| TARJA HALONEN | President of the Republic of Finland & President of the European Union |
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Europe’s Success In Global Competition Will Be One Of Finland’s Priorities During Our Presidency Of The European Union |
Europe has good potential for succeeding in international competition. Our societies are based on democracy, respect for human rights and the rule of law. There are naturally differences between our individual systems, but generally speaking we can say that societies are also expected to provide social protection and security. Responding to global challenges requires commitment to realistic competition targets and to sustainable and socially just values. Europe cannot compete internationally with the cost of labour, but we can base our competitiveness on higher productivity and on skilled, well-educated people. We can thus compete with quality and be in the lead of development, but this requires more investment in human resources and more support for research and other expertise and innovation.
We can be stronger if we are committed to effective co-operation at all levels - also among the civil society and businesses. For example, Nokia and Siemens announced that the companies intend to merge their communication service provider businesses. This kind of a joint venture is a prime example of how important research and development is for staying ahead in global competition. Nokia-Siemens Networks will not only become a global leader in its field; it will also have one of the world’s best research and development teams with the ability to invest in next generation products and services. This is good news for the whole of Europe, not only for Germany and Finland.
For well over a decade now, comparisons of competitiveness have formed an important part of general debate about the economy and society. Such international comparisons put Finland among the most competitive countries in the world, and we have also done well in other international comparisons. I believe that our success in this respect is partly because the Finnish system is based on the so-called Nordic welfare society model. This system is grounded on solid democracy, shared responsibility and social justice. People appreciate our educational, social and health care services, and are more willing to pay taxes to maintain them than is the case in many other countries. The public sector is relatively extensive and also reasonably transparent and efficient. There is very little corruption in Finland, which allows sound collaboration between the private and public sectors.
The Finnish economy has made exceptional progress since the severe recession we faced in the early ’90s. The rise in GDP and productivity, especially industrial productivity, is one of the highest in the world. Our current account has been in surplus for years now, and our foreign debt has decreased. Finland’s public finances are well balanced as a result of sound economic development and strict spending discipline.
The prospects for the Finnish economy and employment situation over the next few years are favourable. Our international competitiveness is good. Though many industrial jobs have moved abroad, we have also started, since the end of last year, to generate more new jobs in industry than we have lost. Unfortunately, our unemployment rate remains close to the European average, but the employment rate was as high as 68% in 2005.
The rate of organisation of both employees and employers is high in Finland. Most jobs are permanent, though short-term contracts have become more common in recent years-and this has created some difficulties. Part-time work is not as common as elsewhere in Europe. Thanks to family leaves, the day-care system and free school meals, both women and men can play an active role in working life and usually work full-time.
Well-established and well-functioning labour market relations enable to formulate wide-ranging contracts. The central labour market organisations negotiate incomes policy agreements, which outline the framework for union-level agreements on issues such as the size of pay raises and social, pension and training benefits. The Government has always actively supported the process with a view of achieving moderate agreements. Nearly all the legislation related to working life is prepared on a tripartite basis, jointly by the Government and the employer and employee organisations. This is also the case as relates to the EU matters. The social partners help to formulate Finland’s position on them – for example on the services directive or when Finland this year decided to give up the transition periods for labour mobility from the new Member States.
Development of the European Union has not lived up to the ambitious goals set in the original Lisbon programme of 2000. The European Council declared that, by 2010, the Union is to become the world’s most dynamic and competitive economic area based on knowledge and social justice. Finland has shown great commitment to realization of the Lisbon strategy and has made good progress towards the targets. The strategy is a very balanced programme for responding to challenges of globalisation. The problem is that the Member States have not implemented the strategy effectively enough. The Lisbon strategy has recently been revised to allow Member States themselves to decide on the most urgent steps needed to promote growth and employment. With a good reason, the Lisbon strategy also underlines the importance of the single market as the domestic market for the EU countries. The ageing population and workforce is a particular challenge for Finland and for the other countries in Europe. Ageing combined with ever faster technological and social change demands investment in vocational training and lifelong learning. It is obvious that skills acquired decades ago are inadequate in today’s working life. On the other hand, ageing employees and professionals with their experience can be of invaluable help to their younger colleagues. In society and at the workplace, there should be greater appreciation for age and experience. I firmly believe that when people are given the chance of lifelong learning and better skills, they will be ready to take this opportunity.
In Finland, we have traditionally believed that the wellbeing of society and economic growth are based on education, education and education. Our educational and science policy is viewed as promoting competitiveness, and education also plays a decisive role in social unity. Another key element here is our belief in equality.
We have been very pleased that our country has done very well in international educational comparisons such as the OECD’s Pisa survey. The Finnish school system guarantees children and young people equal opportunities to complete their basic education regardless of social status, place of residence, gender and ethnic background. Differences between pupils, schools and regions are all very small.
Europe’s success in global competition will be one of Finland’s priorities during our Presidency of the European Union. We shall continue the political debate on ways of improving Europe’s competitiveness and in this context we also intend to raise the issue of innovation policy and efficient utilisation of innovation. In the EU we have jointly decided that our aim is to invest 3% of GDP in research and development. Finland and Sweden already invest more than this. Unfortunately, the target is still a long way off in Europe generally.
No discussion of Europe’s future can ignore energy. Energy issues will be one of the key priorities for both Finland’s and Germany’s EU Presidencies. It is encouraging that the EU is working towards a common view on energy questions. The International Energy Agency (the IEA) estimates that global demand for energy will increase by 50 per cent over the next 25 years. Europe is highly dependent on imported oil and gas. It is important for EU energy policy and foreign policy to be more coherent. EU’s external relations can help to safeguard its energy supplies.
The energy trade, as all trade, is a mutual relationship (a two way street). The more limited the object of trade is, the greater the dependency. We must try to ensure that this mutual dependency is a good thing for both the buyer and the seller. Both parties must be able to feel confident that what has been agreed will be fulfilled.
It is important that we base the EU-Russia energy dialogue on the issues of mutual interest and on confidence. In this context, I would like to mention that Finland considers the Baltic Sea gas pipeline as such an acceptable development. Naturally, we have also underlined that implementation of the gas pipeline must show proper care for environmental aspects.
To our generation, energy resources may seem infinite, but in fact they are limited. We must work together to combat climate change by reducing emissions, saving energy, developing cleaner technologies and promoting the use of renewable energy sources. This will also reduce our own dependency on the current energy producers.
It is clear that the choice between different energy sources, or in the other words the energy mix, is a national decision, and that it should remain so in the future as well. Energy demand in Finland is high in relation to GDP. The high energy demand, with very few indigenous energy sources, has led us to implement many different energy efficiency measures in relation to both production and consumption. As regards the energy sources themselves, we have spread them effectively. None of the individual energy sources is overly dominant. Renewable energy sources play an important role.
Nuclear energy contributes about 16 per cent to our total energy mix. In Finland, the initiative for building nuclear power plant units has so far always come from industry. The decision made in 2002 to construct the fifth nuclear power plant in Finland was taken after comprehensive - and not so easy - political discussion in the Government and in Parliament. Construction work is now under way under the chosen French-German consortium of Areva and Siemens.
With regard to market liberalisation, we have a rather long history of cooperation with our Nordic neighbours. Nordic electricity markets have been developed step by step and provide a good example of electricity market cooperation. A practical way of proceeding towards a European market is to develop regional cooperation first. We are pleased to see that the European Union now is moving forward in this direction.
The European Union is not the whole world. One important success factor in global competition is to strengthen partnerships and cooperation with third countries and regions. Obvious partners are the United States, Russia, Latin America and Asia, with all of which the Union already collaborates. Along with Russia, important partners for us within the Northern Dimension are Norway and Iceland. We should also strengthen our cooperation with developing countries, particularly in Africa. This will be for the good of the African countries themselves, of course, but is also in our own interests. I have come back to where I started. Globalisation has changed the world, and not only in terms of economy. Europeans move from one country to another, and migration into Europe is increasingly vigorous. Civilisations meet everywhere. We must be seriously interested in learning to know the differences between them and to find opportunities for cooperation in order to support sustainable development.