The International Monetary Fund on Thursday recommended that Finland continue structural reforms to boost long-term growth in its concluding statement on the country’s economic outlook.
The statement listed structural reforms as a priority to boost long-term growth, and Finland was advised to implement changes to the collective bargaining system. To support employment and productivity, the IMF said that high-level agreements would set a broader framework.
Mentioning other structural reforms to improve employment, productivity and economic resilience, the IMF urged to continue closing routes to early retirement. Additionally, in-work and out-of-work benefits should be reformed to reduce work disincentives, including for women with care responsibilities.
This year, the GDP is expected to grow by 2%. However, according to the IMF, predictions for growth in 2023 are around zero, after which a slow recovery and a return to growth of slightly above 1% should happen.
Even if overall wage growth has remained moderate, the recent wage agreements in the public sector create growing pressures and risk undermining external competitiveness, the IMF stated. This year, inflation is expected to rise to 7% but slow down to 4.5% in 2023.
A growing debt should be tackled ”by a gradual, but well-defined and well-communicated medium-term consolidation plan based on measures identified in the comprehensive spending and tax reviews,” the IMF formulated.
The government’s proposal to increase R&D spending to 4% was welcomed. But, R&D tax incentives should be directed towards startups and SMEs where the impact would be strongest. The IMF also emphasised the importance of attracting more skilled foreign workers to the Finnish labour market.
(Pekka Vänttinen | EURACTIV.com)
Source: euractiv.com
