Category Archives: Dissertation

Vientivetoinen talousmalli ei tule onnistumaan

Tänään on sunnuntai ja se tarkoittaa, että aloitan päivän kahvilla ja alankomaalaisella lehdellä. Yksi syy siihen on, että pysyn vähän kärryllä siitä, mitä siellä tapahtuu. Myös uutisaiheiden valinta on varsin erilainen kuin Suomessa.

Tänään viikkolehdessä oli artikkeli nimeltään: “Liian monta rahtilaivaa liian vähälle rahdille”. Artikkeli kertoi siitä, mitä olen aiemmin olen kyllä myös lukenut esim. Naked Capitalism -sivuilla (Wolf Richterin kirjoituksia) ja välillä myös ZeroHedge.comilla. Nimittäin maailman kauppa on vuodesta 2010 kovasti hidastunut. Seurauksena on rahtilaivojen ylikapasiteettia. Toki rahdin hinta on myös tippunut öljyn hinnan kautta ja siitä että monet rahtiyritykset ovat ottaneet uusia, varsin isoja konttilaivoja käyttöön. Mutta silti – tältä se näyttää. Olen laiskana ja tänään otin vain kuvan siitä lehden graafista; en pääse kotikoneella Baltic Dryn datoihin tai Alankomaiden Tilastokeskuksen datoihin.

Maailman tavarakauppa, 3kk:n prosenttimuutos verrattuna edellisvuotta. Lähde: NRC/Handelsblad ja CPB

Maailman tavarakauppa, 3kk:n prosenttimuutos verrattuna edellisvuotta. Lähde: NRC/Handelsblad ja CPB

Artikkelissa on myös ING:n kansainvälisen kauppatutkimuksen johtaja Raoul Leering puheella, joka sanoo: “Kauppa alkaa kysynnästä. Ilman kysyntää (tuonti) ei kauppa (vienti).” Hän tuo esiin, että Kiinan tuonti on rajusti vähentynyt ja Euroopassa ja Amerikassa tuonti on edelleen heikko. Molemmat suuret kehitykset selittävät suuren osan maailmankaupan heikkoudesta.

Mitä tämä nyt tarkoittaa Suomelle ja Suomen talous? Olin torstaina puhumassa Metalliliiton tutkijatapaamisessa – raportoin myöhemmin siitä – ja sielläkin puhuin talouden rakenteesta. Vienti on toki tärkeää (pitäähän saada aggregaatissa saada tarpeeksi rahaa, että pystyy maksaa tuontitavarat) mutta väitän (kuten myös monet muut taloustieteilijät kuten Servaas Storm ja C.W.M. Naastepad, Özlem Onaran ja Marc Lavoie), että Suomen talouskasvulle kotimainen kysyntä, joka perustuu sitten palkkojen kehitykseen, on paljon olennaisempi. Olen tätä  jo vähän käsitellyt mm. tässä.

Suomen talouspolitiika kuitenkin keskittyy “kilpailukykyyn”, sekin hyvin kiistanalainen käsite joka tarkoittaa jotain erilaista jokaiselle puhujalle. Idea on, että Suomi on vientivetoinen maa ja näin ollen pitää tehdä toimenpiteitä jotka tukevat Suomen vientiä. Yllätys, yllätys – monet näitä toimenpiteet keskittyvät työvoimakustannuksiin, vaikka monet Suomen vientituotteet tulevat pääomaintensiiviseltä teollisuudelta jonka työvoimakustannusten osuus on suht. pieni. Ei puhuta siitä (tai tehdään politiikkaa siihen), että investoinnit tai uusia energiaratkaisuja voivat olla parempia vientipolitiikan kannalta. Kuten olen tässä näyttänyt, Suomen vienti on yleisesti puhuen aika bulkituotekeskeistä (ainakin jos puhutaan sen suurimmista osista).

Tänä aamuna ajatukseni oli siis suurin piirtein tämä: miksi tehdään politiikka, joka keskittyy työvoimakustannuksiin, vaikka se ei ole teollisuudelle mitenkään suurin kustannusten tekijä? (tätä käsittelin myös jo väitöskirjassani) Sen lisäksi – kauppa alkaa muiden maiden tuonnista, joten niin kauan kuin maailmantalous on heikko (heikkenemässä?) ja Euroopassa kasvu on todella vaisua, mitä on sitten järkeää tehdä tuollaista politiikkaa joka heikkenee kotimaista kysyntää? Ei opettajien tai terveyskeskuksen tai kauppojen henkilökunnan matalampi palkkaa oikeasti (edelleenkään) auttaa teollisuuden “kilpailukykyä” mitenkään. Firmat kuten Kone ja Wärtsilä pärjäävät hyvin koska muissa maissa on yrityksiä jotka haluavat ostaa niiden tuotteet. Takana on vaikka laatu, after-sales palvelut ja ylläpito , innovatiivisuus (esim liittyen Rikkidirektiiviin!). Ehkä pitää taas puhua johtajuudesta eikö pääoma-työ-vastakkainasettelusta.

Pidän Suomen tämän hetken talouspoltiikan linjaukset monin tavoin hyvin ongelmallisena: taloustieteen näkökulmasta, kauppatieteen näkökulmasta, vaikka schumpeterilaisilla näkökulmassa. Voi olla että nämä kaikki toimenpiteet toimivat Sipilän yrityksillä mutta jos hän yrittää oppia siitä ja yrittää soveltaa sitä koko maahan, se on sitten jättimainen fallacy of composition. Hän olisi voinut tutustua siihen jos olisi vaikka ottanut argumentaatiokurssia yliopistossa.

UPM Jämsänkosken ja Kaukaan paperikoneet lakkautetaan – näkemykset

Eilen UPM-Kymmene yllätti Suomen mediaa, Paperiliittoa ja tietenkin Jämsänkosken ja Kaukaan tehtäiden henkilöstöä ilmoittamalla, että yhtiö sulkee Suomessa kaksi isoa paperikonetta (yhteensä 460.000 t/v). Tässä löytyy englanniksi Jussi Pesosen kommentit asiaan, missä on seuraavat elementit: paluu kannattavuuteen, liian alhainen käyttöaste ja nykyinen/tulevaisuuden rankka taloustilanne.

Odotetusti tuli ilmoitus ulosmarssista. (myös täällä ja Ranskassa).

Kuten Helsingin Sanomista ja Paperiliiton sivuilta voi lukea, että tämä on ollut valtava shokkiuutinen Paperiliiton johdolle ja paikallisille luottamusmiehille. Kuten tiedetään aiemmista tehdässulkemisista, vaikutus työllisyyteen ei ole, lievästi sanottu, hyvä. On hyvin vaikeaa työllistää entiset paperimiehet uudestaan, ei vaan siksi koska pienillä paikkakunnilla puuttuu vastaavaa työtä (vaikka se on päällimäinen syy).

Tässä vaiheessa tietenkin on ensimmäisenä reaktiona monille raivo ja hämmästyneisyys. Eipä ihme, jos tällaista tapahtuu (Pertti Leppäsen sanoin)

Konettamme on juuri uusittu ja siksi olimme tänään aamulla koulutuksessa. Kesken koulutuksen tuli kutsu tiedotustilaisuuteen.

Kaukaan tehdäs on aiemminkin ollut näiden säästötavoitteiden kohde. Mutta kuten Paperiliiton puheenjohtaja Petri Vanhala sanoi:

UPM saavutti 200 miljoonan säästötavoitteen ja heti perään tulee uudet säästöt. Näin siitä huolimatta, että yhtiö vastikään kertoi hyvästä tuloksesta.

Jussi Pesonen itse kertoi myös (ks. linkki yllä), että kannattavuus parani vuonna 2014 (hän käyttää sanaa ‘käännekohta’). Joten mitä mättää? YLEn taloustoimittaja Jari Järvinen analysoi:

UPM:n päätös kertookin karusti, mistä on kyse: voimat keskitetään kasvaville markkinoille. Euroopassa karsitaan ylikapasiteettia jatkossakin kovalla kädellä. Samalla säästöjä haetaan muualtakin, hallinnosta, markkinoinnista, kuljetuksista ja joka puolelta. Sopeutus on ajan sana.

Ylikapasiteetti. Siellä se sana taas on. Lienee oikeutettua kysyä, mistä tämä ylikapasiteetti tulee? Tietenkin on se näin, että paperin kysyntä nimenomaan Euroopassa on jo pitkään laskenut, joten se on yksi syy. Mutta: mietipä niitä hyviä aikoja 90-luvun lopussa ja 2000-luvun alussa, silloin kun euron kurssi oli erittäin hyödyllistä Suomen vientiteollisuudelle. Mitä UPM silloin teki? No? Ja sitten vielä muutamaa vuotta sitten, Chapellen tehtaassa, missä PM3 suljetaan? Laajensi/uusi saman paperilajin PM6:n kapasiteettia. Also other companies invested in new capacity around the start of this millennium:

In Europe, two new machines and one major rebuild are coming onstream :

1. Steyrermühl, Austria (change from newsprint to SC) 200 000 t/y, started up in June 1999;

2. Lang Papier, Ettringen, Germany, SC and newsprint, 270 000 t/y, start-up in September/October 1999;

3. Haindl, Schongau, Germany, SC and newsprint, 270 000 t/y, start-up in May 2000.

Paperin kysyntä on tosiaan ongelmaa näille yrityksille. Aiemmin UPM sulki sen Stracel paperitehdas (suuren investoinnin jälkeen vuonna 1999).

Kysymykseni yritysjohdolle on: käytätte omia ennustemalleja sekä esim. Pöyryn ennusteita eri markkinoiden kehityksestä ja sen lisäksi on hyvin tiedossa mitä on paperikoneiden elinkaari ja optimisaatio-prosessi. Jos investoi sillä tavalla, että  (keski)pidemmällä aikavälillä ilmestyy jopa omalla yrityksellä ylikapasiteettia, sitten se on vaan huonoa johtamista. Mutta tämä ei ole sinänsä uutta, paperiteollisuudessa tiedetään jo pitkään, että on ns. boom-bust sykli. Eli lyhyesti, sen takia kun paperitehdas on iso investointi, investoidaan liikaa silloin kun on hyvä kysyntää, minkä seurauksena jossain vaiheessa on ylikapasiteettia.

-> tätä samaa voimme nyt nähdä Aasiassa ja Etelä-Amerikassa sellun ja kartongin osalta. Veikkaukseni on, että muutamaa vuotta tulevaisuudessa kartonki ei ole enää niin tuottavaa. Tähän liittyy myös Kiinan kasvun hidastumista, tietenkin.

Mutta miksi paperiyhtiöt käyttäytyvät? Vastaus ei välttämättä liittyy ahneuteen. Uskon, että se on juuri tämän suuren syklin vaikutus – ne jotka ovat nopeinta siinä mukana, hyötyvät eniten. Ja sen takia kun ainakin Euroopassa paperiyhtiöt ovat vaan kourallista (vaikka ei ole ihan oligopoli), riski häviää kilpailussa on varmaan melko suuri. Sen lisäksi on vaan totta, että osakkeenomistajat ‘vaativat’ parempia tuloksia (heille) koko ajan. Mitä kymmenen vuotta sitten nähtiin hyvänä strategiana (investoida) on nyt haitta (ylikapasiteetti). Euroopassa ja Suomessa, koska kysyntä on huono, ainoa tapa parantaa, ainakin hetkellisesti, tulosta (tai näyttää vakavalta) on leikata henkilökuntaa ja/kapasiteettia.

Tämä ei ole kuitenkaan koko tarinaa. Kuten olen myös väitöskirjassani kirjoittanut, henkilökustannukset ovat vain noin 11% kokonaiskustannuksista. Täällä olen kirjoittanut puuraaka-aineen hinnoista. Sen lisäksi kemikaalit ovat suuri kustannustekijä, kuin myös kuljetus. UPM haluaa vähentää kiinteät ja variaabelit kustannukset, mutta se on vaikeaa kuvitella miten. Joo, kyllä laittamalla koko tehdas kiinni vähenee kustannukset. Väitöskirjassani esitän World Input-Output Databasen perusteella, mistä Suomen paperiteollisuuden tärkeimmät raaka-aineet tulee. Puu ja sellu tulevat (paitsi Suomesta) enimmäkseen Ruotsista, Venäjältä ja (sellu, nykyään) Brasiliasta. Kemikaalit toisaalta tulevat enimmäkseen Saksasta. Nämä raaka-aineet ovat suurin piirtein (+ energiatarpeet) paperiteollisuuden variaabelit kustannukset. Kaikenmaailman henkilöstökulut ovat toisaalta enemmän tai vähemmän kiinteät kustannukset. Mutta kuten on selvää esim. puukaupasta, myös osa niitä raaka-aineita on suhteellisen kiinteitä kustannuksia, koska niistä sovitaan sopimuksella tietystä aikavälistä (oletan ainakin puusta ja energiasta). Eli toisin sanoin: henkilöstön hinnasta sovitaan työehtosopimuksella ja toisista tarpeista toisenlaisilla sopimuksella.

Sillä tavalla päästään EU:n talousnäkymät, josta ilmestyy tässäkin blogissa koko ajan linkkejä. Mutta myös ulkopolitiikka voi olla relevantti, koska voi hyvin olla, että Venäjän sanktiot purevat jotenkin puun saantiin (tai vaikka suomalaisten metsäyritysten mahdollisuuksiin). Mutta vaikka metsäteollisuuden toimintaympäristö on hyvin monimutkainen juuri nyt, kuitenkin UPM:n talousjohtaja sanoo:

Meillä on käytössä rautakankimalli, johon on vaikea saada joustoa tarvittaessa.

Olin pari viikkoa sitten seminaarissa, missä pohdittiin, onko Suomen työmarkkinat jäykkiä, ja tiivistettynä vastaus oli kyllä ja ei. Kyllä: palkoista tai työajasta ei helposti jousteta. Ei: Suomessa joustavuus toimii lomautuksien ja irtisanomisten kautta. Olen sitä mieltä, että tämä työmarkkinoiden joustavuus on just se, mitä haetaan. Miksi ei leikkaukset kohdistetaan Saksaan? Koska siellä on paljon vaikeampaa antaa työntekijöille potkut kuin Suomessa. Siellä olisi mahdollista joustaa työajan kanssa, mutta se on taas teknisesti vaikeaa paperitehtaiden kanssa.

Johtopäätökset

Ensinnäkin on todella kurja, että näin moni saa potkut tilanteessa missä työ on jo vaikeaa saada. Vaikka mun toivo ei ole turhan korkea tähän suhteeseen, toivoisin silti, että alueelliset TE-keskukset ym. tekevät parhaansa löytää näille ihmisille töitä.

Sitten – vaikka yritysihmiset helposti sanovat “markkinat!” uskon, että UPM kantaa itsekin vastuuta siitä, että on ylikapasiteettia. Yritysteknisesti on tietenkin loogista sulkea nimenomaan vanhemmat yksiköt, jossa kannattavuusraja on korkeampi. Silti uskon, että UPM tuijottaa liikaa henkilöstökuluja (varmaan näin opetetaan kauppakorkeakoulussa) ja liian vähän niitä muita tekijöitä. Kokonaisuudessa voi hyvin olla, että osittain omatekoinen ylikapasiteetti ja muiden raaka-aineden hintakehitys ovat vaikeuttaneet kilpailukykyä enemmän kuin Suomen palkkataso. Varmaan UPM kuitenkin kuvittelee, että se pystyy tehdä enemmän niistä palkkakuluista kuin muista kuluista.

Tämä kokonaisuus voisi vielä kirjoittaa uudestaan yritysvastuun näkökulmasta, ja vaikka onko osakkeenomistajakapitalismi hyvä vai huono (verrattuna perinteiseen ‘kärsvällisen pääoman’ malliin, mistä nimenomaan paperiteollisuus hyötyi.) Mutta siihen ei ole nyt aikaa. Ne ovat vaan eväät rohkeille toimittajille.

My speech at the Alter-EU conference “Beyond the Social Dimension of EMU”

Below you can read the speech I held at the panel discussion at yesterday’s Alter-EU conference. Or at least, it was my intention to tell exactly the text below but as usual, I more or less improvised on the themes in the text. The discussion of European economic policy was left for the discussion and I did not get to speak about the issue of climate change.

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 (synopsis) In many European countries labour markets have changed. There are reasons of policy, demography and technological change behind this. Change in national systems of industrial relations or labour market relations have happened much slower. In many countries unions have seen their membership levels decline. To some extent, this is understandable, because the sectors these unions represent have been in decline. There are other sectors, where it has been much more difficult to organize members and engage in collective action. In many countries organizing part-time, temporary and other categories of atypical employees has been difficult. In my view, this is as much a consequence of changes in the way younger generations see labour unions as it is a consequence of unions clinging to the ‘standard, full-time employment’ as the norm to which they relate alternative employment relations. Thus, although the challenge is big, modern labour unions should acknowledge the practical relevance, in a legal sense, of changed employment relations and focus on those groups of employees that enjoy less strong labour rights than ‘standard, full-time’ employees.

In this short speech I wish to address some general issues of labour union representation in our time. The theoretical basis for this topic is my dissertation, in which I developed a synthesis of various currents of industrial relations literature. Through this theoretical framework it is possible to assess, in a broad and qualitive way, what factors contribute to changes in the representative capability of labour unions.

In an analysis using this framework, much weight is given to long-term developments and qualitative analysis of key moments in the interaction of labour unions with other societal actors. These can be decisive industrial conflicts, internal union developments, changes in the sector the union represents or changes in the legal context that influences the labour union environment. In short, seen over a certain period of time, there may be many issues that in their own way influence the representative capability of labour unions.

Often, though depending on the situation, the major factor is the state of the economy and the specific sector. To some extent this can be simplified to issues of employment, under-employment and unemployment.I will return to the issue of employment contracts a bit later. Another issue that is very important is the legal context. The mileage varies, but in many countries – at least in Europe – labour unions participate to varying extents in devising labour market policies. This is true for the national level as well as for the European Social Dialogue process. In this way, labour union representativeness in the context of legal developments is a reflexive dimension, beause labour unions are involved in the processes. Richard Hyman talked about the logic of influence versus the logic of representation, at least regarding the European dimensionI will return to this issue in a moment.

The challenges national and trans-European labour unions, or let’s say the labour movement, faces are quite big. On the one hand it is possible to some extent to see the influence of years of neo-liberal policies that have sought to minimize labour union involvement. On the other hand, there are more diffuse developments such as the influence of globalization, which may have contributed to an accellerated loss of jobs in European industry and attempt to downsize government or privatize state firms – which traditionally have high rates of organization. But also demographic changes, changes in and between generations have in many complicated ways affected the attractiveness of joining a union. Much research has focused on changing social norms and increased individualism. But perhaps the biggest influence is nonetheless the changing structure of the economy. Roughly speaking, blue collar jobs are disappearing or changing – traditional conveyor-belt work is quite rare in Europe.

Labour unions found it easiest to unionize those workers, who had a comparatively weak position through highly transferable skills. But these workers did have an advantage – large numbers. Although I now generalize, labour union organizing and representation has for a very long time relied on a kind of standard worker – full-time, often male, with comparatively low skills. Many unions nowadays still implicitly claim to represent the blue-collar worker – but it is a big question whether this worker still exists in Europe. My research has focused on the Finnish Paper Workers’ Union and in terms of skills, duties and content of work an old-school unionist would perhaps not recognize these employees as blue-collar workers.

Beyond these changes there has been also a wide increase of a-typical work. Here we can think of part-time work, temp agency work, outsourced work, all kinds of forms of work where there is some kind of intermediary between the employee and the employer who deals with issues of employment contract. Why are these employees problematic for unions? In short, because they are “moving targets” – unions cannot count on continuing commitment to the union because the employee moves from job to job in many cases.

And here I wish to return to the reflexivity of labour union representation in terms of labour law and labour policy. Since there is now a wide range of different employment contracts, labour unions have to focus on this issue more. Unions are in a difficult position indeed, because at the same time, they have to represent their current members, who might be in those typical standard employment relations. But on the whole, because this kind of employment relation is still in decline, unions must balance their attempts to represent both old and new members. Nonetheless, for example the Part-time Work Directive, which was born through the process of Social Dialogue, shows unions can have a beneficial influence regarding these kinds of non-standard employment relations as well.

I said these legal issues are reflexive, and by that I mean that through their membership base in previous time there have been certain priorities in advancing policy mainly relevant for that current membership. And that is how it should be with a representative organization. In Dutch we say ‘A general should not advance too far ahead of his troops.’ But a major programmatic aim of the labour movement should be to include those that are not currently represented by labour unions. By that I do not only mean those employees that currently have more insecure employment contracts but also the unemployed and those who are not classified as employees, e.g. Domestic workers and interns.

It will be far from easy to organize these various categories of working people, not in the least because they have many different interests and problems regarding work. But if labour unions broaden their political scope towards alternative employment relations as well, there may be a genuine interest in becoming a labour union member.

So, this is the major issue of union representation in terms of employment relations. But the union movement also has a role in public discussion on economic policies. So far, through the ETUC and many strikes in mainly the Southern European countries unions have had a critical voice in relation to European economic policy. Although important, I think it is important that beyond criticizing current policy unions should also focus on alternative economic policies and deconstructing the rationales for the present austerity policies.

As you have heard during this conference, European economic policy in this crisis has been based on bad science, bad analysis and bad rhethoric. Labour unions could do much more to counter this. Also in Finland labour unions have completely bought the mantra of export competitiveness and labour costs. The issue labour unions should focus on are domestic demand and employment. Preferably these issues should be tackled with a strong focus on the big question of climate change.

In my opinion, even traditional industry would benefit from such a strategy. Every country has different issues that are relevant, but a shift to renewable energy or bioenergy would be beneficial for industry as well and it might well be a growth industry of the future for countries such as Finland. Furthermore, although more consumption is not a sensible goal, a focus on domestic demand does do much to re-balance income inequality between domestic and export sectors.

Regarding the eurocrisis, the window of opportunity for either reconstructing the EMU or perhaps leaving it has probably closed. This nonetheless still leaves us with the potential of the European Investment Bank to spur green investment and positive economic policies. I don’t know if it is in any way possible to reach full employment, although some economic currents think it is possible. But I do think there are within the current setting possibilities to create non-destructive economic policies. And labour unions should promote these. Thank you.

Finnish competitiveness, trade balance and wrong-headed economic policies

[For more on Finland’s exports, see here. The data is until 2012 but as I tell here in Finnish, the picture has not changed much except that machine exports to China started to decline around 2012)

It seems the rest of the world finally starts to acknowledge Finland’s problems. On the one hand, it is vital to see what the problems are, but it is just sad that Finland has ended up in this ‘trap’, as Bloomberg calls it.

Those ‘in the know’ – to which I include myself, have known about this situation for quite a long time. Indeed, while originally I started this blog to write in English about the Finnish paper industry and industrial relations, I quickly moved to the impact of the eurocrisis.

Unfortunately to say, in my view there is a much longer story to what Bloomberg writes and it does very much relate to the euro. Nokia and the Finnish paper industry are in a way ‘collateral damage’. There are potentially many ways to explain the ‘slide downwards’ and especially on the centre-right and in business circles many blame high wage costs (and/or unit labour costs). These do have impact of course, but only (and especially!) in relation to Germany’s policies during the period 2000-2007, broadly. Another issue, which is entirely hidden from the discourse is the relevance of profit margins. In perfect competition (which especially in Finland does not exist) (marginal) profit tends to zero. But in the context of an economy with a relatively small number of big players – e.g. the paper industry but domestically also supermarket/retail chains – where the companies are on the stock exchange, the profit margin matters a lot and very roughly speaking one way to keep the profit margin steady is to cut other costs.

So if we accept this basic mathematical fact, it follows that in a ‘quarterly report economy’ companies would aim for quick profits in whatever way rather than for long term investment, at least domestically. And in this context, there is also a big difference between investing in Europe or domestically (which may be less profitable, given weak demand) and elsewhere in the world.

(There are of course many exceptions to this view – think of UPM-Kymmene, which greatly expands a pulp mill. But as Statistics Finland reported private investments have decreased, and in the pulp and paper industry the domestic investment has declined for a long time already, to quite a large extent to be replaced by foreign investments (which is true for many big Finnish firms). )

The main evidence I see in this regard, is the declining current account surplus. Here, at the site of the Bank of Finland you can see the development of the current account (and trade) balance for Finland since 1998. Earlier, I made a graph based on Eurostat data of the same development – although only goods – but with (probably) a different methodology. It looks like this:

Finland Goods Exports Balance

In the story which attributes a large part of the Eurocrisis to the imbalances within Europe, this is a good development, as it restores a bit of balance. But in the end Finland is a small player in this – the Netherlands and Germany are much more relevant.

But to return to the argument – the Finnish current account balance, and in particular the trade balance has weakened. The question is: why? Finland, in my view, has initially gained a lot through the favourable dollar/euro exchange rate, in which phase many Finnish companies (in particular the forest industry companies) could make investments abroad at a favourable moment. I have written about this in my dissertation regarding the paper industry. There it was simply a continuation of the fact that the domestic markets were ‘ready’ – no more consolidation could happen without the competition authorities interfering. Although this process had already started in the 1990s, nonetheless domestic investment declined even more now.

From 2003 onwards however, the exchange rate has been more unfavourable for Finland (and other euro-countries). Finland’s main trading partners are Russia, Sweden, Germany and China, all of with which Finland has had a trade deficit in 2012. Finland does have a trade surplus with the USA and the UK – regardless of the exchange rate. It is a topic for further research to find out what is imported from where, but Russia is at least mostly responsible for oil/gas and timber for the paper industry. Sweden also accounts for a lot of raw materials, including chemicals, and China exports many things to Finland (and the rest of the world). But on balance, still, Finland imports more than it exports. This is a graph with the major trade partners (excl. China):

Data by ULJAS/Finnish Customs

Data by ULJAS/Finnish Customs

The hard-to-see yellow line indicates Russia. My quick-and-dirty take on the “Finland’s wage costs are higher than Germany’s” is this: even though Finland’s unit labour costs have increases relative to Germany’s, and also Finland’s relative exchange rate within the eurozone has gone worse, this has not significantly affected trade with Germany. Basically, from 2003 onwards Finland has had a fairly stable trade deficit with Germany. But the deficit with Russia has worsened much more, while the trade balance with the USA and UK may have improved.

So what is really happening here? Why the obsession with Finnish wage costs? Finland always presents itself as competing with Germany on high-quality goods. But it can’t be (entirely) the issue of labour costs, because that picture looks like this:

RULC

Yes, Finnish unit labour costs have risen faster than Germany’s since 2007, but regardless of this, the trade balance with Germany has not significantly weakened. The trade balance with Russia nonetheless DID start to weaken around this time. So my take is that the whole competitiveness debate (at least in Finland) is based on completely the wrong indicators: the weakened trade balance doesn’t have to do with Finland becoming less competitive relative to Germany but has a lot to do with trade with Russia. And the following graph shows why. It shows the value (in euros) of imports of various categories of products (in the CN-nomenclature used by the EU).

Source: ULJAS/Tulli.fi

Source: ULJAS/Tulli.fi

So where does the worsened trade balance with Russia come from? Simple – a huge increase in the (euro) value of mineral fuels.

In terms of the Bloomberg story, where does that leave us? Unfortunately, in the light of the data presented here the conclusion must be that the Finnish government and the labour market organisations (very much including the unions) are looking at the wrong solution for the wrong problem. Aiming for wage moderation is simply not going to help with this problem of rising Russian energy prices. There may be a difference in relative labour costs between Finland and Germany, but as the graphs above show, it is unlikely that even similar labour costs would improve the trade balance with Germany.

So all that talk about improving competitiveness and getting exports going again: fine, but it doesn’t relate to the major problem Finland seems to have – which is a large fuel bill. And to me it sounds rather unreasonable to try to solve this problem by taking on wages – as these affect domestic demand also. And I have shown earlier, it seems that for a fairly long time, domestic demand has kept Finland floating.

The question of increasing investment is important, but it does not necessarily relate to the current crisis, especially Finland is still seen as one of the most innovative countries, thanks to its infrastructure, highly educated work-force and IT-qualities. If we combine these issues with the problem then now would be a very good time for Finland to make a transition to the Green economy/Green technology – something which is already happening in the pulp and paper industries.

Tiina Ristikari’s dissertation defense: ‘Finnish Trade Unions and Immigrant Labour’

Yesterday I was attending the defence of the dissertation of my colleague Tiina Ristikari entitled ‘Finnish Trade Unions and Immigrant Labour’. The online version is not yet available I think but general information can be found here.

 

The opponent was Professor Shruti Tambe of the University of Pune, India, who is perhaps best know for the article ‘Collective Subjectivity, Democracy and Domination: The MJVA in Marathwada, India‘. She has also studies issues of work, in particular about skills in relation to the concept of ‘cultural capital.’

 

The discussion was a very civilized one, and there were some really difficult questions to answer – but Tiina did this well! I am very happy about her achievement (and also that she mentioned one of my own articles in her dissertation!). Professor Tambe had very good suggestions about expanding the theoretical scope of the study, which means it will become possible to duplicate a research like this.

 

I recommend this study especially for policy makers that face domestic pressures for restricting labour market access for immigrants – this study gives a good analysis of the position of the Finnish trade union movement in relation to the challenges of labour migration and there are probably lessons to be learned for other countries as well.

My dissertation is now online…(including press statement)

My dissertation, entitled ‘The Finnish Paper Workers’ Union at a crossroads: Labor union representativeness in a changing environment, 1980-2008′ is now online at the Finnish dissertation archive.  This is very exciting and also causing butterflies in my stomach, because this is the first time that my work of the last 5 years is so public! I will have one of the best minds in Sociology of Industrial Relations as my opponent, Professor Axel van den Berg of the McGill University in Montreal, Canada.

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PRESS RELEASE

The structural changes in the Finnish paper industry have also left their mark on the Finnish Paper Workers’ Union

Drs. Paul Jonker-Hoffrén (formerly Jonker) defends his dissertation on September 8, 2012 at the University of Turku in Finland on the topic: ‘The Finnish Paper Workers’ Union at a crossroads: Labor union representativeness in a changing environment, 1980-2008’ The promotion takes place in the Faculty of Social Sciences at the Department of Social Research, Sociology, Lecture hall Pub 3. The opponent is Professor Axel van den Berg of McGill University in Montreal, Canada and the Custos is Professor Hannu Ruonavaara from the University of Turku, Faculty of Social Sciences, Department of Social Research, Sociology

The thesis shows that through the major structural changes in the Finnish paper industry, the union of this industry has changed as well. This is has mostly happened after 2000, because in the last ten years the changes have accelerated. The main conclusion of the study is that the representativeness of the Finnish Paper Workers’ Union has markedly decreased, but this is mainly due to changes in the global paper industry and its impact on the Finnish paper industry. However, also internal disagreements have weakened the internal democracy of the union. Nevertheless, the paper union is still a very influential union in the Finnish industrial relations.

Structural changes

In the background of the changes in the Paper Workers’ Union are two major structural changes, which are also interrelated. Firstly, the total employment in the Finnish paper industry since 1980 has declined from approximately 45,000 employees to around 18,000 employees in 2008. Although labor productivity has increased dramatically during this period, this has also led to a reduction in employment. Secondly, increasing internationalization of Finnish paper companies and technological developments in the production of paper have influenced the decline in employment. These latter factors have led to increased competitive pressure on Finnish (domestic) paper mills, through which also the attitude towards management techniques such as outsourcing of certain functions (cleaning, security) has changed.

Representativeness
The changes in the industry have put the Paper Workers’ Union in an difficult position. Under great pressure in collective bargaining in 2005 and 2008 major changes were agreed. In 2005 there was a very long labor dispute, where the labor union eventually had to give in to weakening of certain ancient rights and outsourcing was also thanks to this collective agreement no longer completely excluded. In 2008, however, the pressure came mainly from within, because there is considerable disagreement between the Social-Democrat and Left Alliance factions on the correct interpretation of certain clauses of the collective agreement on new investments and their impact on local employment and salaries. These differences of opinion exist both within the main organization and the shop floor and between these levels. It seems that the Social-Democratic faction for the moment has put the Left faction offside by strategic collaboration with employers.

The central theoretical concept in the thesis is ‘representativeness’ – what it is, how it can be measured and what it means in the context of a  labor union. There are four dimensions: internal, external, legal and reputational representativeness. This last dimension refers mainly to the effect of strikes and the like. With this theoretical framework it is possible to analyze the position of trade unions (or other actors) and assess internal and external policies in a multifaceted way. For the case of the Finnish Paper Workers’ Union, this means that analysis of e.g. employment, union membership, collective agreements and internal democracy has led to a broad understanding of the representativeness of the union in its changing environment.

Contact information:

Paul Jonker-Hoffrén

Tel. (work) +358 2 333 5714

http://soc.utu.fi/laitokset/sosiologia/oppiaine/henkilokunta/Jonker.html

https://blog.arjenpolku.fi/