Wage restraint patches, renewal sustains

Abstract

Taking care of cost competitiveness is a vital condition for a small open economy. In the short term, the quickest instrument is wage restraint, but in the long term competitiveness is built on productivity and labour mobility. Economic renewal — creative destruction — has strengthened the cost competitiveness of Finland’s enterprise sector by an average of 0.7 percentage points per year during the years 1995–2024. Recent research evidence shows that institutions that strengthen information sharing can increase what is available to share; sharp size thresholds, by contrast, slow firm growth even more broadly than can be inferred from proximity to the threshold. Changing jobs is frequent and rewarding, and a well-designed social security system can support creative destruction rather than merely mitigating its harms. Many things in Finland’s labour market are in better shape than the public debate might suggest, but the conditions for collective bargaining are worth strengthening now rather than eroding — most naturally by narrowing the information gap between the parties. (AI translation)

Publication Information

Maliranta, M. (2026), Palkkamaltti paikkaa, uudistuminen kantaa, Kansantaloudellinen aikakauskirja, 122(3), 326–334.

• ISSN: 0022-8427