New Year message from Prime Minister Matti Vanhanen
A year ago the world economy was suffering a serious downturn and no alleviation of the crisis was in sight. We all hoped then that the new year would show some signs of an end to the crisis. And that proved to be the case. Thanks to broad-based international cooperation, the world economy has picked up, even though uncertainty about growth remains.
In Finland, too, the deepest point of the recession is behind us and we are moving towards better times. Before that, however, many Finns and their families will have to face unemployment, which unfortunately will continue to grow during this winter and spring.
The Government will implement policy measures aimed at alleviating the problems that arise. The Government’s attention is now focused on preventing youth and long-term unemployment.
A lesson learned from the last recession is that broad-based efforts are necessary to avoid long-term unemployment and, in particular, social exclusion of young people. From a humane point of view, and from that of the entire society, social exclusion is something we cannot afford.
Increased solidarity in particular will be needed in the near future. We wish to maintain an undivided society and we need to take care of the weakest among us. The economic crisis must not be managed at the expense of their wellbeing.
Nations have faced the recession in various ways and the crisis has also been instructive. One of the positive lessons learned is that it will be worthwhile maintaining strong public finances in the future, too. A further important point is that our banking sector has operated wisely and cautiously; during this difficult period the banks in Finland have not needed the support of Finnish taxpayers.
To ensure work and income for Finns in the future, we need to pay attention to our production structures, taxation, education, transport and communications infrastructure, and the energy sector, to mention only a few areas. Our growth and wellbeing can only be generated from the work done in those sectors where there is sufficient demand.
The economic histories of various countries prove that success in one sector does not last forever. We need to be able and willing to constantly find success in new areas. We Finns have found this capacity in ourselves before and I believe we will continue to do so.
Pay settlements will play an important role in Finland’s competitiveness in the next decade. The decisions we make now will be a true test of our ability to pursue a moderate pay policy that promotes competitiveness in the single currency era.
It is of paramount importance not to price ourselves out of the market. Finland is an open economy that depends on exports. Ultimately, it is we who will decide to choose between high costs and work. In this, social partners will bear a clear responsibility.
The Finns’ faith in the future has been stronger than during the last recession. It is a fact that our economy weakened more in 2009 than in the recession peak of 1991. However, we have been able to maintain in these circumstances a reasonable level of employment, thanks to our domestic market and to a Government policy that has promoted domestic demand.
Households and a broad spectrum of entrepreneurs have had faith in the future and this has safeguarded a large number of jobs. Now that signs of economic growth are more clearly evident, I believe this faith will also help maintain employment levels in the coming year.
The central government has kept the engines running through the crisis by increasing public debt to the level necessary in the circumstances. It is, in fact, the duty of central government to balance market trends. Nevertheless, an ever-increasing debt burden cannot be a lasting solution. The only sustainable solution is to maintain the amount of work in Finland at an adequate level.
We now need the courage to make the decisions that will promote Finnish wellbeing in future. Action is needed to maintain our welfare commitments without having to raise the tax burden of any generation to an unreasonable level.
Preparations for the Copenhagen Climate Conference towards the end of 2009 constituted one of the largest global efforts of the year. While no breakthrough was achieved in Copenhagen, the conference did manage to gather together nearly all the countries of the world and, for the first time, to make them stand behind certain commonly-agreed policy lines. The entire world now accepts that an effort must be made to limit global warming.
Nevertheless, policy outlines given in Copenhagen and emission reduction targets to be set by a number of countries in January will not be enough to reach the level recommended by the international scientific community. Further measures and commitments will be required.
On behalf of its Member States, the European Union affirms a shared commitment to climate protection. It is also true that many of the measures to be carried out in Europe will be agreed jointly at the EU level. Even so, we must ensure that we are nationally prepared to take more short-term measures than we had previously planned. The fact that the Copenhagen Climate Conference did not satisfy all expectations does not remove the problem. Responding to climate change remains an important item on the political agenda, requiring concrete action from us all.
I wish everyone in Finland a Happy New Year.
Matti Vanhanen
Prime Minister