Prime Minister Juha Sipilä’s speech on the Finnish Broadcasting Company YLE on 16 September 2015
Finland’s situation is exceptionally serious. That’s why I also feel obliged to use new ways of communication and approach you directly. I thank the Finnish Broadcasting Company YLE for this opportunity.
Finland’s economic growth is the lowest in Europe and the economy has been shrinking for a long time now.
In no other country in Europe is unemployment growing as fast as in Finland.
Finnish work and production have lost their competitiveness.
Our debt has grown more quickly on average than other EU countries.
Central and local government expenditure is significantly greater than revenue.
Our employment rate is far below the level of competing countries. At Sweden’s employment rate, our economy would be in good shape.
The refugee situation is intensifying rapidly in Europe and the world is unsettled.
I begin with the refugee situation, but will otherwise focus on the bleak picture of the economy and the need for reform.
The influx of refugees into Europe has grown during the summer. Millions of people are on the move. People are fleeing war, hunger and poverty. Billions of illegal money is circulating in people smuggling activities. This is the reason why the strongest members of families are travelling ahead in search of a safe home for the rest of their family along dangerous routes. The international community has been far too weak in addressing the causes of the influx of refugees, let alone stopping the smuggling.
15,000–30,000 asylum seekers are expected to arrive in Finland this year. This is an unprecedented challenge for our society. We must be able to find the humanity in ourselves, despite the difficult economic situation. Our system needs the resources to process asylum applications promptly, swiftness in returning those whose applications are refused, and proper integration of those who receive positive decisions.
In Finland, those who have been granted asylum must be able to feel safe and welcome. Finland will bear its international responsibility for the influx of refugees, and the Government is also in a continuous state of operational readiness and active at the EU level.
If you feel that you want to do more in this matter yourself, please contact the Finnish Red Cross, for example. Many of you have already done so – I thank you for that.
Ladies and Gentlemen,
The debt of the Finnish State has grown by nearly one million euros per hour for seven years – night and day – everyday of the week.
We cannot continue like this. The money is running out.
Now it is high time to consider what is going on. We cannot escape the facts.
The global economy has been growing for the last few years, but we have not managed to board that train. And we cannot, unless we seriously want to and take action to do so.
The difficult decisions will not stop in the coming weeks. The next few years will be difficult. We have to take a series of painful decisions to help put the finances of our society on a sustainable basis.
I understand that change is difficult. Some oppose the savings, some the reforms and some now the measures under way to improve cost-competitiveness, namely the profitability of Finnish work. All responsible Finns, however, want to stop living on debt. Instead of blaming each another, we should now find a common spirit of reform.
There is no bottomless money chest. Prosperity is earned through diligence, expertise and hard work. We need to create work for as many Finns as possible, so that they can build our society.
Under the Constitution, the Government is obliged to promote employment and safeguard basic services. This is what we are now doing and in this we need your support.
We are implementing savings because the money is threatening to run out. We are making major structural reforms in order to secure basic services. We are reforming the labour market, because only in that way can we get back into the global markets alongside competing countries such as Germany, Sweden and Denmark.
We are investing in key Government projects, because change also needs investment. We are significantly reducing red tape and bureaucracy in order to get the wheels turning again. Together, these measures will raise us from the depths to which we have fallen.
Ladies and Gentlemen,
I know that government spending cuts will affect many people badly. If we do not make them, however, then a few years ahead there will be even more painful decisions. I want to assume my responsibility and take the decisions necessary to change direction. In the words of the President of the Republic, this cannot be left undone. We cannot send the bill for today’s wellbeing to future generations.
It is important for us to understand that in crisis countries such as Ireland and Portugal that fell into difficulties much tougher decisions have been taken than we are now proposing. In both Ireland and Portugal, public sector pay was cut by around 15 per cent. In Ireland, unemployment benefit was reduced by 40 per cent. Public spending was cut by significantly more than now being proposed in Finland.
The more weakly the Government handles matters, the more difficult and painful the solutions to rectify the situation will be. We were in the forefront in advising the Greeks. Let’s now take our own advice. We must not get into a situation in which others decide our affairs.
Ladies and Gentlemen,
I noticed during the social contract negotiations that in Finland employers’ and employees’ organisations have drifted too far apart from each other. In my own experience, the German employer thinks primarily about how work can also be done in Germany in the future, and at the same time German employees, on their own initiative, come to an accommodation with the employer in difficult situations. We need more of this spirit in Finland.
Our goal is for Finnish companies to invest in Finland and employ new workers in Finland.
Our goal is that foreign companies invest in Finland, transfer and set up production in Finland, and employ people in Finland.
From companies and business leaders we expect leadership and skill as well as a touch more patriotism.
Finland has been in a similar situation before. After the Second World War, Finland industrialised and rose from poverty with unprecedented hard work, tenacity and a spirit of joint effort. This was secured above all by a desire to go forward. Finland dared to take bold decisions. This is also how we should act both today and over the next few years.
Finland will not rise simply through spending cuts or tax increases. This country needs more jobs. In order to create them, the Government has adopted measures to improve the competitiveness of Finnish work.
The working life measures announced by the Government last week have been severely criticised. Although change security will improve significantly in redundancy situations and parental leave costs will be equalised to alleviate the situation in female-dominated sectors, I can even so understand people’s confusion. Democracy also includes the right to protest and to legal strike action.
Those who are outside working life, students, pensioners and the unemployed, are already carrying their own burden through savings decisions. Those who are in work must make their own contribution for the good of the unemployed.
Many have proposed internal devaluation as a way out. It would have cost every Finn if value-added tax would have been increased by several percentage points. Value-added tax is a flat tax and it would impact people’s finances insidiously. Internal devaluation would also be a trick, not a permanent reform.
I have been asked why the Government initiated such extraordinary measures.
I made two failed attempts to conclude a social contract. I tried my utmost and the collapse of the negotiations was a big disappointment. Still on the final evening, I made a compromise proposal. I was really surprised when even this was not accepted by everyone. It became clear to me then that there was no real readiness for a joint agreement.
Finland cannot afford to wait and see if a third attempt would be successful. It was the Government’s responsibility and duty, therefore, to take the decisions itself.
I have also been asked why the Government interfered in freedom of contract.
We will use the means that the Government and the Parliament have. The legislator’s means are now a little rougher than if we had reached an agreement on the means with the labour market organisations. Changing the law will not help if alternative arrangements can be agreed in collective bargaining agreements.
I have likewise been asked how export competitiveness will be improved by cutting the Sunday pay of nurses and police officers.
I admit that I considered this question carefully before taking the decision. Reducing Sunday pay will significantly reduce public sector costs and facilitate the reduction of the employer’s social security contribution.
Alternatives to reducing Sunday pay would be, for example, lengthening everyone’s daily working time by just under three minutes or cutting a small part of the holiday bonus. This could have been agreed in the social contract negotiations. These are collective bargaining agreement issues. The Government has no decision-making power in this.
I appeal once again to the social partners. Seek within collective bargaining agreements easier ways instead of means, such as cutting Sunday pay, that are perceived to be difficult. We still have a few days before Parliament begins to discuss the measures proposed by the Government. The whole package proposed by the Government could be replaced by extending daily working time by 20 minutes or so or by discontinuing the holiday bonus.
I want to emphasise that the details of the package are not a face-saving issue for the Government, but we cannot compromise on the objective. Finnish work and employment must be made profitable again very quickly.
Here is an important message for companies and entrepreneurs: you can trust in the fact that Finland is the kind of country where you can set up businesses and create jobs.
And does the Government have a mandate, the authority to reform Finland?
We have the authority of the voters. The wait-and-see and take debt attitude will not longer work. Now we really have to make a change and not think about style points. Part of the opposition also supports the reforms.
For my part, I promise that in all my work I will try to implement the reforms as fairly and equitably as possible. The detailed legislation of the working life package will be prepared in the usual way in consultation with the social partners.
What do I really think?
I know that now is the last moment to put Finland back in shape. Finland is at a turning point. According to the Government Programme’s vision, “public authorities make even difficult decisions together with the Finnish people to ensure future wellbeing. An open and positive attitude towards each other and the surrounding world makes Finland a unique, good country.” This is my only goal – all of the Government’s work is aimed at this. I could never forgive myself if we now leave this undone and throw in the towel.
In the future, many things will be done for less money than in the past. Adjustment will require creativity, a willingness to renew, and relentless work towards common goals.
Ladies and Gentlemen,
We Finns have a special relationship with nature, we enthusiastically embrace technology, we are among the world’s best in practical problem-solving ability. We are a slightly strange people – we prefer to do things than to speak trivialities. A Finnish handshake means more than a hundred-page legal contract. On these strengths we can build something new.
The Government is, in this grave situation, united and serious.
We now need unyielding determination and a common spirit of working and caring together. If one thing is certain, that’s how we’ll recover from this.