Tag Archives: Paul Jonker-Hoffrén

Finland: a tough Nordic accountant that is caught up by reality

By Paul Jonker- Hoffrén. Cross-posted from Eurocrisis in the Press – The politics of public discourse in Europe, a blog of the London School of Economics and Political Science. First published 22.6.2013.

Finland: a tough Nordic accountant that is caught up by reality

Finland is a quite unlikely country to play a prominent role in policy-making around the Eurocrisis. It is, after all, a small country of just over 5 million inhabitants on the (geographical) fringe of the European union. But the country has two assets that propelled it to center stage in recent years: a triple-A status and a low debt-to-GDP ratio. Finland also had its own ‘our man in Brussels’, i.e. Commissioner Olli Rehn. Together with Germany, Austria and the Netherlands Finland has been instrumental in shaping the response to the Eurocrisis that began with troubles in Greece in 2008. One particular aspect of Finland’s ‘toughness’, the collateral demanded from Greece and Spain, including the domestic political discussions about this exceptional demand, is left out here, because it requires special attention.


Right from the start of the crisis the ‘sovereign debt crisis’ has beeen couched in moral terms in Finland. In the editorials of the daily newspapers it has been common to see phrases like ‘countries that lived carelessly on borrowed money’, ‘moral decay’, ‘countries that handled their accounts badly’ etcetera – up to these weeks in June 2013. Although there have been many examples of op-eds that countered this interpretation of the Eurocrisis, the core message of both government and editorials has been more often than not, that the Euroscrisis was caused by over-indebtedness and that countries like Greece and Portugal simply have been living beyond their means, i.e. on borrowed money – without discussion who actually sold these loans to Greece and Portugal. Also in seminars on the state of the economy there is always a participant that tells we are turning into Greece if we don’t cut budgets.


However attractive and simple-sounding in a Lutheran country, this interpretation is not correct. As many economists and commentators have argued (seemingly in vain), the true cause of the Eurocrisis lies in the design of EMU and the resulting development of a huge trade surplus in Germany, capital flows to the ‘periphery’ and resulting (real estate) bubbles and increased (wage) inflation that harmed competitiveness. Nonetheless, Finland – both through Olli Rehn and its government, strongly endorsed the austerity policy for the PIIGS. The argument has been simple: if countries have lived beyond their means, it means they must tighten their belts. This became official policy in 2011 after an important G20-meeting. In the words of Olli Rehn (to the Finnish daily Helsingin Sanomat): ‘Those that still have leeway can finance stimulus until the end of the year [2010], but they also have to start stabilizing public finances during 2011.’ – to which the author of the article added that this is done using borrowed money. The meeting was also noteworthy because Germany demanded belt-tightening while the USA warned to keep stimulus going.


With the advent of the current Finnish government, in which former Finance Minister Jyrki Katainen became Prime Minister, the so-called ‘debt-sustainability discussion’ became again a central policy problem and the government indicated its readiness to cut budgets if need arises. In 2011 editorials again repeated the need to tie indebtedness to GDP, as a strict limit. These editorials still criticised Southern European countries for not keeping a check on public debt, unlike Finland, which in these editorials is seen as a paragon of prudence. It is noteworthy that in these editorials the construction of EMU, the role of German, Dutch and French banks and the incompleteness of monetary union are seldom, if at all, mentioned (although individual journalists may refer to these). To the contrary, both government and press have time and time again emphasized the importance of not mutualising debt. To this day, there is still fierce opposition to the idea of ‘paying the debts of profligate nations.’ In this context, recently there is a lot of mention in editorials of the ‘moral decay’ that would happen if debt is shared somehow, that countries wouldn’t feel committed to be strict with public debt issues.


Interesting is that at least the Finnish daily Helsingin Sanomat quite frequently has extensive articles on Greece or Spain (at least since 2012) regarding the effects of the Eurocrisis, but it almost seems the main editors of the newspaper are not aware of the connection between these developments and the austerity policies driven by Finland, Germany, the Netherlands and the European Commission.


The stance of the Finnish government and the editorials of the main newspapers is all the more remarkable, given that two major scientific pillars of the austerity policy – articles by Alesina & Ardagna and Reinhart & Rogoff- have been thoroughly debunked. Furthermore, Finland’s economy has significantly weakened. In fact, Finland experiences its third recession since 2008. Right now, the labour market partners are gearing up for Autumn’s collective bargaining rounds. Government representatives, banks, corporations and the European Commission are pressing for wage moderation. The prime reason for this is the worry about Finnish competitiveness, because a while ago Finland’s trade surplus turned negative – although this trend already started early in the 2000s.


But also on the ‘academic’ level there is open discussion over what to do. The variety of suggested responses to get the Finnish economy back on track ranges from leaving the EMU to engineering ‘zero- or negative wage growth.’ Some of these economists are on the other hand worried that wage moderation will negatively affect purchasing power and domestic demand. It does nonetheless appear that at this level of public debate, there is an understanding of the limits of government budget cuts, and that this limit has been reached.


All in all, Finland is still very tough on the issue of public debt, both in government policies and newspaper editorials. On Finnish blogs, however, there is a lively discussion of the dangers of current policy.


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.



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.

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