a comparative view on population ageing

The issue with population ageing is not just a priority in Finland, but also in the other Nordic countries. At a meeting in February 2004, the Swedish Prime Minister, Göran Persson (Social Democrats) and his Finnish colleague, Matti Vanhanen (Centre Party) agreed, that the rapid ageing of the population is currently the greatest threat to the preservation of the Nordic welfare society. Yet, there are a couple of decisive differences between the Finnish case and the situation in Denmark, Sweden and Norway. First of all, the economic situation of Finland’s Nordic neighbours has been better in recent years, which is shown by a higher gross domestic product (GDP), in addition to higher employment and lower unemployment rates. Particularly, the differences between Norway (and also Denmark, partially) on one hand and Sweden and Finland on the other is exceptional in this context. In the case of Norway it can be explained by the country’s richness in natural resources, especially the North Sea oil. In the Danish case the comparatively good results are kind of due to a high flexibility of the national labour market, which is based on the combination of low job security with high social protection

A quite surprising difference is the low spending on social protection in Finland compared to the European Union and the other Nordic countries. This may be connected to the outcome of the economic crisis at the beginning of the 1990s, which led to a reduction of welfare. Another explanation is the Finnish efforts to get the public debts under control. Regarding the fertility rates, Sweden is in a worse position than Finland but has considerably higher work-based immigration instead, while the fertility rates in Norway are among the highest in Europe. There are also big differences relating to the old age dependency ratio. The number of employed people per retiree was considerably lower in Sweden and Norway in 1990 but it is predicted to be higher than the one in Finland in 2020. This means that the Swedish and Norwegian system could adjust to higher dependency ratios already in the past, which is expressed, in a higher employment rate of older workers. The Finnish system however is facing huge changes pertaining to the dependency ratio in the near future.

Finland’s Nordic neighbours are also in a better position when it comes to the labour market situation. Although the Finnish employment rate was higher than the European average in 2003, it was considerably lower compared to Denmark, Sweden and Norway. The same applies for the employment rate of older workers. In contrast, the unemployment rate in Finland was much higher than in the other Nordic countries. There were a higher number of older workers without a job than on average in the European Union and the Finnish figure was even twice as high compared to Sweden.

The labour market situation indicates that even though predominately good results in the European context, Finland is at the bottom of the class in most areas compared to the other Nordic countries (mainly because of the severe economic crisis at the beginning of the 1990s). If it wants to play in the same league as Sweden or Norway in the future, it still has a long way to go. In order to meet this goal, active policy measures mostly with regard to the labour market and social protection are essential. Yet, it should also be acknowledged that due to the pension reform, integrated policy approaches, a reduction of public debts and the stabilisation of social expenditures on a modest level in Finland, the country appears to be comparatively well prepared for population ageing in the future.