Features of the average profitability and cost level of Finnish companies

Other Publications, Reports 3 Pekka Sauramo

The report examines the average profitability and cost level of Finnish companies by comparing them with historical data and with other EU countries, including the new EU member states and the candidate countries Bulgaria and Romania. At the turn of the millennium, the profitability of Finnish companies was at a historically peak level. Sector-specific differences in profitability may have been considerable, but it is wrong to interpret good average profitability as reflecting solely the Nokia phenomenon. In profitability comparisons among the old EU member states, Finland performs exceptionally well. Finnish labour costs are at an average level among the old EU member states in both industry and service sectors, but in the export industry — which is of particular importance from a competitive standpoint — Finland’s position improves substantially when labour costs and labour productivity are combined in the comparison. The inclusion of the new EU member states changes the comparative picture, as their labour costs are considerably lower than those of the old EU member states. In Estonia, for example, the level of labour costs is approximately one seventh of the Finnish level. The high level of labour productivity in Finnish industry compensates, however, quite effectively for the cost level differential relative to the new EU member states. Finland therefore performs well in profitability comparisons even when the new EU member states as well as Bulgaria and Romania are included. (AI translation)

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