The Unassuming Economist

A new IMF report says that “Finland’s labor market features a highly educated workforce and has safeguarded equality during a time of adverse shocks. But labor market outcomes have not been as good as in Nordic peers for many years. This paper suggests that there is room for improvement in two main areas. First, wages have become misaligned with productivity at the sectoral level during the past decade. More firm-level flexibility in collective bargaining could help to address this. Second, labor supply is lower among certain population groups compared to other Nordics; to this end, bolstering work incentives further for the low skilled, women of child-bearing age, young and old workers would help. These structural measures would be important also because employment seems to respond less to cyclical growth upswings now than before the turn of the millennium. Finally, additional policies to facilitate the adjustment of the labor market to global trends—technological change and globalization—will likely be needed over the longer term.”