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Flexibility reassessed Helsinki (Peter J. Boldt - 26.02.1998) ... "The idea that the Finnish labour market is especially inflexible and that this is the reason for the high unemployment rate in Finland and elsewhere in the European Union continues stubbornly in common currency. The OECD and its economic policy section have long been a centre for this mode of thinking. The "Jobs Study" of a few years ago reached the conclusion that the only way to reduce unemployment would be to repeal legislation and annul agreements made to protect the rights of employees. These theses have been repeated in the OECD's Economic Outlook every six months and have usually commanded wide media attention in Finland as well as in other countries." ... "In contrast the OECD's other publication, the annual Employment Outlook, has seldom been the subject of comment in the Finnish press. This may be due to the fact that it comes out in July when most Finns are on holiday. However, Employment Outlook has an interesting approach. The 1996 and 1997 reports systematically analyse the main arguments for flexibility and investigate whether or not international statistics support the assumptions made by the economists. Rising income differentials and, above all, reductions in the wages of the lowest paid sector hardly increase employment. What they do increase is social inequality. A reduction in the starting salaries of young people barely diminishes youth unemployment. In Finland an experimental project created, instead of tens of thousands, only a handful of new jobs. Neither does accelerating labour force rotation, i.e. making dismissal easier, create new jobs or lower unemployment. The statistics do not justify the continuous insistence of OECD economists for decentralisation of the collective bargaining system. It is thus no wonder that participants in the Finnish discussion so seldom refer to the OECD Employment Outlook, a publication that openly casts doubt on generally accepted ideas. Within the OECD itself, Employment Outlook has, however, had some impact. The Economic Outlook published in December 1997 is not as eagerly in favour of decentralisation of the negotiation system as it used to be and no longer declares the virtues of flexibility with eye-catching point sizes. The results of the OECD's Employment Outlook do not surprise those who are well aware of the real behaviour of the labour market and human beings." (Excerpts are from SAK's monthly Palkkatyöläinen, published 03.02.1998) |
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