| ALSO IN THE 4/2011 ISSUE OF PRIMA: | |
| • | Eeva-Liisa Inkeroinen, EK’s Director of Industrial Relations: The salary-price cycle must be prevented |
| • | Arab countries face a period of investment |
| • | Economist Bart van Ark: The United States far outperforms Europe in terms of the productivity of services |
| • | Small and medium-sized enterprises are the key to economic growth |
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• Lasse Laatunen of the Confederation of Finnish Industries EK:
THE PENSION SYSTEM NEEDS REFORM
”Unless we raise the retirement age, we will end up with an impossible equation. A situation where a large number of people would collect benefits for up to 40 years is unsustainable,” says Lasse Laatunen, EK’s Director of Legal Affairs in an interview with EK’s Prima Magazine, published on Thursday, 9 June.
For now, pensions are raised in accordance with the so-called earnings-related pension index, in which the weight given to price increases is 80 per cent and the weight given to salary increases is 20 per cent. Some political parties have called for the halfway (or fifty-fifty) index, which was in use until the mid-1990s, and in which the changes in pensions were tied to increases in prices and salaries on a 50-50 basis.
According to Laatunen, Finland simply cannot afford to revert to the halfway index. This would constitute too dramatic an income transfer from the current youth to the currently middle-aged.
”Reinstating the halfway index would increase employment pension payments with two to three percentage points in 20 years’ time, whereas sensible policies would, in contrast, require us to reduce the payment burden by at least an equivalent rate. In other words, the index increment would simply put the younger generation at a [huge] disadvantage. This is entirely unacceptable,” says Laatunen.
According to Laatunen, index adjustments are something employers’ associations and wage earners agree on. Increases in employment pension payments are divided equally between employees and employers.
Laatunen believes that, rather than reverting back to the halfway index, the Finnish system is more likely to face an all-out shift to the cost-of-living index. The cost-of-living index is already applied to national pensions in Finland, whilst also being the most popular index model applied to earnings-related pensions worldwide.
“Pensions are not postponed salaries, but social security earned through labour,” explains Laatunen, and reminds people not to confuse these two concepts.
“Pensions are not even supposed to increase in line with salaries. Rather, what is important is that the purchasing power of pensions is secured.”
“Thus an index is not an earned benefit, but subject to adjustments stemming from common legislation,” says Laatunen.
The current pension system allows for retirement years to exceed the years spent in actual working life. According to Laatunen, the minimum age limit for old-age pension should be raised from 63 years to 65 years as soon as possible. Another option would be to gradually increase the minimum retirement age to 67 years.
Reforming the pension system calls for a variety of measures. Raising the minimum age of retirement constitutes only one such measure. However, Laatunen feels that increasing the minimum age of retirement would send a clear message of the country intending to retain the health of its economy and that people must be willing to work longer.
According to Laatunen, increasing the minimum age of retirement is an issue that should figure on the agenda of the government now in the making, not the electoral period following this one.
“An electoral period is a short period of time with regard to pension reform, but a long period of time to be wasted in decision making,” says Laatunen.
• Ole Johansson, Chairman of the Confederation of Finnish Industries EK:
UNCERTAINTY IS EVIDENT IN ACCRUAL OF ORDERS
Uncertainty is once again gaining a foothold in international commerce, according to Ole Johansson, President and CEO of Wärtsilä and Chairman of EK’s Board of Directors. According to Johansson, this is already evident in the accrual of orders.
In light of such developments, the new government needs to make some wise decisions. A welfare society is based on healthy economic life. Even fast growth is not sufficient to offset the growth of public sector debt. What is needed, in addition to robust growth, is decision making that improves the productivity of public-sector economy.
”Steady economic growth demands an environment that promotes private sector investment in Finland and operations in this country. A prerequisite for growth is that there is a demand for Finnish products and services, and that those products and services are competitive both in terms of quality and prices,” says Johansson.
The strong focus on the problem of poverty evident in recent public discussion surprises Johansson, particularly since the discussion has lacked suggestions on how to finance poverty-related efforts. According to Johansson, the more urgent issue is how to generate growth in order to sustain welfare and prosperity.
• COMPANIES TARGETED BY VARIOUS TYPES OF CRIMINAL ACTIVITY
Retail and industrial outlets are nowadays the targets of a variety of crimes. The amount, structure and nature of crime varies according to the industry in question, reveals a recent study conducted by the National Research Institute of Legal Policy.
With regard to retail sales outlets, the majority of crime consists of thefts committed by customers. Retail outlets are also often targets of violence and threats against staff as well as property damage, writes Venla Salmi, a researcher of the National Research Institute of Legal Policy in EK’s Prima Magazine.
Industrial sites and offices were also the subjects of various kinds of theft, but the most common type of crime prevalent in this field were attacks against information systems that cause damage to the targeted company. Fraud, property damage and burglaries were also included among typical crimes afflicting the industrial sector.
According to the results of the study, the distribution of crime targeting the business sector seems to be somewhat uneven. While some sectors seemed to be wholly spared from criminal activity, others were targeted all the more frequently.
• COMPANIES CARRY GREAT RESPONSIBILITY IN THE ASSIMILATION OF IMMIGRANTS
”As the working-age population ages, it is high time for companies to assume an active role as architects who support immigration policies that buttress Finland’s competitiveness,” says EK’s expert in charge of immigration policies, Riitta Wärn.
”Throughout the years I’ve spent in my current position, I’ve had the chance to meet a great number of immigrants, all of whom have wanted to work. It is really sad to hear these people tell about their intense desire to work, all too often a desire that does not even lead to job interviews, regardless of whether the candidate has completed the curriculum of the Finnish comprehensive school system and would have a vocational, if not a university, degree," says Ms. Wärn in an interview with EK's Prima Magazine.
According to Wärn, employers should immediately take a look at their motives.
”Prejudices and preconceived attitudes cannot be dealt with by denying their existence, but by acknowledging them. It is only after such acknowledgement that we can influence matters."
• FINAVIA´S CHANGE AND GROWTH ORIGINATE FROM ASIA
When it comes to growth, Finavia – in charge of a network of 25 airports in Finland and the country’s air navigation system – relies mostly on Asian passengers.
”Asia marks the path of growth we are following,” is how Samuli Haapasalo, President and CEO, sums up the significance that Asian passengers hold for Finavia.
”We only need to take care of our operations the best we can. Everything needs to start from the customer and invariably from the perspective of service,” says Haapasalo in EK’s Prima Magazine.
The former government agency's road to the service enterprise it now is has been long, and not without its twists and turns.
Milestones consist of the Finnish Civil Aviation Administration being transformed from a government agency into a commercial enterprise in 1991 and of Finavia becoming a limited liability company in 2010.
At the same time, civil servants have become customer service agents.
”Whereas, before, we were a commercial establishment focused on issues concerning basic infrastructure, we are now a company which serves customers. Our management philosophy and steering have been entirely reformed with this in mind.”
THE PENSION SYSTEM NEEDS REFORM
”Unless we raise the retirement age, we will end up with an impossible equation. A situation where a large number of people would collect benefits for up to 40 years is unsustainable,” says Lasse Laatunen, EK’s Director of Legal Affairs in an interview with EK’s Prima Magazine, published on Thursday, 9 June.
For now, pensions are raised in accordance with the so-called earnings-related pension index, in which the weight given to price increases is 80 per cent and the weight given to salary increases is 20 per cent. Some political parties have called for the halfway (or fifty-fifty) index, which was in use until the mid-1990s, and in which the changes in pensions were tied to increases in prices and salaries on a 50-50 basis.
According to Laatunen, Finland simply cannot afford to revert to the halfway index. This would constitute too dramatic an income transfer from the current youth to the currently middle-aged.
”Reinstating the halfway index would increase employment pension payments with two to three percentage points in 20 years’ time, whereas sensible policies would, in contrast, require us to reduce the payment burden by at least an equivalent rate. In other words, the index increment would simply put the younger generation at a [huge] disadvantage. This is entirely unacceptable,” says Laatunen.
According to Laatunen, index adjustments are something employers’ associations and wage earners agree on. Increases in employment pension payments are divided equally between employees and employers.
Laatunen believes that, rather than reverting back to the halfway index, the Finnish system is more likely to face an all-out shift to the cost-of-living index. The cost-of-living index is already applied to national pensions in Finland, whilst also being the most popular index model applied to earnings-related pensions worldwide.
“Pensions are not postponed salaries, but social security earned through labour,” explains Laatunen, and reminds people not to confuse these two concepts.
“Pensions are not even supposed to increase in line with salaries. Rather, what is important is that the purchasing power of pensions is secured.”
“Thus an index is not an earned benefit, but subject to adjustments stemming from common legislation,” says Laatunen.
The current pension system allows for retirement years to exceed the years spent in actual working life. According to Laatunen, the minimum age limit for old-age pension should be raised from 63 years to 65 years as soon as possible. Another option would be to gradually increase the minimum retirement age to 67 years.
Reforming the pension system calls for a variety of measures. Raising the minimum age of retirement constitutes only one such measure. However, Laatunen feels that increasing the minimum age of retirement would send a clear message of the country intending to retain the health of its economy and that people must be willing to work longer.
According to Laatunen, increasing the minimum age of retirement is an issue that should figure on the agenda of the government now in the making, not the electoral period following this one.
“An electoral period is a short period of time with regard to pension reform, but a long period of time to be wasted in decision making,” says Laatunen.
• Ole Johansson, Chairman of the Confederation of Finnish Industries EK:
UNCERTAINTY IS EVIDENT IN ACCRUAL OF ORDERS
Uncertainty is once again gaining a foothold in international commerce, according to Ole Johansson, President and CEO of Wärtsilä and Chairman of EK’s Board of Directors. According to Johansson, this is already evident in the accrual of orders.
In light of such developments, the new government needs to make some wise decisions. A welfare society is based on healthy economic life. Even fast growth is not sufficient to offset the growth of public sector debt. What is needed, in addition to robust growth, is decision making that improves the productivity of public-sector economy.
”Steady economic growth demands an environment that promotes private sector investment in Finland and operations in this country. A prerequisite for growth is that there is a demand for Finnish products and services, and that those products and services are competitive both in terms of quality and prices,” says Johansson.
The strong focus on the problem of poverty evident in recent public discussion surprises Johansson, particularly since the discussion has lacked suggestions on how to finance poverty-related efforts. According to Johansson, the more urgent issue is how to generate growth in order to sustain welfare and prosperity.
• COMPANIES TARGETED BY VARIOUS TYPES OF CRIMINAL ACTIVITY
Retail and industrial outlets are nowadays the targets of a variety of crimes. The amount, structure and nature of crime varies according to the industry in question, reveals a recent study conducted by the National Research Institute of Legal Policy.
With regard to retail sales outlets, the majority of crime consists of thefts committed by customers. Retail outlets are also often targets of violence and threats against staff as well as property damage, writes Venla Salmi, a researcher of the National Research Institute of Legal Policy in EK’s Prima Magazine.
Industrial sites and offices were also the subjects of various kinds of theft, but the most common type of crime prevalent in this field were attacks against information systems that cause damage to the targeted company. Fraud, property damage and burglaries were also included among typical crimes afflicting the industrial sector.
According to the results of the study, the distribution of crime targeting the business sector seems to be somewhat uneven. While some sectors seemed to be wholly spared from criminal activity, others were targeted all the more frequently.
• COMPANIES CARRY GREAT RESPONSIBILITY IN THE ASSIMILATION OF IMMIGRANTS
”As the working-age population ages, it is high time for companies to assume an active role as architects who support immigration policies that buttress Finland’s competitiveness,” says EK’s expert in charge of immigration policies, Riitta Wärn.
”Throughout the years I’ve spent in my current position, I’ve had the chance to meet a great number of immigrants, all of whom have wanted to work. It is really sad to hear these people tell about their intense desire to work, all too often a desire that does not even lead to job interviews, regardless of whether the candidate has completed the curriculum of the Finnish comprehensive school system and would have a vocational, if not a university, degree," says Ms. Wärn in an interview with EK's Prima Magazine.
According to Wärn, employers should immediately take a look at their motives.
”Prejudices and preconceived attitudes cannot be dealt with by denying their existence, but by acknowledging them. It is only after such acknowledgement that we can influence matters."
• FINAVIA´S CHANGE AND GROWTH ORIGINATE FROM ASIA
When it comes to growth, Finavia – in charge of a network of 25 airports in Finland and the country’s air navigation system – relies mostly on Asian passengers.
”Asia marks the path of growth we are following,” is how Samuli Haapasalo, President and CEO, sums up the significance that Asian passengers hold for Finavia.
”We only need to take care of our operations the best we can. Everything needs to start from the customer and invariably from the perspective of service,” says Haapasalo in EK’s Prima Magazine.
The former government agency's road to the service enterprise it now is has been long, and not without its twists and turns.
Milestones consist of the Finnish Civil Aviation Administration being transformed from a government agency into a commercial enterprise in 1991 and of Finavia becoming a limited liability company in 2010.
At the same time, civil servants have become customer service agents.
”Whereas, before, we were a commercial establishment focused on issues concerning basic infrastructure, we are now a company which serves customers. Our management philosophy and steering have been entirely reformed with this in mind.”