Contents | How to obtain this publication | Additional information
The following is the Executive summary of the OECD assessment and recommendations, taken from the Economic survey of Finland, published on 3 June 2008.
The Finnish economy has performed very well in recent years, with strong GDP growth in a low-inflation environment, rising employment and a sound fiscal position. Strong social safety nets and high education standards put the country in a good position to benefit from the opportunities of globalisation. However, unemployment remains high, despite rising labour shortages, pointing to significant rigidities in the labour market. In addition, the challenges of population ageing and rising health costs pose risks to the long-term sustainability of public finances. Municipalities, in particular, will face increasingly greater demands in the field of health and old-age care. The industrial structure of the economy also poses risks, since the forestry sector is under intense pressure, and even in the successful telecommunications industry, competition is strong. Structural policies do not always facilitate a rapid reallocation of resources. Unless measures are taken to improve the sustainability of the public finances, the already high tax burden will have to rise, worsening work incentives, encouraging highly skilled tasks to be offshored, and making it more difficult to attract and retain highly skilled workers in Finland. Against this background, the challenge for Finland is to find ways to modify the tax and welfare systems so that they better encourage efficiency and improve labour market incentives, without losing the benefits of redistribution and social support. Key challenges include:
Raising tax revenues more efficiently: The taxation of labour should be lowered, particularly on high income earners, to help attract and retain highly skilled jobs and workers, and to limit the incentive to reclassify labour income as capital. Taxes on property are currently very low and should be raised, both because property is an immobile tax base and because it is a progressive tax. Both the corporate tax and VAT bases could be broadened, and the corporate tax rate cut.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Finland 2008 is available from:
For further information please contact the Finland Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by Anne-Marie Brook, Petar Vujanovic, Marketta Henriksson and Marte Sollie under the supervision of Peter Hoeller. Research assistance was provided by Isabelle Duong.