Economic Outlook and Competitiveness of Finnish Industry

Simo PinomaaSenior Economist

Confederation of Finnish Industries EK

simo.pinomaa@ek.fiwww.ek.fi

vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv2

Elinkeinoelämän keskusliitto

Finlands Näringsliv

Confederation of Finnish Industries

2 EK/Eng/shs11.2004

pp.kk.vvvv Tekijä

3

EK represents

• The entire private sector and companies of all sizes

• 35 branch associations

• About 16,000 member companies, of which 96% are SMEs

• Over 70% of Finland’s GDP

• Over 95% of Finland’s exports

• About 950,000 employees

pp.kk.vvvv Tekijä

4

EK activitiesEK activities

Regional Offices Regional Offices EK BrusselsEK Brussels

• Logistics• Energy• Environment

and Climate• Sustainable

Development

• Business Law• Competition• Information

Society• Trade Policy

and International Relations

• Economy• Taxation• Employment• Finance and

Welfare• Business

Cycles and Trends

• Competitive-ness

• Collective Bargaining

• Development of Labour Market

• Labour and Social law

• Statistics and Surveys

• Corporate Security

• Business Development

• Education, Training and Qualification Requirements

• Labour and Immigration

• Research and Technology

• Business Services and Financing

CommunicationsCommunications

BusinessInfrastructure

Business Environment

Economic Policy IndustrialRelations

Innovation Environment

and Competences

SME-Affairs SME-Affairs

OUTLINE

• Economic Structures• Macroeconomic Situation• Finnish Competitiveness

pp.kk.vvvv Tekijä

6

From Agriculture to ServicesEmployment by Sector, %

pp.kk.vvvv Tekijä

7

pp.kk.vvvv Tekijä

8

The Volume of Industrial Production Has Doubled

pp.kk.vvvv Tekijä

9

The Industrial Growth without Electronics

pp.kk.vvvv Tekijä

10

pp.kk.vvvv Tekijä

11

pp.kk.vvvv Tekijä

12

Finland: 3 Stages of Economic Development

pp.kk.vvvv Tekijä

13

R&D in Finland in 1985-2005

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

1985 1987 1989 1991 1993 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005

Public sector Universities Enterprises

Billion EUR

0,91,1

1,51,7 1,

8

2,2

2,93,3

3,9

4,44,6

Source: Statistics Finland

4,8

5,3

(estimate)

5,05,4

pp.kk.vvvv Tekijä

14

R&D Expenditure per Capita in 2003 PPP dollars

0 250 500 750 1000 1250

Czech Rep.Spain

New Zeald.Slovenia

ItalyIrelandKorea

AustraliaUK

SingaporeBelgium

Netherlds.FranceCanadaNorwayAustria

GermanyDenmark

JapanIcelandFinland

IsraelUSA

Sweden

pp.kk.vvvv Tekijä

15

Educational achievements: OECD Pisa –studyOECD average = 500, 15 year old students

440 460 480 500 520 540 560

Finland

Korea

Japan

Canada

Australia

New Zealand

Netherlands

Belgium

Sw itzerland

Czech Rep.

Sw eden

Math Reading Natural Sciences Problem Solving

pp.kk.vvvv Tekijä

16

The Crises of the ”Finnish Model”1991 – 1993 a collapse in employment

Will the Good Economic Performance Continue? - yes at least in the short run …

pp.kk.vvvv Tekijä

18

Source: European Commission, April 2007

pp.kk.vvvv Tekijä

19

pp.kk.vvvv Tekijä

20

pp.kk.vvvv Tekijä

21

pp.kk.vvvv Tekijä

22

… the growth has been balanced …

pp.kk.vvvv Tekijä

24

pp.kk.vvvv Tekijä

25

A Strong Current Account Surplus

pp.kk.vvvv Tekijä

26

… but in the long run?

pp.kk.vvvv Tekijä

28

DM 3605405-2006 Copyright © Tekes

Total ranking 2003-2006Total ranking 2003-2006

Sources: IMD, The World Competitiveness Yearbook 2006 andWEF, The Global Competitiveness Report 2005-2006

IMDTotal compe-

titiveness20062004 20032005

WEFGrowth

competitiveness

2005

WEFBusiness

competitiveness

221

124

145

177

2115

986

133

20

1123456789

10111213141528

FinlandFinlandUSASwedenDenmarkTaiwanSingaporeIcelandSwitzerlandNorwayAustraliaNetherlandsJapanGreat BritainCanadaGermanyHong Kong

1123456879

10121115161424

1123547

1086

1412

911151321

10101

145

18348

126

151721

726

2

Finland and Competitiveness

pp.kk.vvvv Tekijä

29

0

5

10

15

20

25

30

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Ranking of Finland in IMD Total Competiteveness Indicator

Lähde:IMD

Simo Pinomaa14.5.2005

Sources: IMD, The World Competitiveness Yearbook 2006

pp.kk.vvvv Tekijä

30

0

10

20

30

40

50

60

Source: Eurostat

EU-27 average 40,8 %

Total Tax Revenue as percentage of GDP EU-countries in 2005

pp.kk.vvvv Tekijä

31

0.841.04

2.333.29

5.095.48

6.046.82

10.9014.72

16.5017.47

19.1020.1220.41

20.7520.92

21.6423.88

24.2224.62

25.3825.70

26.1926.67

29.4131.17

0 5 10 15 20 25 30 35

India***China***Russia**

Brazil*Estonia

Czech RepublicPortugal

SingaporeSouth Korea*

SpainJapan

ItalyIreland

USAFrance

AustraliaCanada

United KingdomSweden

AustriaSwitzerland

BelgiumNetherlands

FinlandGermanyDenmark

Norway

Euro/hour

Labour costs in various countries 2006Industrial workers

*2005 **2004 ***2003Source: Confederation of Sw edish Enterprise, U.S. Department of Labor, Economist, Confederation of Finnish IndustriesData mainly refers to the blue-collar w orkers in manufacturing but in some countries to all employees.

Saukkonen

7.5.2007

pp.kk.vvvv Tekijä

32

3.9

3.5

3.1

2.4 2.4 2.5

5.6

4.2

3.8

3.1 3.1 3.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2001 2002 2003 2004 2005 2006*

%

Euro area Finland

Change of labour costs in Finland and euro area 2001 - 2006Private sector

Source: Eurostat (Hourly Labour Cost Index), Statistics Finland (Labour Cost Index)

Saukkonen

7.5.2007