Finland needs a cross-party agreement on an "unemployment brake" to replace the so-called 'debt brake', according to Elina Pylkkänen, an economist and former under-secretary of state at the Ministry of Economic Affairs and Employment.
The debt brake involves political parties setting agreed targets for reducing state debt at the beginning of each parliamentary term — regardless of who is in government.
As an alternative, Pylkkänen said deploying an unemployment brake "would be a good start." She made the comments on Yle's politics programme Politiikkaradio on Wednesday.
The economist compared the debt brake's €8-11bn savings target to the real costs of unemployment to the state.
"A single unrealised career of around 40 years costs the state approximately two million euros, regardless. If we have even just a hundred thousand people whose entire working life goes unfulfilled, that amounts to €200 billion. Can we really afford this?" Pylkkänen asked.
Structural unemployment
She said unemployment is a far more serious problem in Finland than most people think. According to the former under-secretary of state, as much as 80 percent of joblessness in Finland is structural, long-term unemployment that economic cycles are unable to remedy.
Significant setbacks have occurred during PM Petteri Orpo's (NCP) coalition government. Unemployment has risen for three consecutive years, and the number of long-term unemployed has climbed to 140,000.
Long-term unemployment in particular has become an entrenched, seemingly permanent problem in Finland that policy has failed to solve.
According to Pylkkänen, Finland's decades-long policies of increasing labour supply and lowering taxation on work aren't producing results in Finland.
She said that compared to Finland, the labour market situation in other Nordic countries is in considerably better shape.
According to the economist, discussing state debt is pointless without considering the full scale of unemployment. Public finances will not be balanced without solving structural unemployment.
As a solution, Pylkkänen is calling on decision makers to adopt a new, comprehensive approach that crosses ministerial boundaries to fix serious labour market problems before it's too late.
"Do we really want to exclude these people? Can we afford to do that?"
