere.
6) Engage in a fiscal stimulus program. The Austerians have won the battle against the Stimulusarians, right? Well, yes, they have. But the Austerians say it is impossible to afford fiscal stimulus, and this doesn’t apply to us. Finland can borrow at such low rates that investors will actually pay us for the right to lend us money. Yes, you read that correctly. The yield on Finland’s long-term bonds is 0.85%. However, the short-term expected inflation rate is 1% while the long-term is 2%. This means that in real terms we will pay back less than we borrow. Why the hell aren’t we taking advantage of this?
7) Cut wasteful spending. One program which particularly annoys me is our gargantuan subsidies for agriculture. This increases the price of food, encourages inefficiencies in our own industry, and unfairly hits developing nations.
8) Tie the pay of public sector employees to goals. In private companies the salary plus bonus structure works beautifully. Finland should be a global leader in taking this to the public sector, even to members of parliament. This will encourage and reward hard work.
9) Follow Estonia’s digital strategy. Estonia’s e-residency program is brilliant but Finnish policy makers are simply whining about how it can hurt us instead of taking advantage of it. We copy Sweden’s policies all the time. When Estonia has a great idea we should copy them, too.
10) Reform the labour market. This remains the largest obstacle for a sustained recovery, but the will for reform is weak among labour leaders. We let labour costs get out of hand and now we have priced ourselves out of the global market. Prime Minister Juha Sipilä has tried to drag the employers and workers together to work out a deal, and since they refuse to realistically negotiate he needs to beat them into submission. This is too important to avoid as the past Government did. We must improve labour market flexibility as well as reduce fixed and variable costs for the employers. This is the best way to lower our unemployment rate as well as to get those who have given up ever finding a job back into productive work.