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A sustainable economy is also socially and ecologically sustainable.
Our economic structures and established practices are under pressure, both globally and locally. This time the reason is not the usual cyclical fluctuations, but a radical economic transformation. Adapting to it will require a bag of new tricks – bold and innovative initiatives.
Sitra will be involved in the testing and introduction of novel solutions related to work and the economy in Finland. For this task, we launched a new theme at the beginning of 2014 – New working life and sustainable economy.
The way we work is changing while the public economy is coming apart at the seams
Jobs are disappearing in Finland due to increasingly fierce international competition and automation, which are chipping away at the funding base of our welfare state. The ageing population is also adding to the pressure on public services and their funding. There are now more than 120 non-wage-earning Finnish citizens per every 100 wage earners and this number will keep rising in the years to come.
People with expert skills will not run out of work in the future – and neither will “routine” workers, as long as the pay and incentives for doing such work remain at an adequate level. Average-wage work falling between these two extremes is transforming, and many jobs will disappear altogether.
The situation is not being made any easier by the fact that the Finnish economy and society are running below capacity: for many, in financial terms, unemployment is often a better alternative to working. Many factors make self-employment or starting a business difficult and increasing job flexibility – for example by making the best use of part-time employment schemes – seems to be more about talking the talk than walking the walk. Those that survive a round of employer–employee negotiations are under pressure to work long hours to meet the higher expectations placed on them.
The labour market and financial policies are headed for drastic reform. Labour market rules need to be revised in a way that will help to make the most out of the changed circumstances, in order to meet individual needs and serve the economy as a whole. The key financial policy issue consists in determining the appropriate level of income tax.
A holistic approach will enable sustainable solutions
Finnish society aims to maintain its status as a Nordic welfare state built on the foundation of a competitive national economy and stable public finances (Finland’s national strategy for sustainable development).
This will not be achieved if our decision-making focuses on short-term problems. The concrete ecological, social and economic value of decisions can take time to emerge – in many cases, such value is appreciated only after it has been lost and yet another burden is imposed on public sector expenditure. For example, climate change and its various consequences are a clear indication that our production and consumption habits are ecologically unsustainable. There is also a call for building a socially more sustainable society when social inequality and the income gap threaten to grow. We need a new mindset: instead of focusing on the costs, resolving these challenges should be viewed as an investment in building a better future.
Change is inevitable; we need to be smart and we need to work together. We at Sitra want to play our part in challenging existing practices and building a new economy and working life based on sustainability.