Thursday, August 27, 2015

New austerity measures come to Finland

Finland's economic woes these days are very nasty considering how much she has done to avoid them.  Her work force is incredibly hard-working and skilled, her education system is renown throughout the world as arguably the best, and her political culture is one of the least corrupt. That's the good news. The bad news is that she barely has enough agricultural land to feed herself, she has spent her history trying to maintain a culture while sandwiched between two powerful neighbors that love to rip her off, her complicated language is unlike almost anyone else's on earth, while her remote geographic location make most trade relationships difficult and expensive.

Because of Finland's historical isolation, she leapt at the chance to join the EU.  On paper, this looked like the obvious thing to do.  In reality, this has caused most of her current economic woes.  First, she got put on the hook for the Greek debts and then she was forced into an economic boycott with Russia—her biggest and most important trading partner by far.  If that were not bad enough, her two most important industries have been slammed by forces that were not at all easy to prepare for.  Not so lang ago, Nokia was one of the big global players in the mobile phone market.  That was before smartphones made folks believe that reliable call quality was not nearly so important as having a portable computer that could shoot high-def movies.  Finland's innovative and clever paper industry managed to become the top player on the planet just in time for the promise of the "paperless" society to finally come true.

Yes indeed, no one in their right mind would want the economic problems of Finland these days.  So no one should be especially surprised that the political response to these massive problems are especially lame.  In the article below, we see that some "bright" minds think the solution to her economic woes is to increase the working day by 15 minutes.  That's going to fix things...NOT!

Selling Austerity to Finland


Last Saturday the 22nd, around 10.000 citizens went down to the streets of Helsinki to protest against the governmental austerity measures. Does this come as a surprise if Finland just elected a billionaire business man as prime minister?

Last Saturday we witnessed one of the biggest manifestations this country has seen in its very young but (still) strong democracy [1]. Along the way, the crowd stopped and sat for 15 minutes in the street, blocking the traffic. This was not “occupy movement” nostalgia but a reaction to one of the proposed government austerity measures: the increase of the work day by 15 minutes. This touches on one fundamental point of Finland’s success from the last 40 years, which is partially based on an incredible strong union structure which has protected worker’s rights year after year turning this country into a welfare state. [2]

These 15 minutes will increase one thing: the social and financial gap between employer and employee. An increase of labor time reduces the amount of jobs that can be created and the amount of time workers can enjoy the fruits of their labor. It decreases the consumption power (and time) of the workers, affecting the circulation of capital essential to capitalism (not that I like it!). So who benefits? The Prime Minister, Juha Sipilä, knows it well; he is a business man, it simply increases the profits of the employer. A return to Reagan’s trickle-down economics strategy, long proved to have been dysfunctional [3].

So where does this austerity comes from?

Some blame Mr. Sipilä (the local Donald Trump) for now running a country as a company and as such, austerity is another word for optimization (of profits). Others blame the European Union for not allowing Finland to adjust the value of the currency (the euro drama). Others blame the economy (the fall of Nokia, the fall of the paper industry, the Russian embargo…). Others blame the old-fashioned methods of the Unions while others say there is no reason for an austerity at all.

But let’s first celebrate the level of different opinions showing the greatness of the Finnish society which is well accustomed to discussions around politics. Helsinki’s population [4] is so strongly educated and diverse that going to a public informative event has usually more intellectual pedigree than the average doctoral dissertations of let’s say, Australian Technical Universities!

This great legacy of the 5,5 million inhabitant has been reflected in the last parliamentary elections: The 8 main parties got 21,1%, 17,7%, 18,2%, 16,5%, 8,5%, 7,1%, 4,9%, and 3,5%. This is probably a better indication of a democracy than the generalized two party Ping-Pong (which not only USA but most of the world are in). Portugal’s democracy for example has been a match of two parties for the last 40 years, either PS or PSD.

The crucial (and downside) outcome of such elections was the coalition formed between the three winning parties: the centre, the true finns and the national coalition. These are a cocktail of liberals, nationalists and conservatives respectively. Heading this dream team is Juha Sipilä, a newcomer in politics, and a billionaire who got his fortune by selling his company to the American ADC Telecommunications in 1996. (Maybe an inspiration for another bad plot from José Rodrigues dos Santos: A business man running a well-fare state? It’s like a butcher running a vegan shop!)

Let us look at some of the upcoming austerity measures: 

Massive education cuts and end of free education:

“Finland’s universities are facing drastic cuts and the introduction of tuition fees for international students following the new government’s announcement of severe austerity measures that will involve lopping €4.5 billion (US$5 billion) off public spending by 2019. Overall, approximately €500 million (US$556 million) will be cut from higher education institutions. The government intends to freeze the university index, cut research funding from the Academy of Finland and Tekes – the Finnish Funding Agency for Innovation – and discontinue the compensation paid for pharmacy services to the University of Helsinki and the University of Eastern Finland.” [5]

43% cuts in development aid:

“This is a worrying signal to send out, especially now, when the space for civil society is under threat in many countries all over the world.” [6]

Increase of 15 min of work per day:

The proposal of the government is to “improve the productivity” by increasing the working time 100 hours per year which means additional 2,5 weeks / year (or extra 15 minutes / day , based on the calculations of the Bank of Finland). “The idea of a longer work week without additional pay was floated by Prime Minister Juha Sipilä as a possible element of a social contract between labour and private sector business representatives. The ultimate goal of the accord is the restoration of economic growth through improved business competitiveness.” [7]

Cuts for asylum seekers (10%):

“So if we’re talking about dental care, it must involve treating something like a severe toothache, and no more. We take care of the pain and address acute needs” [8]

Increase of military budget:

“Spending on Finnish defense has been in steady decline since 2006, when the military budget represented 1.4 percent of national gross domestic product (GDP). The GDP to defense spending ratio was 1.34 percent in 2014, and has dropped to 1.28 percent in the 2015 budget.” [9]

And so on…

But where does the austerity really come from? Have we had a natural disaster reducing food crops? A viral outbreak like the black plague? The so called “National debt crisis” comes from the combination of unregulated capital markets + unequal distribution + international disparity. Hard to understand? Take a look at the following graphic or read more on

It’s a manmade crisis: So will austerity solve anything? Not at all, it will worsen the status quo.

We seem to be unable to have a self-regulative system. We need alternative methods or we need to improve the way we are operating our markets, nothing to do with the short-term austerity solution.

Finland is indeed being sold the lie of austerity. And Finland just learned the lesson of how big businesses are run and are based on lies along with their optimization measures: in July 2015, Microsoft, who recently bought Nokia, just laid off in June, 66% of finish work force: 2.300 workers. [10]
If here, in highly educated Finland, such lies are successfully pushed through, then where else in the world is it not possible?

At the end of last Saturday’s manifestation, among many speakers, the beloved Finnish punk band PKN, whose all four members have Down Syndrome or Autism Spectrum Disorder, performed and reminded us of an important lesson: DIVERSITY in life, as in economics it is essential for survival. “Stop the austerity” (grow the diversity!!) is becoming a worldwide protest and we ought to support it if we want to improve our living and environmental conditions.

Finland was the first European country to introduce the universal suffrage in 1906, eleven years before becoming the republic of Finland. more


1. Comprehensive income policy agreements in Finland are tripartite agreements between trade unions, employers’ organizations, and the Finnish government. During the post war period, before the 1990s recession the unions were strong and powerful but decaying ever since.

2. Andreou, A., Trickle-down economics is the greatest broken promise of our lifetime | Alex Andreou. 2014. Available from:

3. Finnish population is around 5% foreigners. Portugal’s foreigner quota is around 6%. Germany is about 10%. Taking into account that Portugal is a former colonial power, this makes one wonder if one considers that both Finland and Portugal are extremities of Europe.

4. Myklebust, J.P., Universities face drastic cuts and tuition fees – University World News. 2015. Available from:

5. Finland slashes development aid by 43% amid fears others may follow. 2015. Available from:

6. Central bank memo: 40-hour work week would create growth, competitiveness. 2015. Available from:

7. Finland cuts cash support for asylum seekers. 2015. Available from:

8. defense_news, New Finnish Gov’t Expected To Hike Spending. 2015. Available from:

9. Microsoft Lays Off 66% Of Finnish Workforce: 2,300 Workers Axed As Part Of Wider Cuts. 2015. Available from:

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