Paavo Lipponen, Prime Minister of Finland at the ILO Global Employment Forum, Geneva, November 1, 2001

The tragic events of 11th September added an element of uncertainty to the already weakening confidence in the world economy. The slowing down came after a long period of robust growth generated particularly by heavy investment in the IT sector. Over-inflated expectations of growth and market value of companies have now been scaled down.

The future need not be bleak. The economic fundamentals in Europe are in better shape than during earlier downturns. The ICT sector remains a stronghold for future economic development. The prospects for recovery next year are good.

Europe can make its most meaningful contribution to recovery by concentrating on long-term priorities. Europe needs further structural reforms and a more positive approach to globalisation. Greater emphasis should be placed on development and the eradication of poverty.

The new alliances and the spirit of cooperation now emerging globally should be used to this effect. The UN system and the role of organisations like the International Labour Organisation should be strengthened. The ultimate objective is to provide tools to tackle the double challenge of promoting and managing global change. Finland is a strong supporter of the UN's development efforts and we are committed to increase our national contribution to development aid, including its share of GNP.

At the Lisbon European Council in spring 2000, the European Union set the strategic goal to become, within the next ten years, the most competitive and dynamic knowledge-based economy in the world. The Lisbon strategy is based on the observation that labour markets, or any other market, cannot be developed in isolation. Labour markets must be assessed as part of the rapidly evolving global economy.

The Lisbon summit set some concrete targets.

First, it is imperative to maintain the hard-won stability in fiscal policy.

Second, we need to take full benefit of the European single market. The introduction of the euro underlines the necessity to constantly improve the functioning of the internal market.

Third, as regards the financial markets, a speedy implementation of reforms is crucial in order to keep up with the rapidly changing financial environment.

Fourth, our European social model should be combined with increased adaptability. Global economy and rigid labour markets are a poor combination.

Finally, the welfare state should support, not retard, this process. Citizens need an adequate level of social security but, at the same time, work should always pay.

The success story of the Finnish economy has been based on a strategy closely resembling the Lisbon strategy.

Finland has recently been ranked first in the Growth Competitiveness Index produced by the World Economic Forum. We have the world's greatest medium-term growth potential.

Our macro economic policy is firmly stability oriented. We have a long tradition of balanced budgets. Public finances have a strong role in the economy, on a sustainable basis.

The World Economic Forum rightly recognizes the central role of strong political institutions in Finland. The broad-based government and functioning cooperation with employers and employees organisations has given both stability and reforms. At present we are engaged in tri-partite negotiations to reform our pension and unemployment insurance systems to promote employment and secure the financing of services for an ageing population.

The concept of equality characterises all aspects of the Finnish society. We are pioneers in the suffrage question. The Finnish women were given the right to vote as early as in 1906.

Equal opportunities are a crucial element in a successful strategy. Access to free, universal, high-level education is of fundamental importance. Today, 70 per cent of the population will at some point receive university level education.

We are proud of our services, such as subsidized day-care for children and high-quality old-age nursing homes. Even in the midst of the deep economic crisis in the early 1990's we were able to save all essential elements of our welfare system.

Unemployment has come down from crisis levels more rapidly than in other countries, but is still high at 9 per cent. Employment has gone up and the present rate already exceeds the EU average: 68 per cent of the Finns in the working age are employed.

Our greatest employment challenge for the future is how traditional industries, services and the public sector will more effectively be able to utilize the potential offered by new technologies.

The roots of the high-technology society are in the long-term policy of investment in research and development, now accounting for 3 per cent of GNP. Two thirds of this is covered by the private sector and the government is determined to raise the level of public financing of R&D.

Universities, research centers, technology centers and companies are integrated in an innovation system that works. This has produced, among other things, two of the world's leading high-technology concentrations, in Helsinki and Oulu.

But the success of Finland would not have been possible without access to global markets and foreign capital nor without the multilateral trade system. The positive aspects of globalisation have often been forgotten. I believe that playing a part in the global economic system would help many countries struggling with poverty and instability.

For small nations with limited natural and human resources the further opening of markets and the development of the multilateral trading system within a framework of globally agreed rules is the best way to succeed in today's competitive world.

A determined and constructive approach to the new round of negotiations at the WTO is of crucial importance. Access to the European market and to that of the other industrialised countries is a vital precondition for sustained economic growth in the developing countries. Without major progress in market access, it will be difficult, if not impossible, to reduce poverty in the developing countries.

The most important task at hand is to work for a successful outcome at the Doha Ministerial meeting. An important step towards this was the agreement to intensify the analysis of the question of social dimension and globalisation.

The ILO is ideally equipped to deal with a whole range of social issues in the context of globalisation. Not only with questions regarding trade and labour standards, which have provoked a lot of controversy during the last years, but also with the linkages between employment, social protection, labour rights, trade and investment and the eradication of poverty.

The unique nature of the ILO lies in its capacity to link social justice to economic performance. This is reflected in its tripartite structure, enabling both employers' and workers' representatives to participate directly in decision-making.

The ILO can play a pivotal role in generating dialogue on globalisation between multilateral institutions, like the ILO itself, and organisations such as the Bretton-Woods Institutions, the WTO, the OECD and the European Union. The ILO's experience in the world of working life, including issues relating to minimum standards for decent employment.

This could also prove a constructive way to tackle the effects of globalisation and the liberalization of trade and investment on employment and social and labour standards. The debate will continue, and the ILO will have to be represented at the fora where it takes place.