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REPORT OF THE COMMITTEE FOR THE FUTURE REPORT BY THE PARLIAMENTARY COMMITTEE FOR THE FUTURE ON THE GOVERNMENT FUTURES REPORT 1998
THE COMMITTEE'S ASSESSMENTS AND POSITIONS REGARDING THE GOVERNMENT REPORT I VALUES IN POLICY AND AS AN OBJECT OF POLICY
2. Structures: A matter of policy
II THE MANY FACES OF WORK AND UNEMPLOYMENT 1. The basic Finnish principles of work
2. Beneficial work, not simply paying work 3. The European and Anglo-American employment models
5. Would the Anglo-American employment model divide Finns? III TROUBLE SPOTS IN THE SOCIAL WELFARE SYSTEM 1. A lack of social innovations - or difficulties in implementation?
2. Strengthening the economic and social infrastructure
3. Systematic and regular policy impact assessment
4. A healthy public economy: An absolute prerequisite for affluence
2. The Kyoto agreement: A first step towards abating climate change
3. Towards a more sustainable energy policy
4. Fine particulates and their threat to health
6. The Baltic Sea algae problem 7. The constructed environment V AN ACTIVE FINLAND AND THE GOVERNANCE OF CHANGE 1. The governance of changes - major, minor and exaggerated 2. Are the values of the information society dividing Finns?
3. Work in the information society
4. Other means of building the information society
5. Finland as the EU's information society laboratory
6. Futures work and Parliament: Building Finland
In this, its report on Finland, Parliament's Committee for the Future has attempted to foster a dialogue with the Government (the Council of State) by answering some of the questions raised in the latter's report "Skill and Fair Play - An Active and Responsible Finland," by evaluating the Government report's policy outlines, and by continuing the discussion generally. On the basis of the earlier Government report on Europe, the Committee for the Future responded in its own report (TuVM 1/97, chapter 7) by posing the Government a number of further questions which Finland faces respecting the practicality of the social welfare model. Owing in part to differences in timing in the Government's and Parliament's work, the questions received little attention in the Government's aforementioned report on Finland. In the present report, the Committee continues to consider these subjects. The Committee for the Future gives its primary attention to matters which can be influenced through policy. Finland's immediate future presents new opportunities. The economic growth figures have been good. It has been predicted that unemployment will drop to about 8 per cent by the beginning of the 21st century. The approach used by the Committee for the Future is nevertheless problem-oriented. In accordance with the nature of the Committee, the examination focuses on long-term questions and social structures. With strong economic growth and a good standard of living prevailing, it is time to make the changes which a sustainable affluence will call for. The Government programme has become an important tool of the Government's political planning. The next government's composition, programme and general policy, upon which Finnish policy in the beginning of the 21st century will be constructed, will be resolved in spring 1999. The present report identifies Finnish society's trouble spots and future opportunities. TuVM 1/1998 vp - VNS 3/1997 vp REPORT OF THE COMMITTEE FOR THE FUTURE 1/1998 vp In response to the Government report Skill and Fair Play - An Active and Responsible Finland
Receipt for consideration On 29 April 1997, Parliament sent the Council of State report Skill and Fair Play - An Active and Responsible Finland (Part II, VNS 2/1997 vp) to the Committee for the Future, for its preparatory consideration. Experts The Committee has heard the following experts: Minister Arja Alho, Ministry of Finance Paavo Löppönen, project manager, and Reijo Vanne, special researcher, Prime Minister's Office Taisto Turunen, manager, Department of Energy, Ministry of Trade and Industry Timo Hämäläinen, senior inspector, Ministry of Trade and Industry Marja-Liisa Parjanne, special researcher, Ministry of Social Affairs and Health Keijo Mäkelä, special adviser, Ministry of Labour Kalevi Sorsa, M.S. Ilkka Suominen, director general, Alko Oy Councillor of State Johannes Virolainen Kati Peltola, Social Service Department, City of Helsinki Professor Yrjö Haila, Professor Markku Kuisma, Professor of Church History Juha Seppo, Leena Vilkka, Ph.D., and Juha Siltala, researcher, University of Helsinki Professor Risto Harisalo, Professor Antti Kasvio, Simo Aho, researcher, and Sami Borg, researcher, University of Tampere Professor Reijo Heinonen, University of Joensuu Raija Julkunen, senior lecturer, University of Jyväskylä Professor Hannu Katajamäki, University of Vaasa Professor Paul Lillrank, Professor Pirjo Mankki, Professor Jukka Ranta, Professor Veikko Teikari and Assistant Professor Peter Lund, Helsinki University of Technology Professor Matti Otala, Tampere University of Technology Harri Heino, research director, Research Centre of the Evangelical-Lutheran Church Professor Åke E. Andersson, Institutet för Framtidsstudier (Institute for Future Studies), Sweden Dr. John P. Klus, University of Wisconsin, Madison, Wisconsin, USA Ron Young, CEO, Knowledge Associates, Ltd., Cambridge, England Ulla Sirkeinen, director, Confederation of Finnish Industry and Employers Dr. Tarja Cronberg, provincial director, North Karelia Regional Council Jaakko Iloniemi, managing director, Centre for Finnish Business and Political Studies Antti Hautamäki, managing director, Antti Rainio, project director, and Kaisa Kautto-Koivula, special expert, Finnish National Fund for Research and Development Pekka Ylä-Anttila, director, Research Institution of the Finnish Economy Tuire Santamäki-Vuori, acting director, and Seija Ilmakunnas, researcher, Labour Institute for Economic Research Pirjo Koivukangas, project director, and Mauno Krunlahti, project director, Welfare Cluster Pertti Laine, unit director, Finnish Forest Industries Federation Stig Kankkonen, journalist, Hufvudstadsbladet Antti Piippo, managing director, Elcoteq Aila Pukkila, managing director, Pukkila Press Lassi Mäkinen, economist, Lasmak Oy Kirsti Paakkanen, managing director, Marimekko Oy Carola Teir-Lehtinen, director, Neste Corporation Ilkka Tuomi, researcher, Nokia Research Center Samuli Skurnik, managing director, Pellervo Society Kari Ebeling, development director, UPM-Kymmene Corporation Pekka Ketonen, managing director, Vaisala Oy Kari Lilja, businessman, Wind Factory Arne Wessberg, president, and Ismo Silvo, head of planning, Finnish Broadcasting Company Ltd. Hilkka Pietilä, M.S. Toivo Pitkänen, inventor Reference information Skill and Fair Play - An Active and Responsible Finland, Part II of the Government futures report to Parliament, is a continuation of report VNS 3/1996 vp, Finland and the Future of Europe. Committee for the Future in the parliament answered to it in 1997 (report TuvM 1/97).
I VALUES IN POLICY AND AS AN OBJECT OF POLICY "Social values and norms are incentives in themselves. Problems arise when incentives conflict with each other or with the values held by citizens. From the citizens' point of view, the problem is not the difficulty of making technical comparisons between complex systems, but a lack of clear-cut norms." (Government report 1997, 19) 1. The plurality of values Permanence and movement Human beings create values, assign values to the world, and act on that basis. Some values are enduring. Security is built around such values, but movement is also important. Most important of all is the human being, who, self-searching, self-expressive, self-manifesting, impels change both personally and within the group. In strategic thinking, the control of change and, especially in the midst of upheavals, the tolerance of uncertainty are essential. Success requires that people discover their realistic possibilities. All the good that the future will bring - in the form of values, too - is easy to welcome. This is not to disparage the message presented in the Committee's last report (TuVm 1/1997 vp, on development questions in Europe and the world), to the effect that good does not come to any person or nation automatically. Good things must be worked for, and it is also important to be ready for bad things. The basic values are universal Like other peoples, the Finns share a large number of basic values: love for one's neighbour, responsibility for the environment, respect for life and nature. A great number of social values, such as democracy and equality, have been enshrined in Finland's constitution. The definition of the human being's rights and responsibilities has been a typical feature of the basic values or ethical-moral guidelines and regulations that have taken shape on different foundations over thousands of years. The 20th century has been the century of human rights. Now, at the end of the 1990s, people have begun to raise the question of the human being's responsibilities. With globalization, the need has grown to draw up global rules and operating models. The primary themes of ethical guidelines and declarations have been humanity, nonviolence and respect for life, justice and collective responsibility, truthfulness and tolerance, mutual respect, and fellowship. Ideals and action The Government report's discussion of values primarily examines human ideals and goals - as does research in the field generally. From the standpoint of building the future, we should also clarify how citizens and their communities in fact behave. Have ideals and the real world become too alienated from each other? Researchers depict the conflicts between goals and action by speaking of functional values. Functional values reflect one's mode and way of living. We can also use them to describe how today's social welfare system works. While Finns, according to values surveys, respect honesty and oppose tax evasion and the abuse of social benefits, perhaps too many are prepared to compromise their principles. As justifications we usually hear that "everyone else does it," "in this system you can't get on any other way," or "my wrongdoing isn't much compared to so-and-so's." In Finland, because of the welfare system's financing problems, there has been discussion of the disintegration of functional values at the level of the individual. Some have claimed that those who perform unreported work and those who have such work done are guilty of an evasion of responsibilities. The unemployed have been accused of passiveness, businesspeople of tax evasion; people who want to retire early have been accused of laziness. These and many other groups have been accused of not caring about the society's shared wealth. Nothing indicates, however, that Finns as people are at all more dishonest or malevolent than they used to be. The explanations have to be sought in the society's structures. Are the functional values of human communities - the family, the state, businesses, the political community, vocational groups and the trade union movement - in good order? Do the ideals and objectives correspond to the deeds? Are the structures of society such that people can live in accordance with good values and ideals, or are people being forced to give up their idealistic values - or are they simply drifting away from those values as circumstance dictates? Otherwise stated, if the society does not consider work essential from the standpoint of the national economy, and it is possible to obtain an adequate livelihood through public support, the fault does not lie with private individuals - except as citizens who influence the community's policies, minimally, by voting. Are the pension scheme and the economy so powerful that we can strive to have a retirement age substantially lower than that found in other nations? Is the benefit derived from education so slight that it weakens the motivation to study? Are taxes and social welfare contributions so heavy and the procedures so bureaucratic, that the threshold for starting a business is too high? Are the rules of social benefits and working life such that people accept work only under certain conditions? Have people generally been give a proper picture of the rights and responsibilities that the government and the citizens share as regards the public economy's future resources? Attitudes toward rural society offer another topical example of the substantial gap between ideals and reality. Research on attitudes and values indicates that a love for the countryside is one of the values which unites Finns most unmistakably. At the same time, educated, active young people are moving from the countryside to the major cities more than before. Is the values base of rural society in practice failing? Have we romanticized our image of the countryside? Does a conflict prevail between rural living conditions and idealistic rural values? Have we constructed an image of an idyllic rural society which has no place amid today's increasingly intense competition and increasingly centralized economy? As they have become lasting in nature, the recession and change of the 1990s have widened the gap between idealistic and functional values. For policy, the important ethical question is, Why are so many people in Finland unemployed, socially excluded, exhausted with work and/or favourably disposed towards tax evasion right now - when the nation is wealthier, production more efficient and people more highly skilled than ever before? Personal and community values Personal and community values complement each other. They are not mutually antagonistic. Each level of values has its own function. A strong sense of community creates the prerequisites for psychological growth and other manifestations of well-being. Individual participation, close cooperation and an atmosphere which fosters success are essential. With the importance of small communities growing, personal values are important at the local level. At the same time, the need for a definition of global values is becoming more pronounced. In business, organizational values have been deliberated more in the 1990s than in decades past. It is imperative that values be defined and promulgated through joint effort. Community values are in part determined by personal values. Commitment to a community through citizenship has been an especially strong factor. As citizens of an independent state, Finns share values with the citizens of other countries at several levels of internationalism. The global political players include the UN, the World Bank, the OECD, the G7 summit meetings, the Red Cross, and the World Council of Churches; at the European level, they include, in particular, the European Union and the Council of Europe. Each organization has its own foundation of values. Peace, democracy and the rights and involvement of citizens have emerged as values of the European Union. The values of the Council of Europe have emphasized pluralistic democracy, respect for human rights, and the rule of law. At the practical level, European integration has manifested itself above all in the form of objectives aimed at economic stability and the assurance of efficiency and competitiveness. As aspects of these objectives, such things as popular education, employment, research, social equality and sustainable development have been objects of concern. The fact that economic objectives and values have not coincided adequately with these other assumptions of integration has been perceived as a far-reaching problem. International activities provide a number of examples of collective attempts to define values and ethics. The UN's Universal Declaration of Human Rights may be the best known of these. From this decade, the centennial meeting of the Parliament of the World's Religions, held in Chicago in 1993, offers a good example. At the gathering, representatives of different religions and ethical-culture groups approved a joint declaration of global ethics. Its most important ideas were as follows: 1) A better world order will not be created without a new global ethic. 2) Every human being must be treated humanely. 3) We must progress consciously towards a culture of nonviolence and reverence for life, solidarity and economic justice, tolerance and honesty, and partnership based on gender equality. 4) Ethical consciousness must be raised. The formation of the values of international players will have an impact on Finland's future. Finland must be actively involved in this international activity, which is part of the field of global ethics. That activity is the guarantor of peace in a world of increasingly internationalized economics and politics, but is also the intellectual foundation for practical cooperation among people working in various fields. In the middle ground between personal and community values, vocational values traceable to the guilds of medieval Europe play an influential role. For the individual, having a vocation has long been an important thing. It has been a basis of both personal livelihood and social commitment, as well as a source of general social respect. People have considered the values and ethical rules associated with vocations to be important in a personal way. The values associated with vocations attempt to be functional values. They emerge on the basis of joint deliberation and decision-making by practitioners of the vocation in question. In many vocational groups they are also subject to supervision. Violators may even be expelled from the vocational community or prohibited from engaging in the vocation. The practical strength of these values lies in the fact that they are established by those they govern. Policy values In a democratic state, policy is used to direct the course of events according to moral values - that is, according to what people perceive to be intrinsic to a good, respectable life. In a democracy, policy draws its authority from the people. That authority also applies to values. Policy must be based on publicly defined and recognizable values. In order to remain functional, a political system must ensure that its foundation of values is durable. In this situation, what is expected of politicians? What are the idealistic values like? The citizens take the view that, because the politicians exercise the power that the voters have given them over other people, they should adhere to rigorous morals and respect the community's shared values. Politicians are expected to be sensitive in recognizing right and wrong. When the source of power - popular values - changes, policy has to change, too. On the other hand, it is the responsibility of policy to actively develop new values which promote the good of the people and society. Message and influence must travel in both directions - from the people to the policy and the policy to the people; from the present to the future and the future to the present. In an unstable, changing world, policy must ensure stability. At the same time, politicians must be visionaries and pioneers. They must be concerned about movement and must dare to take risks. In terms of idealistic values, the entire political system is founded on trust - the citizenry's faith that the right objectives are being sought through the right actions. Because policy is expected to be able to fulfil its promises, it must arrange its tasks properly. The trust loses its underpinnings if expectations and promises do not come together with effort - the best possible effort, even. For this reason, the functions, role and resources of political life and its most important player, the state, must be in harmony with one another. In the 1990s, the position and tasks of the state in many Western countries have been subjected to assessments on the basis of conflicting assumptions. Some feel that the society must take care of its citizens; others feel that the excessive expansion of the state's tasks weakens its credibility and the society's foundation of values. The World Bank and the OECD have continually warned states about taking responsibility for tasks which they cannot handle and, indeed, no longer even have the means to handle. Some have for example urged a critical assessment of whether the creation of jobs can be a task of the state. Whether the prevailing ideal supports a massive state or a lean one, policy and the state must ensure that a genuine possibility to choose is preserved for future generations. Policy is especially needed in an era of crisis. It must find its own new role in a changing world. The change in the foundation of values The last report by the Committee for the Future (TuVM 1/1997) described an international social transition engendered by new technology and the globalization of the economy in particular. That transformation is also reflected in the values of Finnish society. According to another type of assessment, talk of a crisis is exaggerated - globalization affects only a small part of the economy, production and trade. The development of electronic and information technology is affecting everything, but change in many areas of technology is nevertheless quite slow. The technological innovations of the late 19th and early 20th centuries (electricity, the telephone, the aeroplane) overshadow those of the late 20th century. Supporters of this interpretation stress that, when evaluating today's breakthroughs, we need to remember that the people of the Western countries have never experienced a period of peace and economic well-being longer than that seen since World War II. As the world becomes more international, values are no longer as national as they were, regardless of the differences in how we recognize or admit to the existence of a crisis. In its last report, the Committee for the Future emphasized the wisdom of adapting to the world's changes, but also stressed the need for activism and initiative - in the area of values as elsewhere. The justifications for values and policy follow each other closely. At different times in history, various points of departure have provided justification for decision-making. In his book Toinen tasavalta [The second republic] (1996), sociologist Pertti Alasuutari has divided Finland's postwar history into three different eras, each of which proceeded from a different assumption. From the end of the war up until the late 1960s, the discussion was largely conducted by referring to ethical and moral arguments. The period could be called the era of the moral economy. Decision-making was based on moral principles. This distinctive feature of culture was connected to that period's phase of economic development. The second phase began in the late 60s and continued through the early 80s, and can for all practical purposes be considered the era of the planned economy. The period was characterized by a strong belief that problems could be resolved through scientific planning and organization. The third phase, the era of the competitive economy, has stretched from the early 80s to the present. State centralism has gradually given way to talk of the individual, and discussion of the market and the stimulation of competition has increased. In the time of the moral economy, people talked about care work as a calling. During the planned-economy era, that discussion started to seem old-fashioned, and the emphasis shifted to the professional nature of social and health-care work, and to the entire society's need for scientific planning. In today's competitive-economy phase, people prefer to speak about social and health-care services and their production, about supply and demand. The vocational groups in the field more or less market themselves and their labour. Semantics guides both the thinking and the doing. By the same token, the foundation of values often no longer rises from the realm of morality or science, but from the world of business. A similar trend can be observed by observing how the national and family values of the 30s evolved into the values of the 60s, which emphasized feelings of community and solidarity. Justice and equality served as values in the era of the Nordic countries' development of its social welfare systems: in this thinking, justice outweighed appropriateness to purpose. Now, following the collapse of so-called pragmatic socialism, the view has been taken that appropriateness to purpose has overcome justice, and that market values rooted in efficiency hold sway. It is obvious that political orientations in the next century will continue to be tied to the general evolution of values. Tensions and antagonisms will emerge from the dialectic of ascendant economic considerations and the still-powerful need for solidarity. 2. Structures: A matter of policy "The sense of being in control comprises understanding life, coping and feeling that life is meaningful. The sense of meaningfulness, in particular, explains why 'hard times' do not necessarily make people more dissatisfied with their lives. In this situation, meaningfulness arises in part from a sense of community. Human beings have an inbuilt system of incentives, and therefore an easy, untroubled life is not their ideal. Nonetheless, adequate resources - the sense that something can be done and a vision of what this might be - are an integral element of an equitable society." (Government report 1997, 38) Through policy we create a society's operational prerequisites and limitations. In spite of this basic premise, politicians wind up simply fiddling with minutiae. Major policy decisions may emerge from preparatory work within the ministries, without adequate political direction - regardless of whether the times are good or bad. The strength of democracy is based on a concentration of forces in the society's durable structures. A portion of the values foundation consists of such universal factors as religion. The values attached to religion and the family are strongly bound up with traditions in almost all societies. The importance of nature has been and continues to be crucial. In recent decades, the values of sustainable development have come to the fore. More clearly than before, people have begun talking about economic and social sustainability in addition to environmental sustainability. Throughout the 20th century, human rights and responsibilities have often been the focus of the values discussion. The relationship between inheritance and environment has been the subject of occasional controversy, but the role of both in forming the foundation of values is significant. In future, that foundation will be determined on the basis of widely differing factors. Political decision-making can affect only some things. This report brings up some of the circumstances which shape the values foundation. Those factors are not commensurable, but nonetheless give a hint of the great variety of value choices. Peace and equality From the standpoint of defining all the rest of the values foundation, peace is crucially important. In all human communities, the prevention and control of conflict is one of the society's most important tasks. The quest for equality is a universal basis for collective and personal values, a basis comparable to peace and, indeed, one connected to peace at many levels and in many ways. Equality is a broadly accepted goal. Ideas of how to define equality vary. Some seek equality through a universal concept of the welfare state. With the aid of income transfers and progressive taxation, an attempt is made to reduce income differences among people, and thus to promote equality. Others feel that the excessive progressiveness of taxation leads to incentive problems and that excessive income transfers render people passive, thereby creating unemployment. According to this line of thought, income gaps should be widened, so as to increase equality through the creation of jobs. In the Nordic social welfare model, equality is a generally accepted point of departure. Equality is associated with human rights and liberties, social involvement, and services. For example, targeting services at all people regardless of wealth has been considered imperative from the standpoint of justifying the model. Parallel to this concept, another direction of thought has emerged. According to the latter, people are not equal, or cannot be equal, in all things. Alongside levelling, people have begun to speak about equality of opportunity. Ethnic origin and place of birth Through national and international policy, we must attempt to answer the following moral-ethical question: Is it right that the family into which one happens to be born continues to a decisive factor from the standpoint of the basic prerequisites for a good life? In the information society of the 21st century, as in the industrial society of the 20th century, birth will evidently continue to be the most decisive determinant of a person's foundation of values. The prerequisites which a child born to an African family has for living in accordance with the universal idealistic values defined by the UN, or for success as measured by the yardsticks of an increasingly global economy, are completely different from the possibilities enjoyed by a child born to a European family. Even in Finland, in spite of both equality in official matters and the constitutionally confirmed principle of the equal treatment of citizens, one's station at birth continues to have an undue impact on the division of people as skilled or unskilled, employed or unemployed, winners or losers, rich or poor, healthy or sick. In the Nordic social welfare system, it is considered very important that public services be made available to all, so that equivalent prerequisites for living are as much as possible protected for all. The idea of the system is that everyone pays and everyone receives the benefits. The society finances the individual's life through tax revenues, so as to keep risk situations under control. The time at which one receives the benefits varies according to one's life situation, as in the case of a serious and expensive-to-treat illness, for example. The fact that women give birth to babies, not taxpayers, depicts the situation well. Criticism has also been directed against the system, in which people pay relatively high taxes, for which people seek compensation in the form of tax-supported services and income transfers. Trends in the 1990s have awakened suspicions as to the durability of the system's financial foundation. In the light of practical difficulties with that foundation, we should be reacting to the following signs. The fifth of the population having the highest incomes benefit fully from the society's basic services, but also from the most expensive services, such as higher education and cultural offerings. A great portion of the social support is directed towards the working upper-middle class, as the active population. The support given low-income citizens is the most conspicuous, because it is primarily a matter of income transfers - of direct cash support. Some wish to preserve the situation because it legitimizes high taxes and preserves the social insurance scheme, by which all people are protected against life's risk situations. Some want to increase needs testing because they see for example that those with large incomes have the resources to pay for their services, while low-income citizens, relatively speaking, receive excessive benefits at the expense of middle-income citizens. Our main concern is to consider Finnish society's future alternatives. Which social benefits and services will be intended for everyone? Will needs testing have to be increased? Is the distribution and amount of insurance excesses (deductibles) to be reconsidered? In its history, Finnish society has made many leaps towards equality and a more equitable distribution of income. In spite of the welfare state's efforts on behalf of equality, the environment remains significant in many respects. A family's wealth and education continue to have a great impact on life expectancy, incidence of disease, upward social mobility, and the quality of the education that the family's children receive. Family background and other regional living conditions have an impact on unemployment. During the worst period of unemployment, more than 40 % of the children of unemployed persons in central and northern Finland were also unemployed. The same phenomenon is evident in neighbourhoods of Finland's major cities. Identifying things as one's own: the personal and the collective If we wish to strengthen the ethical foundations of communities, we must be able to recognize the structural factors which reinforce personal morality. Identifying things as one's own is such a factor. The family is an immediate refuge. It is a private sanctuary which not even the state can enter except under carefully defined conditions. On the institutional level, the family may be the most important, socially reinforcing means of identifying things as one's own. In a great diversity of societies and at many different times, ownership has had a solidifying social influence. Few people will destroy what is their own. The concept of ownership must however be seen as involving more than matter. It also involves knowledge, skill, ability, perception and ideology. History has witnessed many chaotic periods in which a social order is born, popular trust in that order is strengthened, and the daring needed to commit oneself to common concerns manifests itself only after ownership conditions become clear. People have to know who owns the land and the other sources of affluence and success. In Russia, the lack of clarity surrounding ownership is even today one of the largest impediments to economic stability, sustainable business and investment activity, and other forms of development. In the Nordic countries, state ownership has been vital to the creation of infrastructure. Without state investments, a country like Finland could not become industrialized. Without the public sector, today's expertise-based society would not exist. In future, in a wealthy country like Finland, the problems of values related to ownership, stake-holding and what is one's own will be transformed. Ownership is becoming concentrated in an alarming way. Young people often own nothing. By conscious decision or force of circumstance, they rent rather than own a dwelling. Some groups of citizens are left, owning nothing, outside the pale of productive, efficient society. Unemployment or the permanent impoverishment brought on by the scantiness of one's pay may divorce too large a segment of the population from ownership and, thereby, from the sphere of social solidarity. The same threat is evident in other dimensions of ownership - such as skills and stake-holding. Without minimizing the multiplicity of big-city problems, it can be stated that the Paris or London slums, which even the police avoid, exemplify what happens when people have neither possessions nor skills. The Los Angeles black ghetto's assault on the propertied class some years ago and, more recently, the summary destruction of Chinese-owned shops in Indonesia demonstrate what social antagonisms can lead to. Identifying things as one's own and creating a sense of solidarity are among the most important objectives of policy. People are ready to participate when they feel they are stake-holders. From the standpoint of the smooth functioning of a society, participation and a sense of identification are essential. The adequately equitable distribution of ownership and what is one's own works to everyone's benefit. Even the wealthiest people benefit from the security that levelling produces. For Finns, the idea of work places and residential neighbourhoods under surveillance by guards is foreign. In Finland, the ability to move around outside without fear is valued. When the focus of ownership is shifted from land and material goods to intellectual factors, distribution appears easier, but may in fact be even more difficult. Material things are easier to transfer than skills are. Skills are an important source of wealth and a major factor in production. They are in principle renewable and available to all; on the other hand, a skill is clearly something the individual possesses. The uneven distribution of skills can create social inequality far worse than what the unequal distribution of material wealth can cause. The other cornerstone of ownership - at least as important as the personal - is the collective. People want to be members of human communities. People are family members. Through work, study and hobbies, people both secure their livelihood and working skills and give meaning to their lives. In addition to living their own lives, people want to follow the world around them and have an impact on it. Shared responsibility is an important possession. Social solidarity ensures that private ownership will not be turned against other people or nature. One cannot simply do anything with what is one's own. Proximity of political and administrative decision-making is also a part of identifying things as one's own. If decisions which affect the citizenry are made at too great a distance, they are not perceived as important. People feel that geographic remoteness, long chains of representation, and the proliferation of decision-making levels prevent their ideas and values from being conveyed and applied for the common good. In part for these reasons, in European Union circles, regional and provincial autonomy has been discussed as a counterweight to the centralization of decision-making inevitably caused by economic integration, the European Monetary Union (EMU) process included. Caring A society is healthy and capable of renewal if, in pursuing their own interests, its citizens, business enterprises, state institutions, municipalities and other players take care of themselves, one another, and the common good. Fewer and fewer gain any advantage for themselves, even, if the shared infrastructure - physical and intellectual - is not maintained in good condition. The sharing of responsibility for nature, natural resources and the environment generally, regardless of international borders, is of vital importance. In Finland the material standard of living is high. People are for the most part well cared for. The problem lies in the fact that, in spite of this well-being, some elderly people, children, unemployed persons and older workers feel they have not received adequate attention. Neither the state nor the municipality can replace parents, loved ones, friends, human relationships and the closeness of another human being. It has been asserted forcefully that children are alone too much in their homes, and that the task of raising children has been shifted excessively to schools. The unemployed receive income support but feel that the society doesn't need them. Older workers feel they are in the way of younger people at the work place. Persons who live alone and institutionalized old people lack companions to talk with. In the Nordic social welfare model, caring is in danger of being entrusted too much to official authorities. Institutionalization is a problem for all big systems which are managed from the top down. Rewards People want to succeed and feel approval around them. Many assume that they will receive some benefit or pleasure by doing their work or attending to their studies or performing some other function better than others do, or better than they themselves have in the past. The same applies to communities and businesses. A society can have structural barriers to rewards and success. Excessive taxation is generally considered destructive to motivation. Equal pay and a good trend in earnings regardless of education and the difficulty of the work presumably have parallel consequences. Unemployment benefits, aid to business, and other gratuitous state subsidies can add to passivity. From the standpoint of rewards and success, the citizen's wage and early-retirement benefits, as direct and enduring forms of state assistance, are extremely problematical solutions in all the countries of Europe. Mechanical EU agricultural subsidies have evidently been improperly founded on these value assumptions. When their salaries are in any event paid, according to each farm's surface area, farmers lack the motivation to exert themselves by working longer days, improving their working habits or revising their production methods. In recent years there has been much discussion in Finland of how income subsidies and other social benefits which guarantee a minimal livelihood present problems from the standpoint of rewards. Earned income disqualifies one from receiving income transfers, and paid work does not benefit the worker economically at all. For that reason, some have said that the way of thinking should be changed right down to the terminology, and that it should be possible to receive earned income in addition to the income support. The approval of economical early retirement pensions meanwhile means that there is no desire to find solutions to the problems which aging causes in working life. Seen from this perspective, it would be better to encourage the ageing worker to work a shorter day, for example. The manner in which the amount of the final pension is computed should be changed to favour this sort of work. Rights and responsibilities Human activity and the values which determine it are based on rights in the family, on the job and in society. The rights and responsibilities must be proportionate to each other. In the current long period of peace, the services offered by the society have been expanded and the social and economic rights of citizens have been emphasized. In popular thought, the responsibilities have been reduced to the payment of taxes. Such being the case, people's notions may have become more vague, even respecting the fact that the family has primary responsibility for the care and upbringing of children. In the international discussion of social issues, the framework of a UN Universal Declaration of Human Responsibilities to complement the Universal Declaration of Human Rights, has been outlined. The new declaration would include 30 articles, each of which would articulate one or more obligations. These would concern humanity, nonviolence, reverence for life, justice and solidarity, truthfulness and patience, and mutual respect and fellowship. In Finland it may be important to discern the individual's growing need to be collectively responsible for life. As a precondition, the society must have a clear enough picture of how both parties in the social welfare system - the individual and the society - fulfil their respective roles. The Committee for the Future's last report (TuVM 1/1997 vp, 8-14) referred to governance of life as a success factor which permeates everything. What does that mean? An example from the fields of work and education will help us. In Finland, the speed and comprehensiveness of the updating of work and technology has been felt sooner and more clearly than in other Western countries. A large portion of the technical data needed in a job becomes old in a few years. The European Commission has estimated that 80 % of technology used on the job will be updated between 1995 and 2005. This will also require the updating of workers, since, during that same period, only 20 % (in Finland, about 23 %) of the labour force will be replaced. The 20- to 30-year-old age group will shrink by 9 million, but the 50- to 60-year-old group will swell by almost 6 million. The problem cannot be resolved unless we assume that people must make every effort to remain at the level that their work tasks demand - in technology as in other spheres. Every person has to maintain his or her working abilities. Successful work communities are systematically becoming learning organizations. Vocational mobility, the conscious alteration of work tasks, and retraining as an aspect of updating will become crucially important as antidotes to immobility, passivity and possible social exclusion. Culture Finnish culture has been called a tradition, a loan, a primordial force. It is precisely through its mundaneness and practical orientation that our culture has furthered equality, democracy and justice. In an information-intensive society, in which the rate of technological change is dizzying, the future of culture will not be free of problems. The world of the computer monitor is very rational, and culture is in danger of being reduced to an agility with information. In future, those nations will succeed in which a deep, broad humanity and a strong intellectual life rise to assume their places as crucial resources. Courage does not grow on the strength of brains alone. The frenzied, short-cycled tempo of life tempts us to dabble and scratch surfaces - but challenges us to look deeper. Culture encompasses the skills of thinking, wondering, asking and doubting. Joy and passion are not foreign to culture, and intuition prevents us from blundering along amidst the chaos of information. Culture and art are important, but everyday skills and social ability - ability in the right things - have their value, too. Finding one's personal expertise and developing a capability for responsibility guarantee that a person will be involved. The daring to confront life grows into a tolerance for disappointment and uncertainty, and setbacks become splendid opportunities for learning to solve problems. Life does not bend to planning, but culture, social capital and personal courage are strong forces with which to take on the future. With such strengths, the human being will always be more than a consumer. The use of time Our utilization of time is governed not simply by the changing days and seasons, but also by changes in society. Traditionally, we have been accustomed to dividing our time into segments of work, free-time pursuits, and rest. The utilization of time has an important connection with the shaping of personal values. In terms of social policy, the use of time is problematical. How do the replacement of labour with technology and the absence of work affect our time-use choices and our notions of ourselves, other people and society? How do our use of time and changes in how we use time affect the development of service systems, for example? Studies indicate that work, the content of free time, and human relations are crucial to the feeling that life has human value. The social importance of free time has been examined on the basis of "the good life." Some have for example noted that privacy is becoming less and less of a benefit and in future will become downright elitist. Communications, the Internet and the virtual economy Globalization is the newest and perhaps most far-reaching phenomenon shaping the values of Finnish society. The Committee for the Future considered this subject in its last report, emphasizing the need for active involvement and intelligent adaptation. The Internet, which was originally created as a technical means of transmitting information, has in many ways gone beyond its original task. It has opened the frontiers of whole worlds to moving goods, information, ideas and ideologies at a speed which is without historical points of comparison. It is changing our operating environment and ways of doing things - and, in the long run, it may reshape our values more than we can now guess. Today's worldwide communications system has been termed the world village, in which billions of people can have dealings with one another as if in a rural village. The matter can however be seen in other terms. Information transfer also brings to mind a global metropolis. The great majority of us neither know nor care to know what is going on in far-off nations. The information networks are under the control of a few. From the standpoint of values, it is essential to realize that states have lost their chance to direct and oversee information and its creation and transmission. Through the new communications technology, the chosen topics of discussion and their messages are imparted to hundreds of millions of people simultaneously. The growing importance of the Internet became evident in connection with the 1997 Nobel Peace Prize. The prize was given to a 47-year-old U.S. woman, Jody Williams, who had among other things used a network she created on the Internet to establish a worldwide citizens' movement against antipersonnel land mines. The Internet's impacts are manifold. The burgeoning on-line commerce, for example, may weaken the state's sociopolitical possibilities through a loss of tax revenue. If, on the one hand, both trade and the various phases of the production of goods are entrusted to the care of electronic communications, and, on the other, an increasing amount of work can be done, and profit generated, incorporeally, what or whom is the state to tax? Without tax revenues, the state will not be able to attend to social levelling. The Internet has given us a glimpse of a new type of economy, the virtual economy, in which wealth is created with commodities and labour which cannot be located in a specific place, institution, or point in time. The concepts of a business, turnover, an employer and employee, an owner, a profit, and a recipient of that profit are becoming vague. Even now, many physical products are designed, produced, financed and utilized in many countries, through the agency of many parties. In virtual enterprises, which function globally and are built around expertise, it is increasingly difficult to personalize responsibility for the pay level, working conditions, social security contributions or taxes. Rights and responsibilities, and the values which stand behind them, are not as ascertainable as they once were. The virtual economy has changed the world monetary system's operating environment. The computerization of securities trading has created a global field of operations and made the scale of the capital being transferred from country to country unmanageably large. The monetary world has cut itself loose from the real economy. Formerly, currency exchange and international capital flows were connected to trade and productive investments. Today, the bulk of financing flows are short-term transfers by which shifts in the value of monetary property are exploited. The dimensions and speculative nature of capital movements have increased the fragility of the international financing system and shaken the equilibrium of many a national economy. The need for a new Bretton Woods system has been discussed. The Bretton Woods Conference, held in 1944, created the postwar international financial system. The establishment of new international institutions has also been proposed. The most far-reaching proposals have called for the introduction of a global currency. In practice, attempts have been made in the 1990s to stabilize the international financial system with regional arrangements, of which the EMU is the most sophisticated. Other similar, but less integrated, arrangements include the Asian Free Trade Area, Mercosur, and the Southern African Development Community. All these systems are attempting to create continental economic zones. The 21st century's winners will probably be those who adapt to the new technology first and most efficiently - and are able to reap its benefits. Old, hierarchical societies which cling to the traditional way of working, planning and managing are not capable of swift change. Finland has the flexibility of a young culture. In Finland, the old, hierarchical structures of the economy, politics, working life, information and research, and the family are not a great burden. Success will however require that people feel that they have a stake in the information society of the future, and that they share its values. In this fashion, all resources will become fully available. The problematics of sharing the values of the information society will be considered in greater detail in the final chapter of this report. The Committee moves for the approval of two statements concerning this chapter.
"The growth-driven maintenance of employment is the basic option which best fits the Nordic tradition." (Government report 1997, 116) "What needs to be reassessed, however, is the way in which income relates to work input. Various ideologies agree on the principle of making an 'active contribution to society', both the conservative principle that every member of society should work for a living, as well as the left-wing principle that everyone should have the right to work. How far should the principles of a 'healthy' labour market be revised in order for all those who are capable of work to take part in some form of common endeavour?" (Government report 1997, 116) 1. The basic Finnish principles of work Everyone has a right to be useful Work has been the foundation of the Finnish economy. Wealth and social welfare continue to originate with work. Work is however different from what it was 10 or 100 years ago. Although a majority of Finns presumably do not place great value on investing, consulting or entertainment as work, those endeavours are frequently more productive and in that sense more beneficial work in macroeconomic terms than farming or manufacturing some physical product is. Finnish and European mass industrial production is being transferred on the one hand to machines, by automation; and, on the other, to Asia, by virtue of Asia's inexpensive and flexible labour markets. Productive work is increasingly a matter of expertise. The U.S. researcher and politician Robert Reich analyzed the change in the nature of work in the early 1990s, in his book The Work of Nations. He takes the view that work tasks will in future break down more clearly than before as routine jobs, local service tasks, and information jobs, which he refers to as symbolic-analytical services, and which will require a great deal of expertise and creativity. According to him, the competitiveness of nations depends on creative information work. The changing nature of work in the information society will be considered more closely in the final chapter of this report. To put it simply, we have lived for the last 200 years in an era of paid labour, a time in which work, workers and indeed, in a profound sense, all of life have been divided on the basis of the pay received for work. In this chapter, work will in general refer to paid labour. Finns have traditionally proceeded from the assumptions of the Protestant work ethic: Finns have believed that a sound economy, affluence and democracy cannot exist without work. For most people, work has also defined free time. People have used free time to get energy for their next job, to learn new things and obtain additional earnings. Except in the case of limited special groups, free time as a opportunity for being idle or lazy - for doing nothing - or for pleasure alone, is a very rare phenomenon in Finland. The poorer a people has been, the more everyday life has been full of work and securing a livelihood. The urge for upward social mobility, the desire to succeed and be richer than one's parents, has been obvious. That has in turn has ensured that the performance of work has not fundamentally decreased, although the need to work hard in order to earn money has long since become history. The relationship between work and free time in Finland is elucidated somewhat by the fact that there are few European countries in which such a large part of the people devote their holidays, year after year, to fishing, hunting, growing potatoes and carrots, gathering mushrooms and berries, planting and thinning woodlots, and studying. We consider the image of former Finnish president Mauno Koivisto working in the woods at his cottage natural. There is something very fundamental involved here. In Finland, working at one's summer cottage, growing crops at a family farm that perhaps is no longer actively operated, and pottering around in an allotment garden or a basement workshop have complemented remunerative work, provided refreshment or even replaced actual work. Nowhere else in the world has so much work and care been put into the building of second homes - summer cottages - as in Finland. In essence, a strong commitment to work has been a question of a basic human need - the desire to be useful. The relationship to one's work has changed over the course of time. Finns born in the 1970s no longer consider work the single most important element of life. The increase in free time has fostered new demands as to the content of free time. Work is often seen as an means, as a generator of economic opportunities which makes fruitful free time possible. As forms of free-time relaxation, constructive pursuits such as berry-collecting and cottage renovations have in part given way to seeking fun from the realm of more commercial free-time pursuits. The relationship to work has changed. Among young people, the increase in temporary and project-like jobs of an insecure nature has weakened commitment to a single job. Many are forced to work without income security and holidays, for example. This re-valuing of work may have a fundamental impact on notions of social solidarity. Finns have become accustomed to the equality which has been created through work in the 20th century. Working and being useful have been everyone's natural right. It has not been necessary to exercise that right. However, since a strong work culture has prevailed, idleness, and thus unemployment also, have not become acceptable. Older Finns have had the right to be useful, too. For this reason, guiding people towards early retirement and having to step aside before the retirement age have been perceived as difficult matters. Inasmuch as Finns have been serious about their responsibilities, accepting gratuitous assistance has run counter to basic values. People have preferred to proceed on the assumption that the aid is a loan, or that they will provide work or some other compensation in return later on. The question is one of independence and esteem. Examined more deeply, the basic needs for independence, esteem and being useful are also found in the Nordic model of well-being, which academician Erik Allardt has crystallized in the three classic elements of having, loving and being. Finland has succeeded in establishing one of the world's highest and most egalitarian standards of living for all its population groups. That however is not enough if hundreds of thousands of jobless people, say nothing of people shunted into early retirement, feel that they are neither needed, loved, nor respected. Many futures researchers see work as dividing people more clearly than before into two groups. Work is becoming a privilege. In many European countries, people have woken up to the realization that some families are being forced into partial or total unemployment and idleness, while those families who are working have access to more jobs, and more diversified jobs, than before. In unemployed families no one earns a full salary - a livelihood is secured through temporary jobs, public assistance or the grey market - while, in the working family, several family members are well paid. One of the most famous futures researchers, Charles Handy, has summarized the change in the value of work by answering Mark Twain, who said, "If work were such a great treat, the rich people would have helped themselves to it long ago." Handy answers, "They have, Mr. Twain, they have." (The Empty Raincoat, 1995) Everyone has a right to benefit from work It was once assumed that working was worthwhile. The worker and the person having the work done both benefited from it. Useful, profitable work has been a driving force in society. Finland, like a great number of other European countries, has drifted into a situation in which not even this assumption holds true. Mechanization and the new global division of labour have contributed to the elimination of Finnish jobs - especially those that require physical labour. At the same time, the right to benefit from work has become more limited. In the era of the welfare state, the range of public supports and assistance has been expanded for many reasons, including the alleviation of the impacts of unemployment. As a result, working is no longer as clearly worthwhile in all situations or for all population groups. In Finland, in relative and human terms, the lack of benefit in working has caused the most trouble for less well-paid blue- and white-collar employees who pay their income taxes without any chance for the tax breaks afforded by capital gains, depreciation, and tax breaks connected with property and business income. For certain families who have children, and receive housing assistance and other support, the benefit derived from working, if all these forms of assistance are maximized, is minor. These families form a group of their own. It has also been noted that even middle-income persons who have good educations and good jobs may calculate how profitable working ultimately is. The problems of work and unemployment are complicated. The most recent recession was profound. Because of the sense of responsibility and the undiminished respect which work enjoys, policy and the government are expected in spite of everything to produce solutions not simply for the problem of unemployment, but also for the problem of the uselessness of working. 2. Beneficial work, not simply paying work "The decisions that were made during and after the recession can be seen as first steps on the road from a welfare state towards a 'workfare' state. This means adapting the welfare state to new economic conditions, and paying income in more direct proportion to work input. In spite of this, the work society is mounting a staunch defence: although there is no way for us to achieve a rapid cut in the unemployment rate, we can still attempt to hold on to the ethics of our work society." (Government report 1997, 111) Proposals for a sharing of work, a "citizen's wage," and a shortening of working hours are all based on the idea that the concept of work has to change. These proposals have enjoyed wide support in Europe. Paying work is not the only mode of effective, productive work. From the standpoint of the whole society, some work - production which damages the environment, for example - is even harmful. Household work, voluntary organizational work and supplemental studies aimed at obtaining new knowledge and skills for work are productive, efficacious, necessary and beneficial. The U.S. social commentator Jeremy Rifkin, the most important exponent of this thinking, has spoken about the development of the third sector into an important, job-creating sector of production. Remunerative work is becoming a much smaller part of a person's work history and life cycle than it has been to date. The 20th century's standard of work, whereby one held a paying job 8 hours a day, 40 hours a week, from age 20 to age 65, usually for the same employer, has disappeared. More often than before, work is temporary and consists of numerous separate segments. In a lifetime, a person holds many jobs which are fundamentally different from one another. The new characterization which people give to their work - bit jobs - is apt. More and more clearly, we are headed in the direction of an alternation and overlapping of work, study and leisure. People will use part of their time to strengthen the foundation of the future - their own and others'. The continual acquisition and application of new knowledge will be important. People will do a certain part of their weekly work as paying work and a part as unpaid or low-pay work, for the good of a civically spirited society. In the latter context people will take care of children, tend to the aged, or protect the environment. Some models envision this work as being funded by both the state and businesses, who could receive tax breaks in return. Advocates of sustainable development perhaps go the furthest in questioning the importance of paying work. In the opinion of some, material economic growth inevitably conflicts with ecological values. Among Europeans who are thinking about work and leisure, France's André Gorz emphasizes freedom and self-education as forces which renew a society. In contrast to social reformers who, in accordance with the 1990s' mainstream thinking, stress the obligation to work, Gorz opposes all manner of compulsion. He supports a "multi-functional" model, according to which everyone has the freedom to choose how to organize his or her life on the strength of a basic income granted gratuitously, completely irrespective of paying work. In the Gorz model, a radical reduction in working hours will free people for study. They will be able to employ themselves or participate in network work and cooperative activities instead of, or in addition to, holding paying jobs. According to Mr. Gorz, the state must accept this development in order to prevent the emergence of a situation akin to civil war. German sociologist Ulrich Beck takes a more moderate position. He would provide the citizen's wage to people who are not able to support themselves by normal work. In return for the wage, which would be received from social welfare offices, these individuals would have to participate in nonprofit activities such as education, environmental protection, culture, health care and care for the dying. He speaks in terms of voluntary social involvement, however, rather than compulsory or alternative service. His motto is "recipients of the citizen's wage will not be paid for their work, but they will be compensated." He disputes the contention that his model is "employment therapy" for the jobless, preferring to call it the creation of a new civic society. The idea of a citizen's wage has come under heavy criticism in Finland as elsewhere. Gorz's and Beck's models have been condemned most for their failure to explain adequately who will pay for the wage, if no one is participating in productive, paying work. When Beck promises that those who care for the aged or do environmental work are to be compensated non-monetarily, what does he mean in practice? German critics take the view that the performance of work based on barter and reciprocality is possible only on a small scale in small communities. In Germany, more than 150 work communities based on a barter economy have been established. On the subject of unemployment, a commentator in Die Zeit (8 April 1998) answered Beck by saying that the latter's model does not resolve the problems of four and half million unemployed Germans: on the contrary, the critic said, German joblessness may worsen if the concept of productive, monetarily measurable, beneficial work is rejected in the society more broadly. According to Beck's critics, the state would ultimately be forced to pay the bill in all of the alternative models. The sceptics also note that some reliable party will in any event have to keep a record of the work done. Further, in the longer term, someone will have to attend to issues of fairness and the rules of the game in general. Even if the pay and growth are merely qualitative, they too will have to be distributed somehow. The state, in some form or another, will be needed for that task, too. 3. The European and Anglo-American employment models "From Finland's perspective, Denmark and the Netherlands provide an interesting case study, owing to the similarity of our national traditions. Here, Denmark may be viewed as something of a 'test laboratory', and the results of their [sic] experiments are being followed up with interest. Denmark was the first of the Nordic countries to be confronted by high unemployment and, in an effort to encourage active measures to cope with it (by means of a special 'active unemployment pact'), a combination of ingredients and values from various options were thrown together. These active measures include 'job recycling' through the introduction of extended leave, subsidization of businesses that provide home services, 'work duty' and the creation of new arenas for voluntary action. The 'rules' of unemployment insurance have been reformed, and various social actors are being urged to engage in local partnerships so as to create new arenas for work and social activity." (Government report 1997, 116) The Committee for the Future considers the Government report's treatment of employment models too simplistic and narrow, and for that reason would like to analyze the issue of work in somewhat greater detail, on the basis of the preceding section on values. Basic differences between the models To simplify, the Western world's employment models can be divided into two types: the continental European model and the Anglo-American model, used by the United States, England, Australia and New Zealand. The continental European model proceeds on the basis of civil rights and equality in working life, as well as economic efficiency. The model has led to a healthy economy and - in Finland especially - efficient production. A significant part of the population is however underemployed or completely outside the realm of working life. The Anglo-American model emphasizes market forces, competition, and the necessity of working. At least by Nordic assessment criteria, minimum wage levels, social security and other welfare-state rights and benefits are not established so as be hindrances to the economy, production and work. The long-term result of this has been sustained economic growth and high employment. In European eyes, however, these blessings are achieved at least in part at the cost of egalitarianism and the rights and security of workers. In this report on Finland, employment is examined as a Western problem. It must however be emphasized that, for example, the world's second-wealthiest country, Japan, which since World War II has experienced the world's fastest economic growth, has now in many ways been forced to assess its social model and, more generally, the Asian social model from entirely new points of departure. Regardless of the different cultural settings, the big problems are the same: how to make the financial foundation durable, how to provide work for everyone, how to defray the expenses of an aging population, and how to prevent the division of the populace. We have also had to consider whether it will be possible in future to assume that all or even most women, once married, will be left at home in spite of their equivalent educations. The Club of Rome, French and Danish models The full-employment model developed by the Club of Rome (Orio Giarini and Patrick M. Liedtke, The Employment Dilemma and the Future of Work, 1997) assumes that everyone between the ages of 18 and 78 would perform 20 hours of work service weekly in the public sector. Actual remunerative work would be left primarily to the care of the private sector. The basic public work could be replaced partially or completely with the paying work. Unemployment benefits would be abandoned, and these resources would be directed toward the establishment of the 20-hour public jobs. According to the model's developers, the guaranteed basic jobs would be needed especially for young people, the parents of small children, and older people. Voluntary charitable and care work would acquire greater value. A person's value would not be determined solely on the basis of his or her paying work. In practice, the model's ideas have in some ways been reflected in France and Italy, both of which are seeking to introduce a 35-hour work week. Germany is discussing a 30-hour work week and many social-support modes reminiscent of the citizen's wage. At least for the time being, employers and the Government have opposed the proposals, basing their stand on Germany's need to remain competitive. A 35-hour work week has also been proposed in Finland, but as an average rather than a matter of routine. France has reduced working hours broadly in recent years. Industrial production is at an all-time high and there is a record surplus in the balance of trade. Industrial investments increased last year by 10 % relative to the year before, when the growth was only 1 %. The values of listed shares are also at an all-time high. The unemployment rate decreased 1.7 % in the course of the year, dropping to 12.2 %. The Government has announced that it will strive to provide jobs, for example from public funds, in order to stop paying people not to work. At the beginning of its term, the Government promised to create 700,000 new jobs in the public sector; of these, 350,000 will be created to alleviate the stubborn problem of youth unemployment. The French Government feels that the country's economic crisis is over. In Keynesian fashion, growth in domestic consumer demand is considered essential to the strengthening of the economy, and the Government has bolstered that demand by reducing taxes. Many economists stress that the export trade, which functioned splendidly in France even during the recession, could not on its own have increased employment. Crystallizing the change in economic and employment policy, le Nouvel Observateur noted that "formerly, one worked in order to consume, but now one consumes in order to work." The Netherlands' employment model is characterized by alternating different types of jobs with free time, and by giving consideration to the different types of life-cycles that people have. About half of all workers are employed part-time or are performing short-term jobs. Only some women work, as opposed to staying at home - only 30 % of all women are regularly employed in full-time jobs. In Finland, scepticism has been voiced about applying the Dutch model: leaving the women at home or in part-time work, while it might alleviate unemployment, does not fit in with the Nordic way of life. In Denmark the unemployment rate was 12 % at the beginning of the 1990s, but has since dropped to 7 %. Levels of pay and unemployment security have not been disturbed. Work hours vary, however, and compromises have been made with protections against arbitrary dismissal. The cost of getting work done has been reduced by tax solutions through multi-year contracts. Among the tools of active labour policy, well-planned training programmes and personal job placement have been important. If a person does not find agreeable work within two years, he or she has to go into training or accept a public job. The person's home municipality attends to the fulfilment of the work obligation. The adverse side of the employment management model is that a third of all unemployed persons have dropped or been dropped entirely outside the sphere of labour policy services and unemployment security. They are of working age, but the society is no longer investing in them. In autumn 1998 Denmark's labour-market parties reached surprising agreement on bringing more and more Danes into working life. The Folketing - the national legislature - is currently considering the laws governing the reform, which will include limits on unemployment benefits: for example, the per diem unemployment benefit will be available for four years instead of the current five. At the least, the per diem benefit has been granted for two and a half years; under poor employment conditions it has been granted for nine years. Under the proposed reform, no longer will unemployed workers in the early-retirement pipeline simply have to wait until they reach the retirement age; the activity obligation will also apply to persons 50-55 years old, who, as things stand now, can receive per diem money for ten years. The biggest controversy has centred on the requirement that unemployed persons of foreign extraction demonstrate an adequate proficiency in Danish. If their language skills are insufficient, members of ethnic minorities can be forced to take language courses. Those who refuse would be denied per diem benefits. The reform will also provide new opportunities for job-seekers. All those who lack jobs will be guaranteed an opportunity for at least six weeks of training. In those sectors in which there is a shortage of labour, everyone who so desires will have access to training. This will for example affect the ADP field, in which there is a severe shortage of workers. The Phelps model Of the Anglo-American employment proposals, the regressive employment subsidy model advanced by labour economics researcher Edmund S. Phelps, a professor at New York's Columbia University (Rewarding Work: How to Restore Participation and Self-Support to Free Enterprise, Harvard, 1997) is becoming one of the best-known. The Phelps model assumes the creation of a general employment subsidy which is aimed at businesses and decreases as pay increases. It would only be paid for low-wage work. The model was developed at the beginning of the 1990s in Europe (by Jacques H. Dreze and Edmond Malinvaud, winners of the Nobel Prize for Economics), but in the European context the public sector was the target of the support. The model became known around the world when both the Clinton administration, in the United States, and the Blair Government, in Great Britain, began to apply it. In the United States, where the employment situation is good, the subsidy, intended as it is for low-income workers, has been used with hard-to-employ special groups. In Britain, the targets of the subsidy have included poorly educated youth who have neither work experience nor adequate skills for working life. The Phelps model differs from numerous earlier models by making enterprise, work, and usefulness very clear conditions for all public support. Everyone has to do some work and a serious attitude is taken toward all necessary work. It is however conceded that there is a lot of work which does not pay well and which people do not want to do at the wage the market pays. The employment subsidy is limited to low-wage sectors. The other value-based premise is the recipient's need for the subsidy. The subsidy is paid to low-income workers rather than everyone, as in the continental European model. In the Phelps model, the concept of social levelling means that the subsidy decreases incrementally as the pay increases. The model's third value-based difference vis-à-vis the European model is the targeting of the employment subsidies at the market sector rather than the public sector. The aim is to create new jobs within the sphere of the competitive economy. Critics of the model emphasize, however, that it is in any event a type of public subsidy. Throughout the 1990s, the United States has increased its national income through labour faster than Europe has. The United States is witnessing the lowest unemployment in 25 years and the lowest inflation in 30 years; crime has been in a clear decline for the last 5 years and the national budget is balanced. In 1997 the GDP grew by 4 %, three million new jobs were created and wages rose by 4 %. Critics note that the price of employment has been high. Of all U.S. workers, 75 % are estimated to be getting less pay now than they were ten years ago. A third of all the workers are part-time employees. Many people work several jobs. Income differentials have continued to increase. The gap between the continental European and British-American models of occupational welfare will presumably keep on growing, since both the United States and Great Britain continue to tighten the conditions under which people can receive public benefits or support without working or making some other contribution. In both countries, broad campaigns focused on employment and the obligation to accept work have been launched. The British Government has launched a programme, which, under the slogans "New Deal" and "Welfare to Work," is being applied to the struggle against joblessness and poverty. In the United States, the labour shortage is part of reason for the work obligation. Under reforms which originated in the state of Wisconsin, the acceptance of work has been made a condition for receiving public assistance. The reforms have been incorporated into federal legislation as part of Public Law 104-193. The gist of the federal provisions are that no one may receive more than five years of public assistance, or welfare, in his or her lifetime. The states can make the time even shorter. Under threat of funding penalties, the law stipulates that, by 2002, the states must organize work or training for various classes of welfare recipients. The states have developed different types of programmes and support schemes. In Wisconsin, a drug-user must perform 28 hours of work per week in parks, for example. The same 28-hour work requirement has been established for mothers with sole custody of their children. In Missouri, the state pays a compensation to every employer who hires a welfare recipient. In the state of New York, 38,000 welfare recipients have been forced to work cleaning and repairing streets in order to receive food stamps and welfare checks. The end result has been a restoration of order and cleanliness, which has attracted wide notice internationally. In April 1998, Prime Minister Blair launched Great Britain's New Deal programme, which obliges young people to accept work or training. Young persons who have been unemployed for a half a year must accept either a job or full-time training. The person can choose a state-subsidized job, for which the employer is paid about GBP 230 a month; a job in environmental offices, in which the work consists primarily of cleaning or forest improvement; a job in a voluntary organization; or a self-obtained job. The full-time training or practice work is intended for those who lack basic schooling. The intention is to reform taxation and subsidy compensations next, so that every job will be worth accepting. Insurance payments, other labour costs and taxation in low-income sectors in particular are being reduced through the national budget. Every family in which at least every other adult is working will be guaranteed a monthly income of GBP 800 and taxes will not have to be paid on earned income of less than GBP 1,000. A separate but similar employment programme has been created for persons with disabilities. Social reality, historical traditions, demographic structure and, among other things, concepts of unemployment are in many respects quite different in Great Britain and the United States, as compared to Finland. For example, the hidden unemployed in Britain are estimated to number two million, or more than all the statistically recorded unemployed job seekers. Most of the hidden unemployed are women. Of single parents, 60 % are either without work or cannot accept work, for example because public child care either does not exist or is too expensive for the family. Comparisons between the United States and Finland are complicated by the difference in the countries' size, as well as the United States' major racial differences and large immigrant population. In contrast to Finland, people of colour in the United States can be directed into low-paying jobs. Illegal immigrants are the largest impoverished group. From the perspective of the typical low-income worker in Europe, the difference between the United States and Europe has often been characterized thus: in the United States, workers have jobs, but no money. In Europe, some of them have jobs and money, but some have neither. Comparisons and examples are always problematical, but do provide some idea of alternatives and orientations. An awareness of employment policy options has become more important to Finland now that it has joined the EU, since some of the employment policy's outlines are being developed at the EU level. European solutions are also being sought in taxation which affects employment. The global economy forces Europe to follow world trends closely and assess the practicality of its own model in a changing environment. In autumn 1998, for example, with respect to the EU's comparative discussion of employment models, a report on the position of women and single parents in particular was considered in the European Parliament (A4-0272/98 and A4-0273/98). According to the European Parliament, there is no reason for Europe to follow the U.S. route in social and employment policy. The Parliament rejected the Wisconsin approach, whereby, among other things, single mothers who are capable of working are forced, under the threat of losing welfare benefits, to get jobs when their children are at the most 12 weeks old. Within one year, Wisconsin has got 65 % of its welfare recipients off the rolls, but, at the same time, the number of homeless single-parent families has grown. The majority of all single parents earn less than the minimum wage. 4. Finnish solutions "These new trends in employment originate from an aspiration among business enterprises to achieve greater control over their operating environment, which has become characterized by tougher competition and greater uncertainty. The recession provided justification for a new, leaner style of production and the spreading of risks from the business to the individual. It is for labour policy makers to decide whether to hit the brakes or pull out the stops, i.e. to allow this trend to continue by deregulating terms of employment. It is nevertheless the primary mission of labour policy, everywhere in the world, to provide sufficient assurances of job security against short-sighted 'dumping.' At the same time, we must ensure that those who are employed in 'irregular' jobs are not consigned to the status of second-rate citizens in matters of social security." (Government report, 109) Points of departure Unemployment figures everywhere are problematical because the definitions and bases of calculation vary. According to the Ministry of Labour, there were 360,000 unemployed persons in Finland in August 1998. The ministry considers as unemployed those persons who have personally registered themselves as unemployed job-seekers, who are without jobs and are available for full-time work. In accordance with EU specifications, Statistics Finland records as unemployed only those who state, in an interview survey, that they are without work; who have looked for a job actively within the last month, and will be available for work within the next two weeks. By this yardstick there are 260,000 unemployed persons in Finland. According to the Ministry of Labour, the unemployment rate is 14.2 %; according to Statistics Finland, it is 10.2%. Eurostat meanwhile puts the figure at 12.1%. The differences are significant. It is essential that we ask why some 100,000 persons are no longer actively seeking work and do not consider themselves unemployed, or are outside the Statistics Finland definition of unemployment for some other reason - but are nevertheless the beneficiaries of Ministry of Labour unemployment benefits or other support functions. Because of both external and internal factors, Finland has its own characteristic type of unemployment. When speaking about Finnish unemployment, we need to distinguish among at least the following types of persons who are unemployed or not performing paying work - 1) persons who have become temporarily or permanently unemployed who definitely want to return to work and are prepared to study a new vocation; 2) persons who have consciously decided to temporarily stop working, who, in view of child care, studies, or some other reason, feel that their quality of life or their families' quality of life will improve if one of the parents stays home; 3) young people who have not yet obtained jobs because of insufficient training, the wrong place of residence from the standpoint of getting work, or some other rational reason; 4) persons who have estranged themselves permanently from the requirements of working life, who either lack the desire or ability to work, because of alcoholism or some other illness, for example, or have no real opportunity to return to work, even after training; 5) persons who consciously seek part or all of their livelihood from the grey market; and 6) persons who took on excessive debt during the recession, for whom it is hard to get work and almost impossible to go into business. The problems of these groups are varied. Because unemployment wears many faces in the national economy, policy and everyday life, the solutions may not be simple and easy, either. Finland also has its own employment policy. In Finnish discussions of other countries' models, especially the new employment policy programmes being backed conspicuously by President Clinton and Prime Minister Blair, it has often been noted that Finland has already implemented the programmes' central objectives. In the opinion of many, Finland has progressed substantially further in employment questions than other countries have. This is illustrated for example by the fact that special groups such as single mothers continue to be the focal point of the U.S. and British employment discussion. On the one hand, they are generally outside the work community; on the other, simply put, only they obtain welfare or comparable assistance for housing, food and other purposes via their children. In Finland, women have already been equal in labour matters for a long time and, as a population group, single mothers working in low-wage sectors, according to the latest studies, hold on to their jobs more tenaciously than anyone else does. Defenders of the Finnish employment model emphasize that even when the unemployment rate in Finland was 18 %, social solidarity did not collapse. The welfare state's safety net was strong enough to alleviate the impacts of a deep recession. Just as the Government futures report notes several times, the welfare-state model functioned as it was supposed to. Even in the wake of the recession, Finland has one of the most egalitarian distributions of income in the world. In the Finnish system, as in most other European models, it is assumed that those who have lost their jobs have paid their contributions to the employment security funds. The assumption does not always hold true. Contributions are made for some work only, and those payments represent only part of the costs. The biggest problem, however, is that unemployment has become entrenched. The number of long-term unemployed is exceeding the assumptions on whose basis comprehensive social security has been developed. At the same time, we are re-examining the thinking which assumes that each generation of active workers will in its turn take care of the elderly, the sick and those who have been displaced from working life. In rural Finland, the family farm is the foundation upon which basic human settlement, food production, a substantial number of services, the production of wood raw material, and the bulk of other rural business activity are constructed. As the structure of agriculture and forestry changes and the number of family farms declines, the face of rural society is changing. On the one hand, the remaining family farms are becoming bigger and developing their operations; on the other, the dependency of these farms on the surrounding community and the services it produces is increasing. The structural development now foreseen is extremely fast and will have a significant impact on the standard of services throughout the countryside. Family farming and family forestry are the Finnish rural model. The larger society's task is to create the faith and establish the prerequisites for a functional rural society. Measures which maintain an adequate basic structure, services, and other entrepreneurial activity founded on that structure should be directed at rural Finland. The actions should be aimed at strengthening the local economy. These could include tax measures, measures which enhance rural services, development measures aimed at the road and information networks, or measures which strengthen the interaction between the countryside and population centres. Employment models and guidelines for working Kati Peltola, director of the City of Helsinki's Social Service Department, has been promoting a programme to exempt labour from environmental damage charges. The programme represents one Finnish employment model aimed at renewing the foundations of society. According to Ms. Peltola, the whole structure of taxation should be reformed: instead of labour, the results of production should be taxed. The burden of social security contributions, she says, should be moved to production's value added. Labour-intensive rather than capital-intensive production would thus be supported. The taxation would be used to reward employers who give people jobs. Her model includes many other reform proposals that come to grips with structures. She would place the financing of social security on a new footing. While the emphasis of taxation and social security contributions would be shifted to capital, production results, and production's value added, the financial underpinnings of the social security system would be strengthened. Ms. Peltola believes that that system, unless reformed, will disintegrate, since the revenue received from work will decrease as production becomes more capital-intensive. She presents the model in the book Hyvinvointivaltion peruskorjaus [Overhauling the welfare state] (1997). The sharing of work has received broad support as a means of improving employment and reducing inequities in social welfare. In Finland, the excessive work load assumed by those who are working, and the intensification of the pace of work - factors which manifest themselves in work burn-out and various types of diseases - are being presented more and more often as justifications. In the 1960s, Professor Paavo Seppänen developed the so-called 2 x 6 working hours model. In this scheme, the work day becomes shorter, but the effective operating hours of factories and service institutions become longer. Work efficiency increases, and the utilization rate of machines, equipment, and operating space improves. Seppänen did not create the model with unemployment in mind: his purpose was to integrate work and leisure with each other so as to answer human needs. Only in the 1990s has the model acquired some applications. In addition to workers, businesses in which automation has been extensive and the work is performed on expensive machines have found the model to be a good one. Among new Nordic working time initiatives whose implementation might also have affected Finland, the Danish general strike of spring 1998 should be mentioned. The main demand was a shortening of working time through the introduction of a sixth holiday week. The initiative did not receive support and lapsed when the Government did not act on it. In all, more than ten substantial, comprehensive employment proposals have been prepared in the last five years in Finland. The first of these was the 1994 report by an employment-issues working group led by Matti Pekkanen and established at the initiative of President Martti Ahtisaari; the most recent was the spring 1998 report by the Economic Council, which works in conjunction with the Government, on the functioning of the labour market. The proposals repeat one another in some respects. Many of the programmes propose some form of cut in the tax rate coupled with a corresponding cut in the state budget, reducing the taxation of labour, reducing the tax bite on employers, fostering the mobility of workers, wage flexibility and reform of labour market rules, increasing wage differentials, and reducing the level of starting wages for older unemployed workers to the level of wages for young people. Where applicable, Finnish employment proposals and models have been tried, without disturbing the structures of society. One thorny problem of Finnish employment policy - and of employment policy in many other European countries, too - is limited geographic and vocational mobility. Employment models differ in terms of the distribution of employment costs and the targeting of tax benefits. Differing concepts of tax benefits, for example, lie in back of the Anglo-American model, which emphasizes private-sector jobs, and the European model, which focuses on public-sector jobs. In the American model, the benefits from the reduction of taxes and labour and pension expenses accrue to the employer and, naturally, the worker, in the form of work. In the European model, the public sector, which produces the services, and the citizens, who receive the services, get the benefit of high taxes and the good level of services thus ensured. Finland has adhered to the old model of an extensive public sector. One common feature of Finnish employment models has been a strong faith that economic growth creates work and thus attends to the problem of unemployment. This was the point of departure especially for the report by the first major employment working group, chaired by Matti Pekkanen. Economic growth has exceeded all expectations and, contrary to predictions, has now continued uninterrupted for more than five years - but unemployment has not been eliminated. Until very recently, few researchers had in fact criticized the growth-based thinking. Economist Urpo Kivikari is one exception. According to him, capital-intensive, highly automated industry will not resolve Finland's employment problem, even if it does produce high growth rates, Growth, he says, does not create work; work creates growth. According to him, people need to be put to work somehow, since "all people who work, no matter how dumb they are, are contributing to increased growth." He emphasizes that if this way of thinking were taken as a foundation for reforms, we could discuss the means more openly. Could we for example reduce the employer's fringe benefit costs substantially? Could we adjust the minimum-wage statutes so as to get young people working? Could we replace today's income transfers and the bureaucracy needed to take care of them, with the citizen's wage? According to a study completed under the leadership of Professor Matti Pohjola of the Helsinki School of Economics and Business Administration (Suomalainen työttömyys [Finnish unemployment] 1998), a lowering of the maximum taxes paid by low-income workers is essential to the reduction of unemployment. At the same time, the study found, unemployment benefits must be cut and housing assistance reduced. Reducing the tax bite on the employer by FIM 15 billion, from the current 60 % to 55 %, would reduce structural unemployment by 2 %. The growth in employment would generate about FIM 5 billion in tax revenues, while FIM 1 billion would accrue from the decrease in unemployment expenditures. In other words, FIM 8-9 billion in cuts should be made in the state budget, for the sake of tax relief. Reducing the level of unionization and the coverage of collective labour agreements to 50 % of the labour market could reduce structural employment by 3-4 %. Reducing employment security benefits based on earnings levels by 10 %, or limiting the duration of those benefits to 12 months would make a 1 % decrease in structural unemployment possible. The 1995 Research Institution of the Finnish Economy (ETLA) study Advantage Finland: The Future of Finnish Industries takes the position that, for low- and middle-income workers, unemployment security and free time, figured together, constitute a standard of living which would be lowered by holding a job. The study, which has been used extensively as a textbook, proposes a carrot-and-stick approach. Without disturbing overall unemployment benefits in any fundamental way, it would be possible to support the creation of jobs by increasing grants for moving expenses and paying severance pay and per-diem unemployment benefits as a part of a bonus for getting a new job. This would serve more effectively to encourage people to seek work than simply cutting per diems would. In the Labour Institute for Economic Research journal Talous ja yhteiskunta [Economy and society] (1/1998), Dr. Jaakko Kiander predicts that unemployment will decrease sharply, and goes so far as to state that full employment would be possible if certain economic-growth bottlenecks were removed. According to him there are five impediments to growth: the regional inaccessibility of labour, inadequate skills, a shortage of productive capacity, an inadequate supply of labour and the aging of the population. From the standpoint of policy in the 1990s, his key proposal is major tax reductions. He would like to use the latitude in financing policy created through growth and decreased unemployment to reduce taxes. He would also keep a tight lid on future growth in state expenditures. The end of the article reveals that his tax-reduction proposal would only reduce taxation to the level which prevailed at the beginning of the 1990s. Former president Mauno Koivisto, the first speaker at the Studia Parlamentaria lecture series launched by the Committee for the Future on 23 April 1998, emphasized that employment cannot be improved in a sustainable way through high taxes on labour. He stated that "labour has become a very expensive production factor. Indirect costs of labour have become very high. The taxation of labour has become nothing less than severe, and it begins at very low levels of earned income." In the European Union, the taxation and costs of labour were last discussed in connection with a report on Europe's competitive position (SEC(96)2121), in which the European Commission presented, among other things, a critical assessment of wage costs. By contrast, the European Parliament's Committee on Economic and Monetary Affairs and Industrial Policy found that enhancing the productivity and competitive position of European industry primarily through labour-market flexibility and across-the-board cuts in wages represents a bad solution both economically and socially. Finland has chosen the path of cautious reform. In its 1998 report, the Economic Council recommends continuing an incremental approach. If the chosen incremental policy for some reason is not adequate, we must again face simple, basic questions like the following: Is labour the basis of personal and collective wealth and well-being? Has everyone had a chance to be useful, when he or she so desires, by working? Has everyone had a chance to benefit from the work he or she has done or has had done? Is work an obligation for everyone who is able to work? Is it the state's task to promise or provide work? Self-employment, small enterprises and major enterprises, from the standpoint of working life In its last report (TuVM 1/1997 vp), the Committee for the Future broke production and the economy down into different levels. The boundary between the export industry and the domestic, local economy is fading, however, as globalization takes its course. As collaboration in production increases, leading companies emerge - companies which control the world market and have products and services produced by small partners and subcontractors in local economies. Export work is becoming increasingly inconspicuous. When the representatives of a major foreign enterprise come to Finland for negotiations on joint operations, Finland's lodging, transport and other services are in principle serving as export enterprises. Self-employment is important to the development of the local economy. From the standpoint of unemployed people and their family, it is also often a better alternative than unemployment. Self-employment and starting a business are neither easy nor risk-free. Not everyone is an entrepreneur. More and more people should however become entrepreneurs, since, from the perspective of the future, our small businesses are too few in number - as a comparison with average figures for EU member countries confirms. A successful small business is the sum of many kinds of knowledge and skill. Failure originates not only with the entrepreneur's lack of knowledge and skill, but also with the society. Approaches for promoting self-employment are to be sought in a lightening of the administrative procedures which govern business, in even-handed tax treatment for different types of business, and in the limitation of business risks in accordance with the entrepreneur's solvency. A simple company format which makes the saving of business income possible and promotes and favours the creation of new jobs must be developed for the smallest businesses and businesses in the start-up phase. The Government's policy programme for small and medium-sized businesses (Ministry of Trade and Industry, Neuvotteluraportteja [Conference reports] 1/1996) establishes, among other things, the lightening of administrative procedures and the revision of the tax system as objectives aimed at the harmonization of different company formats. The European Commission has also recommended the improvement of growth possibilities for small enterprises, through a lightening of administrative procedures, in all member countries. We cannot build a future on the strength of subsidy schemes. The slowness of change stems from the fact that the vital needs of small-business activity are not well enough understood. The operations of new businesses and small businesses in general should be made so simple as to enable people to choose small-scale entrepreneurship as a means of making a living even if they lack training - so simple that every entrepreneur will be able to take care of officially established requirements personally. This sort of reform work has been carried out in Canada and Sweden, among other places. Production-cooperation networks enhance the flexibility required by international competition and thus improve the competitive position of leading enterprises. The slowness of change is in part a question of values, too. In Finland, entrepreneurship is not yet high enough in the public's estimation and the hierarchy of objectives which people bring to working and living. It is unreasonable to expect that people who have received a typical, average education will become businesspeople on a broad scale, since even those who have received the most advanced university training for the purpose do not take an interest in self-employment, or in employing others in a business. Among students at schools of technology and business administration, only a handful want to start their own businesses. In recent years, great emphasis has been placed on the employment impact of small businesses. In addition to ensuring a functional domestic local economy, small businesses create a basis for a developing, international, large-scale export economy. International enterprises which compete through economies of scale need a broad network of small businesses. It has even been claimed that small businesses determine a country's competitive position internationally. In 1996, small businesses (those with fewer than 50 workers) increased their total personnel by 8 %. In medium-sized enterprises (50-250 workers), total personnel increased by a few percentage points, while the total personnel of major enterprises decreased by a couple of percentage points. Of growth in total sales, 45 % originated in small businesses. In 1996, the greatest number of businesses (24 %) were to be found in retail trade, although industrial enterprises continue to employ the most people. Thirty-five per cent of all persons employed by businesses were working in industry. Large enterprises which specialize heavily in exports form the backbone of Finland's economy. In its last report (1997), in a section entitled "1996, the Elephants' Wedding Year," the Committee depicted the course of globalization and the consolidation of large enterprises, a process in which Finland is involved. In some sectors, the merger process has accelerated to the point that the matter might now be depicted with dinosaurs. From the standpoint of the development of working life, major enterprises may have been criticized too one-sidedly for outsourcing, for example. Some have referred to "the blind forces of the market." Why should major enterprises compete in production expertise and efficiency, but be blind to the sensible rules of working life, and to personnel development? Doesn't a successful business have to be sure of its capability for self-renewal, in addition to rational work and production? Innovativeness requires an environment which is good in both material and psychological terms. In a successful large enterprise, the demand for superior efficiency and rationality extends to general working conditions, labour peace and the on-the-job atmosphere. Personnel training cannot be ignored. 5. Would the Anglo-American employment model divide Finns? "Be that as it may, this option has proved its weaknesses in practice: it reduces social cohesion and increases inequality. To avoid the spread of poverty, low-income groups need to have their income subsidized or supplemented by social security. A deflationary policy, low wages, income subsidies and escalating social problems can thus result in a situation where high unemployment becomes a liability rather than an asset for the public purse. Another risk is the deterioration of the beneficial socio-psychological effects which usually characterize a growing economy." (Government report 1997, 114) Before we consider the extent to which Finns would be divided by the employment measures presented in non-Finnish models - especially the U.S. model, which is directed at low-income sectors and is alien to Finland - we first have to analyze the starting-point situation somewhat. Even although Finland has one of the world's most egalitarian income distributions, not even Finnish society is unified. Production and labour in the market-economy sphere are already divided and differentiated in many ways. More clearly than any other factors, globalization, technology and expertise have determined the level at which Finland and Finnish enterprises will be located. A comparable differentiation can be observed in the labour market. In Finland, a country whose economy is based on high technology, expertise and exports, labour supply and demand sometimes do not interface with each other well. The last Committee for the Future report proceeded from the hypothesis that, in Finland, the economy, production and labour break down into four levels. In addition to the global economy, economies function at various lower levels. These economies take shape either on a geographic basis, as a result of specialization or, for example, because the capacity or competitive strength of certain businesses does not suffice to compete for leading positions in the global economy. The specialization trend in the economy and production is reflected in the skills required of workers. Businesses functioning at the level of the most intense international competition are demanding more and more skills and knowledge from their workers. It is evident that demand is creating supply, and educational institutions are taking that into consideration in their own educational profiles. The final result is major differences in standards even within the same educational sector. In Finland, ownership divides people in that a majority own very little - often only a residence and a car. In contrast to other Europeans, the average Finn does however own a summer cottage: the country has more than 430,000 summer cottages. Traditionally, the state, the municipalities and church congregations have been major owners. The newest feature is a significant increase in foreign ownership. Almost half of the ownership of listed companies has shifted to foreign investors. The wealth of the average person in Finland has long depended directly on whether he or she has been working. The rapid swings in ownership and wealth in the 20th century can be depicted in simple terms with the following comparison. At the beginning of the century, when Finland's tenant farmers were emancipated, a third of Finns owned land, a third were tenant farmers, and a third were landless. Now, at the end of the century, a third of the working-age population have permanent jobs, a third perform short-term jobs, and a third are unemployed or getting training or education. Of working-age Finns, 63 % worked in 1997. Of this total (1,846,000), 336,000 were working at fixed-term jobs; of these, 143,000 were men and 193,000 women. About 1.5 million Finns had permanent jobs. In spite of differences in the employment models, researchers on working life admit that there is always work which does not pay enough to ensure an adequate livelihood, work which is performed by creating jobs in some way separate from the normal mechanisms of the market economy. The jobs are supported by business or the society. That divides the jobs and the wages paid for them into different levels. The risk of divisions stemming from job-creation programmes needs to be compared to the current unemployment situation, with its problems of social exclusion. Do subsidized employment and make-work jobs automatically mean a reduction in wages? Do they create two labour markets, in the lower of which the rules of working life are not observed as faithfully? The developers of public employment subsidies which decrease as the salary increases claim that the subsidy would maintain employment in low-income sectors and prevent the flight from Finland of normal jobs which demand little in the way of special skills. According to them, the best solution would however be to create new wealth, and thus more jobs, through work. Work and the creation of jobs will also establish a foundation for jobs which pay better and require more skill. Work is seen as the most effective way of preventing the division of the populace into two groups. According to the Phelps employment model, the regressive nature of the subsidy ensures that, as it gets smaller, slowly approaching zero, while the pay increases - at, say, a level of FIM 10,000/month in pay - there would be no incentive to keep wages below the threshold level so as to retain the subsidy. The developers of the model emphasize that the subsidy should be paid only to people working full days, so as to support employment which provides an adequate income. By making use of tax rolls and other registers, the authorities would be able to ascertain that the minimal terms of employment were being observed and that the wage information was correct. In Finland, modern technology and the small size of the labour market make adequately precise supervision possible. Competition and market forces are perceived as ensuring that the general employment support would lead to an increase, equal to the support, in the earnings level. In part because of the subsidies, the profits enjoyed by the entrepreneurs would at first increase. It would be profitable, from their standpoint, to expand production and enlarge the labour force. This would in turn lead to an increase in the level of earnings. It is also felt that the subsidy would bring part of the grey economy within the sphere of the normal economy. It is said that Finland lacks 100,000 small businesses. In 1996, of the 203,000 business enterprises in the country, 550 were large (at least 250 workers), and 2,000 medium-sized. The greatest proportion of enterprises, close to 99 %, were small businesses employing fewer than 50 persons. The number of one- or two-person mini-enterprises has been growing rapidly. There are 175,000 businesses employing 4 persons or fewer. Of the labour force employed by businesses, 43 % is to be found in small businesses, whose sales represent 35 % of the total sales of all enterprises. A low-income employment subsidy could open up possibilities for enlarging small-scale enterprises in particular. It is also said that Finland lacks 50,000 service-sector jobs. It is felt that an employment policy which favours low-income sectors would increase this number. In recent decades, few Finns have had the resources to hire domestic help or to purchase cleaning or other services. Sparse settlement, the population base, the equitable wage policy and progressive taxation explain why the number of private service-sector jobs is inadequate. The services are thus handled by the public sector. The values and attitudes found in Finland are different from those in countries which emphasize entrepreneurship. A general employment subsidy directed at all businesses has been justified with the assertion that it would not give rise to injustice and inequality among businesses. In order to prevent labour-market disturbances, the developers of the general employment subsidy consider it imperative that the subvention be directed only at low-income sectors, in which it is difficult, for various reasons, to find workers. The subsidy would decrease according to the wage, which would eliminate the potential for its abuse. For the state, the general employment subsidy would at first necessitate budget expenditures. The developers of the idea stress, however, that over the longer term the benefits will be obvious. The essential thing is that jobs will be created in the sphere of private business activities, thus also decreasing expenditure pressures in the public sector. Throughout the recession, according to Ministry of Labour studies, the greatest shortages have been for welders, cleaningpersons and sales representatives, not for data-processing professionals who are expected to perform demanding work. For the state, reducing unemployment by one percentage point saves FIM 2 billion. For the entire public economy, the savings amount to FIM 4 billion. The Committee moves for the approval of five statements concerning this chapter.
"Small European economies such as we have in the Nordic countries have relied on their internal cohesion and equality, of which our extensive welfare systems provide ample proof. Recent analyses of our national success factors support the continuation of our established policy, which stresses the role of competence, confidence, and social cohesion. When large corporations choose a location in which to do business, the factors which guide their choice are predictability, social stability, data communications infrastructure, wide-ranging national expertise and a well looked after environment. All the above factors play to Finland's advantage, nor is there any reason to change our present policy in these areas." (Government report 1997, 116) The basic values of the Nordic social welfare system have been fairly constant and probably will continue to be so. In opinion surveys, Finns voice their support for the present type of social welfare system. From the standpoint of idealistic values, of which the most important has been equality, the social welfare model is for the most part free of problems. On the ideological level it has not really been called into question. With respect to many major issues, the Finnish social welfare system has since the 1960s developed under the joint care of many political parties and labour-market organizations. At the level of the national economy, the cycle of taking on debt has been brought to a halt. National income has grown without interruption for several years. In 1997 the growth rate was 6 %, one of the highest rates in Europe. In May 1998, industrial production was 12 % greater than it had been a year before; in July, more than 8 % greater. Forecasts promise continued growth in production and exports. The unemployment rate is expected to drop well below 10 %. The Finnish social welfare system will however encounter pressures because of the difficult financing situation. A new recession is bound to come sometime, and at that point the economy must have a cushion of money. In the current situation, additional revenue can be procured by creating additional jobs and thus obtaining more taxpayers, by increasing taxes or expanding the tax base, or by selling state property or improving the yield on that property. The international economic unrest and the national structural problems - indebtedness, the aging of the population, and the problems engendered by unemployment - will make it difficult to preserve the welfare state model precisely in its current form. Because of the external and internal pressures, the danger exists of losing the model's best features, if the necessary adjustments are not made in it. According to the principles of strategic planning, the policy which has been maintained in Finland for 40 years should be re-examined in the new environment, even if the end result is simply to build on the basis of the old. The Committee for the Future will next examine, in addition to unemployment, those structural and long-term problems of the Finnish social welfare system of which at least weak signs are evident, and on which comparative research on competitiveness has focused its attention. For the welfare system, the problems will not become barriers if we come to grips with them in time. They are not necessarily tied to economic cycles. Some of the allegations may prove erroneous in the light of subsequent research and policy impact assessment. Issues of this sort warrant discussion, too, especially when great international interest is being expressed in the Nordic welfare state model. This chapter on the social welfare model elaborates on statements presented in the form of research theses in chapter 7 of the last Committee report, with respect to the problems of our social welfare model. Since the welfare state's financing base has emerged as a central threat to the social welfare model, the economic perspective - money and its adequacy - plays a prominent role in the following chapter sections. 1. A lack of social innovations - or difficulties in implementation? "Undoubtedly there are certain risks associated with the preservation of old institutions such as labour settlements and social security schemes, but the risks are far greater if we choose a more radical path: where it might lead cannot be predicted or guaranteed." (Government report 1997, 91) New technology and exports will not be enough On the strength of technical innovations, Finland has swiftly become a leading country for new technology. Finland's innovative capabilities in technology are among the best in the world. The 1998 yearly report of Switzerland's international Institute for Management Development, which compares education and competitiveness, calls Finland the world's leading country in the development and application of technology. Finland has gone from being a country which imported technology to one which exports technology vigorously. One cannot however succeed solely on the strength of technical and production-process innovation, if the society in which one is operating and living is not renewing itself. In comparison with technological advances, Finland has a dearth of social and political innovations which enjoy adequate acceptance. Creativity and the search for innovations have clearly become important matters in all the developed countries. In the joint "futures seminar" held on the Committee for the Future's 1998 get-acquainted tour of Japan, the chief Japanese speaker, Professor Akito Arima, rector of RIKE University, perhaps got the strongest reaction among the Finnish delegation by speaking very plainly about one of Japanese society's most burning problems - a lack of creativity. In future, good eduction, technical knowledge and skill, and even major investments in science and product development will no longer suffice. As to the work of developing innovations, another Japanese expert, Professor Ikujiro Nonaka, who specializes in questions of knowledge management and the development of intellectual capital, underscored the need for an animating intellectual environment in addition to the so-called hard issues - indeed, he considered the former perhaps even more important. Social innovations can be divided into two levels: they concern, first, the application, introduction and utilization of technical innovations, and, second, the renewal of the society's structures and operating systems. Both are targeted by means of policy and political decisions, but the closer one gets to the society's structures, the more clearly the innovation requires that the political system define a long-term policy. Superior social welfare services have been a focus of Nordic expertise for a couple of decades already. Health care, on the practical level, and medicine and nursing science, on the theoretical level, have long been strong areas. Expertise has been a target of investment. In the 1990s there has been talk of a special welfare cluster. The conditions for selling expertise have been the best imaginable. In spite of all this, however, Finland has with few exceptions failed to benefit from its expertise commercially. According to the Research Institution of the Finnish Economy (ETLA), Finland, in spite of its cutting-edge products, remains an underdeveloped manufacturer and exporter of medical technology. World trade in the sector is growing by 10 % yearly. The welfare cluster's share of all Finnish exports is less than 2 %, which is smaller than the average for OECD countries. In a great number of countries the figure is 10 %. The country's small size, the lack of capital and the scarcity of large, global firms do not suffice as explanations. Among small European countries, Switzerland and Ireland, for example, have exceeded the 10 % level. For Finnish know-how, the final product's unprofitableness is considered a problem area. Finns have been criticized for the fact that, with a number of splendid exceptions, they have not been adequately able to refine new-technology innovations, create new products on that basis, and sell those products as the fruits of their own expertise. The Linux computer utilization system provides an example of a technological invention which the Finns have left almost completely unexploited commercially. The young Finn Linus Torvalds quietly developed computer software - a utilization system - which many experts have long considered better than Microsoft's Windows, for example. While Bill Gates was amassing a vast fortune with Windows, the Finnish inventor put his system onto the Internet for any and all to use free of charge. Linux has been openly used and refined on the Internet. It is estimated as having close to 10 million users. In August 1998, Forbes magazine stated that the 28-year-old Torvalds may be the most popular programmer on the planet. An open-minded combining of elements which are remote from each other is essential to innovation. Things have to approached in a new way. Problem-solving ability is one of the most important skills. In Rethinking the Future (1997), Professor Michael Porter emphasizes that we must not be satisfied with small, incremental improvements. Doing and learning things together enhances innovativeness. The Finnish work culture, in which workers often toil away alone, is not the most auspicious point of departure. In international interaction, language skills must be very good. Language is much more than communication: it is interchange, an understanding of what lies behind things and what connects things. It is culture. The claim that Finns lack the motivation to work in order to increase their wealth constitutes one explanation for Finnish expertise's poor commercial showing. There are many reasons at play here. The ideals of equal ability and equal opportunity have perhaps lowered the level of profit-motivated ambition. It has been alleged that the excessively bureaucratized work culture has had a similar impact. Owing to its governmental nature, the legalistically oriented civil service tradition prohibits making a profit - or, at least, profit has been frowned upon. This has become obvious when public tasks have been managed with public funds for private purposes. Some have nevertheless perceived a problem in, among other things, the lack of possibilities for bringing good ideas, inventions and products developed through official activities into broader use, and onto the market. The arrival in the public sector of business thinking and economically defined accountability has changed many of the foundations of work. The motivation for most work tasks in the public sector has nonetheless continued to include, in addition to salary or other economic benefits, something much deeper than money. As public tasks and the offices and institutions which attend to them have been transformed into business companies and public utilities, people have noticed that making public officials into businesspeople who conduct commerce and produce a profit has not been simple. The public sector's different tasks and functions should be more clearly differentiated than they are now. Official tasks and business functions require different types of expertise, norms, work habits, personnel and pay systems. Human services have their own rules and ways of operating. The position of the person receiving the service also varies, depending on which public-sector tasks are involved. We can demand certain tasks free of charge, or almost free, from the state or municipality, as a constitutional right. Some services we buy at full price from public utilities just as any customer would on the open market, without being able to appeal to the arguments of equality, reasonableness, the service's public nature, or other principles of good public administration. If the various tasks of such an expanded public sector are not more distinct from one other than they are now, the traditional values of the civil service and the legal principles of good administration will presumably long form an attitudinal and intellectual impediment to economic success - even in those functions which were broken out to become part of public business operations as early as the 1980s. Now, at the end of the 1990s, we find ourselves in a situation in which state-controlled companies (i.e., those in which the state owns a majority of the shares) and public utilities have substantially more workers than the state's administrative departments and institutions. Structural impediments to innovation are also evident in the low esteem in which entrepreneurship is held. Finns have traditionally put their faith in large, strong organizations and, in particular, the public sector as an economic player and employer. Of Finnish university-level students, only 4 % state that they want to go into business. The comparable figure in the United States is 40 %. Doesn't going into business interest Finnish university students at the level of ideals, even? Do Finland's young people have little tolerance for risk? Is it because working for someone else is considered easier than being an independent entrepreneur? Do the structures of Finnish society (taxes, pay, oversight, administration) make young people leave entrepreneurship out of their reckoning? Has the era of the welfare state provided such an easy model for working and living that no one wants to assume the risks of business? Attitudes favourable to entrepreneurship have been planted, with good results, in our country's schoolchildren, in the context of playing at being businesspeople. In comprehensive (elementary) schools in Espoo and the province of Vaasa, for example, entrepreneurial activity has also been conducted by classes. The pupils have set up "business enterprises" complete with production, administrative, and marketing departments, rotated the operating responsibilities, and collectively used the net earnings for a school trip or the like. The experiences have been both encouraging and instructive. This sort of modern education should be expanded. A defensive position is not the most productive position The deficit in social and political innovations appears in different spheres of life in different ways. The prevailing wait-and-see atmosphere tends to uphold the status quo. The builders of the social welfare model are in a defensive position. They are taking a reactive stance; they are not taking enough initiatives. The configuration is visible in political life, advocacy organizations and the social sciences. Social reforms have also been few in the 1990s because no joint understanding has been reached about the implementation of the new models and ways of operating that have been developed. Consensus has been easier to reach on depending on the old way rather than trying a new way. The introduction of a model which guarantees a citizen's wage, a basic income or some other comparable, basic social security illustrates how prolonged a discussion can be. In 1971, the wrier Samuli Paronen became one of the first Finns to unveil the idea of "independence money" or "living money." It was to guarantee a minimal living to all "without any quid pro quo except being a human being." The idea has been nurtured for three decades, but the consensus needed for decisions has not been achieved. Since the public sector's share of GDP in Finland continues to exceed 50 % and the sector employs close to 700,000 persons, the initiative and responsibility for political and social innovations obviously belongs to politicians and civil servants. Finland has 120,000 state civil servants, 150,000 workers in state-controlled companies and public utilities, and 400,000 municipal employees. The figures do not include municipal utilities, energy companies or, for example, Helsinki City Transport. Indirect public administration - the so-called third sector, which in part performs public tasks - is estimated as employing close to 80,000 workers. It is easy to ignore our society's long-term structural changes, since it is possible to get past bad times by collecting additional state taxes and cutting expenditures evenly: such was done, in part, to grapple with the recession of the 1990s. In Finland, the growth in tax revenues since 1995 has been swift. In 1997 the tax revenues received by the state, municipalities and church congregations increased by 10 %. Fifteen per cent more income tax and, on average, 9 % more in other taxes were collected than in 1996. In the quest for higher revenues, Finland has evidently come to the end of tax-increase road. Structural reforms are needed. Solutions are also being sought through the sale and more efficient use of state property. The state's property policy, which at present is largely the responsibility of civil servants in the Ministry of Finance and the Ministry of Trade and Industry, will become one of the most important fields of policy in the near future. A clear policy is needed as to what sort of ownership role the state intends to assume in future. This need did not exist in connection with the sale of certain state-controlled companies in spring 1998. What is the safe, appropriate degree of domestic ownership? How will vital sectors be protected under crisis conditions? In building the future of the social welfare system, an evasive, procrastinating, defensive position is not the best point of departure. The role of the initiative taker should be assumed again. Here are a few very varied initiatives and points for discussion from spring 1998: In his study Politiikkaa urbaanissa betonilähiössä [Politics in the urban wasteland] (1998), Kyösti Pekonen, assistant professor of political science at the University of Helsinki, warns that "social peace has for the time being been purchased with money - borrowed money." He continues: "The Finnish social state has endured, but from listening to people one can clearly sense the popular understanding that the peace that has been purchased is only temporary. It has not been possible to buy confidence in political decision-makers." Mr. Pekonen insists that the political parties reach agreement rapidly on what sort of social policy Finland has the resources to carry out, and what the welfare state of the future will be like. On 23 April 1998, former Finnish president Mauno Koivisto delivered the first speech at the Studia Parlamentaria lecture series launched by the Committee for the Future. With the average income tax rate having reached 50 %, he warned about the state socialism which Finland ended up with during the recession. "The hope was to build a bridge over the recession by taking on a vast amount of debt," he stated. "We have not got to where we are on the basis of any sort of self-sacrifice, but on the basis of the pursuit of selfish interests." He warned that "unless we take special measures, we will go much further." The former president was also concerned about the pension pipeline: "Soon we will find ourselves amidst a great number of well-earning, active, and healthy old-age pensioners who will certainly be watching out for their interests - and people will be telling us that politics isn't attracting young people." Regarding the public sector's prospects and the citizen's wage considered in the present report, President Koivisto noted that pressures for the further growth of the public sector are extremely strong. We have gone so far with levelling, which has largely been this sort of socialistic idea, that essentially similar people are supporting essentially similar people. And in order to be on the receiving end, we require some degree of passivity. The citizen's wage has largely been implemented, in the form of income support. Could we change the terms a little bit? Could we conceive that people might after all be allowed to do something without immediately being fined for it, even if they are receiving social assistance? Taking an initiative in the discussion of the welfare state can also mean justifying the virtue and durability of the current social welfare model tenaciously and credibly. An article published by Matti Tuomala, professor of economics at the University of Tampere, in the Labour Institute for Economic Research's publication Talous ja yhteiskunta [Economy and society] (1/1998) illustrates this active promotion of the practicality of the social welfare model. He takes exception to the idea that the welfare state may weaken the attractiveness of work, saving, or enterprise. The welfare state, he says, increases efficiency: people are more willing to take risks, to retrain themselves and change jobs or vocations in a society in which there is adequate social security. 2. Strengthening the economic and social infrastructure "The more faith we show in the ability of future generations to make wise choices, the less compelled we should feel to leave a legacy of structures which might limit their future options (above all, this applies to physical infrastructure). By leaving them a legacy of resources which improves their capacity for renewal - such as knowledge, skill, functioning institutions and public confidence - we give them a fair say in decisions which will affect their lives and their future." (Government report 1997, 107) The Finnish welfare state has been created incrementally. At the beginning of the century, the importance of a solid productive-technical infrastructure was emphasized, and public resources were directed into the creation of roads, railways, sewers, telephone networks and the like. The next phase witnessed the creation of school and health-care systems, and, in the interest of promoting equality, various sorts of income transfer schemes. The relatively strong entity which has been constructed now needs to be re-evaluated. How can we make social welfare last? How can we make the model flexible so that it is equipped to handle disturbances in timely fashion, in both social and monetary policy? The cycle of wealth and social well-being The factors bearing on social well-being are interdependent. Social well-being may be depicted as a cycle in which the movement of wealth is important. The relationship between factors which increase wealth and the parties responsible for those factors must be in good order. If any one basic factor limps along, the whole system limps along. Efficient and productive labour, a good living environment, a well-educated populace, efficient public services and an enterprising, innovative atmosphere make Finland an excellent location for businesses and, above all, for the enterprises that will perform the demanding work of the future. Jobs which are good from the standpoint of both work content and pay attract families and bring the state money. This in turn serves to maintain high-quality education and residential living, and to care for the environment and the other basic factors of future wealth. At the same time, a foundation is created for new, productive jobs. The cycle of social well-being and wealth is closed, the links hold, and the movement continues. The cycle of social well-being A clean and attractive environment, a skilled labour force and well- functioning public services attract people and the result being... provide a basis for creates possibilities for all to start businesses diversified and become wealthy, thus high-value-added industry reducing poverty and and production, and social exclusion; high-paying jobs - which strengthens good educational and other public services; and accelerates research and other investments, The financial foundation The Committee will concentrate on the public sector's role in financing the social welfare system. Before the recession of the 1990s, the share of Finland's national product represented by social welfare expenditures was below the EU average and under very good control. As unemployment grew and the national product collapsed, the share increased, becoming one of the highest in the developed countries. Now the trend is flattening out. In recent years, the main targets of criticism of the social welfare system have been its structures and, in particular, the link to the mass unemployment which afflicts Europe. In simplified terms, the critics' train of thought runs as follows: today's social welfare system reduces the demand for labour, since the big employer tax bite raises the price of labour. At the same time, the job applicant's motivation for accepting work, even on basically reasonable terms, is slight, since the income transfer benefits that the person is receiving in effect raise the base price of labour. In principle, the train of thought has no defects. The increase in taxes and other indirect costs of labour has a substantial impact on demand, at least in the short term. Talk of a "income trap" and incentive problems is thus largely justified. It is however unreasonable to connect these structural problems directly with the mass unemployment of the 1980s and 1990s. The hypothesis that, for example, the fivefold increase in Finland's unemployment rate between 1991 and 1993 stemmed from the social welfare system's structural problems does not withstand critical examination. No dramatic, sudden change took place in the structure of the society and the public sector. The reasons for the growth in unemployment are to be found in macroeconomic factors: the growth in national product dropped out of the normal full-employment track within a couple of years, and gave way to a substantial decline in national product. Examined retrospectively, the decrease in national product and the rise in unemployment were almost directly proportional to each other. Likewise, the economic growth which has now been kindled has increased the number of jobs very rapidly. In a year's time, from August 1997 to August 1998, 80,000 new jobs were created - the best such achievement in Europe. The OECD's so-called country study of August 1998 finds that, over four years, the rate of Finland's economic growth has been more than twice the average among OECD countries. The report emphasizes at the same time that the drop in unemployment from the 1994 peak of 19 % to the level of early 1998 - below 13 % - is the greatest drop in an unemployment rate ever recorded in an OECD country in such a short time. The progress of automation, the collapse of the Russian trade, the banking crisis, the poor educational level of the adult population, and the global economic upheaval were the factors behind the mass unemployment. The public sector's problem was that its structures did not react quickly enough to the new situation. Unemployment figures are subject to dispute. It is less ambiguous to examine employment - the amount of work done - than unemployment. During the recession the among of work decreased markedly: the number of Finns employed dropped from 2.4 million to 1.9 million between 1990 and 1995. In February 1998 the figure was 2.2 million. The costs of work not done are many. In 1997, more than FIM 18 billion were consumed by unemployment security benefits and the implementation of labour policy. The comparable figure during good times (1990) was slightly more than FIM 5 billion. Several experts on the state and national economies warn that, over the long term, the greatest concern will however be the adequacy of the labour supply rather than unemployment. The economy's care ratio expresses how many persons outside of working life each working person supports. In 1987 the ratio was 1.10. Today, ten years later, each 100 employed persons have 166 persons to care for. The retirement of large age groups and the lengthening of life expectancy will cause a major change in the relationship between employed persons and old-age pensioners. Up until now, there have been almost two persons employed for every old-age pensioner. Within 20 years there may be one such pensioner for every working person. When the employee pension scheme was created in 1962, the objective was a 40 % full pension, the tax rate then being less than 30 %. Now, almost 40 years later, the tax rate is 55-57 % and the full pension 60 %. In the initial stage, it was computed that the first 40 % employee pensions would be implemented in 2002. Since then, the scheme has been improved fundamentally from the beneficiary's standpoint. On 1 December 1997, the first woman worker received a 60 % employee pension at the age of 65. Relative to many other European pension schemes, Finland's pension system has been much better prepared: The aforementioned full employee's pension has been termed the first in the world. The idea of accumulated pensions is nevertheless in part illusory. The Finnish employee pension scheme relies on both savings and inter-generational transfers - that is, persons of productive age give up a part of their earned income to both the young and the old. The savings accumulated during working years are presently used to finance about one-fourth of pension financing; the direct contributions by working-age persons represent about three-fourths of the total. How well the money which accumulates in pension fund reserves is invested is a difficult question of its own. How will the national economy manage to finance the growing expenditures occasioned by the aging of the population? When studies using various assumed values have been made on the national economy's financial capability in the 21st century, optimistic assessments - in the calculation of employee pension fund reserves, for example - have concluded that the public financing is in good long-term order. On the other hand, the state economy's so-called basic calculation, which is cautious and, respecting economic growth, optimistic, has heretofore concluded that, beginning in the year 2010, growing employee pension expenditures will be financed by dismantling pension fund reserves, which will then become exhausted by the year 2024. According to the same basic calculation, the depletion of the reserves will lead to a 10 % increase in employee pension contributions in the year 2025, at which point the overall tax rate, moreover, will jump by 4 %. According to Kansantalous ja eläkkeet vuoteen 2050 [The national economy and pensions up until 2050] (1998), the latest study by Pekka Parkkinen, research director at the Government Institute for Economic Research (VATT), there is no cause to fear the pension bomb. Pension contributions will remain under control if the economy grows and people retire at a later age than they do now. According to VATT, the big age groups no longer need to feel guilty about the pension bomb. The increase in life expectancy will increase pension expenditures much more than the retirement of the large age groups will. Talk about the pension bomb is pointless for another reason, too. Future pensions will eat up fewer tax resources than current pensions because the future's pensioners will have more employee pension years and pay behind them than today's pensioners do. As more and more people draw their pensions from employee pension fund reserves, less state money will be needed than before. According to VATT, pension expenditures will be affected, first and foremost, by the national economic trend. The faster the economy grows, the larger the share that the pie will yield for pension expenditures. The retirement age should also be higher than now, since life expectancy is increasing. Someone who thrives in working life should be given a better pension. The retirement age could be increased in conformity with the Swedish model. In Sweden, a 61-year-old can decide when he or she will retire. If freedom is immediately attractive, the pension will be smaller than for those who enjoy working until an older age. In the 1990s, financing problems have forced policy-makers to give special attention to the costs of public services. Indicators which depict costs have been created. Awareness of costs and their differences, for example between municipalities, has grown rapidly. The annual costs of supporting an unemployed person are estimated at FIM 80-100,000. The yearly costs for an old person in poor condition being cared for in a hospital or other institution come to several hundred thousand markkas. There are 33,000 such persons in Finland. On average, a normal place in an old people's home costs FIM 190,000 per year. A place in an institution of higher learning costs FIM 29,000 a year. That sum includes only direct public expenditures for the institution's operations; tuition and other fees borne by the student are not included. The direct costs of a spot in a child-care institution are FIM 37,000 a year. Finland's competitive position In its last report (TuVM 1/1997 vp), the Committee for the Future termed it important to develop not simply statistics on the national economy but also indicators which depict social well-being and trends therein in a more diversified way. The Ministry of Finance's new study of competitiveness, Suomi taloudellisena toimintaympäristönä [Finland as an economic operating environment] (1998), has done well in expanding the perspective from which social well-being is observed. Assessments of social well-being must examine what it is that brings about well-being, how the standard of living is raised and how the quality of life is enhanced. Comparisons of factors bearing on social well-being are made difficult by the fact that it is not simple to apply even as old an economic yardstick as competitiveness to the evaluation of the development and prospects of a state, continent or other area. Researchers have been examining the competitiveness of business enterprises for a long time. Indeed, it has been alleged that only such assessments are real - that measuring the competitiveness of states makes no sense. Regardless of such reservations, the placement, movement and planning of business enterprises, capital, investments, expertise, and any economic activity in the global economy are followed closely. Finland's ranking in international measurements of competitiveness is significant, even if precise figures are not involved. Most competitiveness studies are based on inquiries made in industrialized countries with business enterprises and their managers. The UN Development Programme's yearly Human Development Report which covers all the world's countries and measures overall social welfare through life expectancy, participation in education, and income level, represents another type of assessment. In various statistical categories, Finland is at the very forefront; in the overall social welfare rankings it places sixth - fifth, if gender equality is incorporated into the classification. Finland's ranking in the business world's international comparisons of competitiveness has changed, even within the same survey - and very quickly. In 1997, the World Economic Forum (WEF) placed Finland 19th worldwide in terms of competitiveness. Switzerland's Institute for Management Development (IMD) placed Finland 15th in 1996 and 4th in 1997. Both assessments use about 200 measures, but the WEF places emphasis on outlooks for private consumption, while the IMD focuses on the business operating environment. Fifty-three countries were included. In the IMD's most recent yearly report, which measured the effectiveness of science and the economy in the 46 leading industrialized countries, Finland ranks fifth, after the United States, Singapore, Hong Kong and Holland. Private enterprises in particular have invested more in research than before. The comparison takes in 259 statistical variables, which are broken down into groups: domestic economy, internationalization, administration and policy, infrastructure and population, business efficiency, and science and technology. The study views technology and the effective collaboration between businesses and universities as the strengths of Finnish science and technology. The report notes that, in spite of Finland's emphasis on high technology, our country has not received a Nobel Prize since 1945, when A.I. Virtanen won the honour in chemistry. Unemployment, state indebtedness, the scarcity of patents in proportion to the population, the brain drain and the high cost of living were cited as Finland's weaknesses. In Finland's case, the biggest difference between indexes lies in the area which is the most sensitive politically - labour resources and expertise. Here, the WEF puts Finland almost at the bottom of the industrial world's rankings, in 47th place. The rigid labour market and high unemployment were viewed as weakening competitiveness tremendously. The IMD ranks Finland first in the same area, basing the placement on Finland's high educational level and expertise. Almost as great a difference exists in assessments of taxation and the public sector. According to the WEF study, taxation and the large public sector clearly weaken Finland's competitive position; according to the IMD, a broad, efficient public sector is a major competitive factor. In the competitiveness report issued by the Union of Industrial and Employers' Confederations of Europe, Finland places below the average. A study by the Confederation of Finnish Industry and Employers reached a similar conclusion. In the Finnish business survey, Finland's ten best competitive factors included telecommunications, availability of raw materials, availability of foreign capital, the impact of exports and imports on the level and dissemination of technology, trust and functional cooperation between businesses and sources of financing, and low inflation. Other competitiveness studies have noted that the 1990s' strong public investment in education, technology and infrastructure is already being clearly reflected as one of Finland's strengths. The studies point to the public sector's large expenditures, mass unemployment, high taxes, the public sector's large share of the labour force, long holidays, and above-average labour costs as Finland's weaknesses. In the Finnish survey, business managers overwhelmingly considered high personal taxes the biggest weakness. The pay system's limitations and the impacts of taxes and social security contributions on the availability, quality and price of production inputs came next on the list of weaknesses. For purposes of comparison, it should be noted that small enterprises - or, taking the size of Finnish companies into account, mini-enterprises - take a different position. Access to capital, the uncertainty of venture capital financing, the unpredictability of taxation, access to trained workers, and the heavy bureaucracy are often overlapping problems. In spring 1998, primarily on the basis of OECD information, and with the aid of the survey of business managers, the Ministry of Finance investigated various factors bearing on competitiveness, and the strengths and weaknesses of different sectors (Suomi taloudellisena toimintaympäristönä 1998). The countries compared were Sweden, Denmark, Germany, Holland, Ireland, Great Britain, the United States and New Zealand. Above all, the modern technological environment, a superior and economical communications infrastructure, competitive taxation of business and capital, and the high educational level of the country's young people were counted among Finland's strengths. The national economy's condition is auspicious, the citizens enjoy good basic social security, and the principles of a state founded on law are observed. The business community's operational latitude has increased substantially in the last ten years. The economic operating environment's worst deficiencies relate to taxation. The overall tax rate and taxes on labour in particular are high. The other challenges are linked to functional improvement of the labour market, the commercialization of innovations, the weakness of education in business and mathematics, and the paucity of work contributions by older citizens. The Ministry of Finance study's essential point is that the strengths - information, technology, stability and infrastructure -are self-generated. The problems - high taxes on labour and the financial difficulties posed by aging - are likewise self-ameliorating. The Ministry of Finance emphasizes that, since these problems and the future's survival challenges in general are substantial, the solutions will likewise be rigorous. From the standpoint of policy, it is interesting that Finland's 80-year-old Central Chamber of Commerce, in its report Suomi sijaintimaana [Finland as a country for investment] (1998), points to a well-functioning administrative system as a competitive advantage. Finland has very few natural factors favourable to competition and must be as attractive as possible in terms of other factors. The smooth functioning of the society, the orderly body of legislation, the efficiency of administration, and the dependability of the public sector form a foundation for good business operations. The Committee emphasizes that there is reason to continue the development of indicators which depict Finnish society's well-being, competitiveness and success factors. At the same time, it is natural to expand international comparability and improve collaboration in the field, especially within the sphere of the EU and OECD. Social capital Because of its high standard of living, good educational system, modern technology and functional basic services, Finland is seen generally as having all the prerequisites for success. The material basis for future production and work - and innovations - is good. Less attention has been focused on social capital. We have perhaps also proceeded too confidently from the assumption that expertise capital will accumulate only by increasing the amount of education. The number of places for new students in university-level institutions has been increased a great deal, but the quality of the education and the other basic prerequisites for effective study have been given too little attention. This is illustrated by the fact that a third of those studying to become graduate engineers fail to complete their studies. The loss is substantial from the standpoint of both the individual and the national economy. The U.S. sociologist Robert Putnam carried out an empirical study of areas of Italy in an attempt to determine why northern Italy has succeeded splendidly in global terms, but from far different points of departure than those of the Rome region, Italy's governmental centre, for example. One significant explanatory factor was the efficiency with which the northern Italian population's human resources were being used. The region is characterized by a strong sense of self-esteem, an enterprising spirit, a good ability to take on risks, and confidence in its expertise. As a value base, the identification of things as one's own is firmly established in the region: this is reflected in small-scale entrepreneurship, family ownership and extensive cooperative activity. Ambitious objectives have been established. Northern Italy has succeeded in adapting old traditions to the new in various spheres of life. In simple terms, one can characterize the region's way of life by saying that northern Italy respects the old but seeks out the new. Regional policy and aid for business have been criticized in both Finland and Sweden for increasing the regions' dependency on state aid and, in the period of EU membership, on EU aid. The same sort of dependency has been observed in families. High taxes and high fees for services have made families dependent on every government decision respecting social benefits, since the family often has no savings. Some claim that the supports direct what people do, and that the sense of initiative disappears. In terms of most OECD educational indicators, Finland is a leader among the developed countries. Finland's investment in education has long been among the largest in those countries. Only in Canada, Denmark and Sweden did educational expenditures represent a larger share of national product than in Finland. Finland's comprehensive (elementary) school expenditures per pupil were above average. Further, the rate of participation in education in Finland is among the highest in OECD countries. The population's educational level is clearly above average and, among younger age groups, close to the top. The educational level of older age groups, by contrast, is far lower. Adult education and, in particular, vocational retraining are among Finland's challenges. In international academic achievement comparisons, Finnish schoolchildren have placed high. Finland also fared well in a large-scale study, performed by Der Spiegel and published in May 1998, on major European universities. The survey found the University of Helsinki's language instruction to be the best in Europe. The Helsinki School of Economics and Business Administration came in sixth in its field, beating out Oxford and Cambridge, for example, on the Der Spiegel list. The University of Helsinki's law faculty and the Helsinki University of Technology placed 13th in their respective fields. The comparison took in 102 university-level institutions. Finland has also awakened to the importance of social capital in pondering why, in spite of all the efforts aimed at equality, many of the best benefits offered by the social welfare system, such as an excellent, free university education, are utilized predominantly by the wealthy, well-educated segment of the populace, and do not find their way in the intended egalitarian fashion to the full spectrum of population groups. In three decades, free education, from the lowest level to the highest, socially financed according to the principle of equity, has not succeeded adequately in levelling out social and regional differences. The problem will grow in the information society, in which more and more job expertise will be required. It is essential to remember that international surveys in the 1990s have noted an explosive growth in demand for the most-skilled workers. In the United States, for example, statistics on relative changes in demand for skills and knowledge in terms of educational level indicate that the gap between demand for the least knowledgeable workers and the most knowledgeable has increased abruptly. In prior decades, the demand for knowledge increased evenly in terms of educational level, but today the demand for intermediate-level education and average levels of knowledge has actually dropped. In the Finnish social welfare model, the promotion of equality has not sufficed to break down the inequality in the social capital of families. In the case of education, Finland has not succeeded in raising either the ambition level of the children of disadvantaged families, or their parents' consciousness of the crucial importance of a good education in getting a job. The best result will be obtained when we connect social and expertise capital to each other and strengthen them. This will require an increase in entrepreneurial motivation, and in the motivation to work and study. The target level should be high. The ambition and desire to succeed should be strong. Because of the importance of social expertise capital, it is worth noting that studies by Statistics Finland, the Research Institution of the Finnish Economy (ETLA), and the Confederation of Finnish Industry and Employers indicate that, measured in terms of the worker's pay, the worth of an education has declined in Finland. Although the studies focused on industry and production and took place in the mid-1990s, at the depths of the recession, some general conclusions can still be drawn about them. The studies found, among other things, that - - especially at the lowest level of education, the education's productiveness, measured in terms of pay, is low; - in terms of pay, only a university degree is worth getting; and - the productiveness of education at the licentiate's and doctoral levels has clearly decreased. The decrease in education's productiveness, measured in terms of pay, is exceptional in the context of international comparisons. When the ETLA study considered duration of education and income equalization in addition to pay, the net lifetime earnings of educated persons were often lower than the lifetime earnings of uneducated persons. In evaluating the worth of an education, we must consider employment - the likelihood of getting and keeping a job - in addition to pay, income equalization and duration of education. According to information from the mid-1990s, education increased employment up until the college level, but those who had received a basic university degree had as much difficulty getting jobs as those who had only received an elementary-level education. In competitiveness research, Suomi taloudellisena toimintaympäristönä (1998) finds, regarding the pay-productivity of education in working life, that educational motivation may be diminished by the fact that unemployment even of educated persons increased in the recession years of the early 1990s, becoming higher than in any of the other seven OECD comparison countries. The unemployment risk for highly educated persons has admittedly remained well below that of less-educated persons. In Finland, a university-level education, compared to a secondary-level education, appears to raise the level of at least gross earnings quite a lot. In Finland, a college-level education does not really increase earnings at all vis-à-vis a secondary-level education. With the coming of the information society, the conflict visible in Finland between an education's great economic value and the meagreness of the rewards it brings appears to be worsening. The practicality of an incentive system is a basic prerequisite of an industrial and production strategy based on skill. New technology and internationalization with its language-skill requirements alone have increased the productivity differentials between individuals, but high self-esteem and social interaction should also be taken into consideration as values. Both employers and employees know this. Social expertise capital is a cumulative thing. Older people are very important. Aside from the value given education, the social exclusion of older skilled persons and those who pass on social knowledge is in this sense an error. Socially created and approved systems such as the so-called pension pipeline for 55-year-olds (whereby they have unlimited unemployment security) and individual early retirement pensions encourage the retirement of older persons from active working life. They also have an impact on values and attitudes. The appropriate, acceptable retirement age is decreasing. As late as the 1980s the objective was to work until the full retirement age. 3. Systematic and regular policy impact assessment "The cuts as carried out have not affected the essential features of the Finnish social security system. We have succeeded in preserving a system unique to the Nordic countries, based on a combination of three elements - equal security for all residents (universalism), employment-based earnings-related security, and supplementary means-tested security." (Government report 1997, 44) Finland lacks policy impact assessment. A number of organizations generate statistics, clarifications and studies on social welfare, but, almost without exception, they do not assess the success and impact of policy. They lack any comparison of the different objectives and instruments of policy even more clearly. As a small country, Finland does not have any potential for operations by independent, competitive assessment institutions. Below, the Committee for the Future gives brief consideration to topics from different areas of social welfare and politics, topics which political assessments should consider. The examination is practical and does not attempt in any sense to be comprehensive. Whose well-being - and on what terms? Assessment of the practicality of the contemporary model of social welfare must consider how that model treats people, nature and the living environment, enterprise, the state and the national economy. A few glimpses of the structural problems and various interfaces in an affluent society: In a nation of five million, several hundred thousand Finns are unemployed or taking training which does not always correspond to the changing demands of working life. Various types of jobs are open even while unemployment prevails. In industry, especially in electronics, there is a shortage of workers. The amount of needed work which is not being done, particularly in the care-providing field, is growing rapidly. Vocational mobility has not increased adequately. In geographic terms, jobs - new ones especially - do not interface well with the labour supply. The provision and performance of grey market work have increased clearly. In 1996 the annual bill for the grey economy and economic crime was FIM 25-50 billion. It has been estimated that the comparable figure for 1983 was only FIM 2 billion. In 1997 employers failed to make FIM 4.4 billion in advance-tax deposits. In 1996 FIM 5 billion in such deposits were left unmade. In a survey conducted by the Taxpayers Association of Finland (30 June 1998), 74 % of the respondents felt that, in many cases, working today is not an adequately worthwhile alternative to living on social welfare payments. Among respondents aged 15 to 34, more than 80 % believed that living on social welfare payments was often more worthwhile than working. About 600,000 Finns are relying on some sort of social assistance. Between January and June 1998, about 300,000 households received income assistance. In November 1997, the number of clients receiving income assistance was eight times what it was in 1990. In the mid-1990s, 490,000 households, with an average of 1.2 persons, did not have enough money for rent, debt instalments, or other essential expenditures. There are still almost 100,000 households with excessive debts. When a business chooses where to locate, taxation and the price and availability of labour are important factors. Finland, like the other Nordic countries, has a reputation for long holidays and high taxes and employer costs. Finland's personal taxation is the second highest in Europe. Finns, and especially Finnish students, have little desire to start businesses. In recent years, about 350,000 persons have been registered as having credit problems, and bills have been collected by distraint from the same number of Finns. During the recession, it is estimated, 150,000 persons who had at least some entrepreneurial background lost their creditworthiness and thus, for all intents and purposes, their chance to go into business. It should be noted, however, that one can lose the legal right to start a business only by committing a crime. Between 1990 and 1997 there were 42,000 bankruptcies, which, in a country where the threshold for going into business is high, constitutes a special problem. In 1997 there were 3,611 bankruptcies. That year there were 222,833 business enterprises, of which 24,960, or 11.2 % of the total, were new. In 2010, almost one Finn in every three - about twice as many as now - will be an old-age pensioner. Workers are retiring, on average, at age 58. Only 8 Finns out of 100 work until they are 65. Forty per cent of Finns aged 55 to 59 and 80 % of Finns aged 60 to 64 are pensioners. In Finland, relative to the other Nordic countries, a markedly larger portion of persons under the age of 60 are retired. It has been calculated that if people remained in working life one year more than they now do, FIM 7 billion in yearly savings would be generated. The costs of early retirement pensions alone come to FIM 50 billion a year. Mental health problems are the most common grounds for disability pensions. The state has relegated public service tasks to the municipalities, but the distribution of financing has become a problem. In part of the country, the citizens who need the help most have felt that they have been left in an insecure position. In the face of financing difficulties, the municipalities, which attend to the provision of a large portion of social welfare services, have begun privatizing services and raising fees. Lay-offs of workers have spread, affecting even teachers. From the standpoint of nature and the environment, Finnish affluence is facing the same universal problems as other affluent societies do. Finland recognizes the importance of sustainable development but has by no means given up the objectives of economic and productive growth. The synergism of different policy sectors If we are to evaluate the impact of policy systematically, we must make cross-administrative comparisons. The deleterious impacts of some policy sectors on other sectors must be evaluated. It is not enough for each policy sector simply to assess its success in terms of its own objectives. Housing policy has an impact on employment. According to the Helsinki School of Economics and Business Administration's Suomalainen työttömyystutkimus [Survey of Finnish unemployment] (1998), the ownership (rather than rental) of residences is one importance reason for structural unemployment, since it inhibits the mobility of labour and raises the pay demands of workers who are relocating. Seventy-eight per cent of households in Finland own their homes, while the average among all industrialized countries is about 60 %. In Holland, where unemployment is low, 45 % of all households rent. According to the survey, lowering the ownership level to 50 % would lower the unemployment rate by about 2 %. The heavy taxation in the Nordic countries has been defended by citing the principle of equality. The suspicion has nonetheless been advanced that a new type of poverty, that of heavily taxed citizens with low incomes, is emerging in countries with heavy taxes. Progressive taxation taxes individuals with high incomes more than those with low incomes, but what remains with the family after taxes is also of crucial importance. The ranks of people who pay all their taxes include low-income workers who perform honest work. Low- and middle-income earners have thus far paid their taxes because the services have been free or cheap and assistance payments have been easy to get. Now the services have become expensive and requirements for receiving assistance have become stricter. For working low-income families with children, the taxation of low- and middle-income citizens creates situations in which less income remains for living expenses than families who rely solely on income assistance and income transfers receive. Working families receive income assistance on the same conditions as others do, but it is unreasonable that the take-home pay for full-time work does not suffice to meet the income-assistance norm. Some middle-income households are forced into a income or incentive trap when sliding-scale service fees and progressive taxation come up against a particular cut-off point. The family's additional income does not always increase net income. These problems have been reduced by reforming the system for day-nursery charges, for example. Especially when speaking about poverty, one has to see matters in their proper proportions. The Nordic countries do not have the same sort of unmitigated poverty that many other countries do. The compatibility of state and municipal policy needs to be assessed. As the state has transferred tasks to the municipalities, the impacts on social equality have been somewhat unpredictable, and have varied from municipality to municipality. In Norway, preparations were made transfer certain matters to the municipalities and thus closer to the people - as such a wise idea - by enacting a regulation which limited municipal self-government. According to the regulation, the government must underwrite a minimal level of social security for the most vulnerable population groups. In many western European countries, democratic regional administration ensures equality among small municipalities and levels out the worst differentials within its jurisdiction. In southern Europe, the position of the family is strong. In many communities in Sweden's so-called Bible Belt, church congregations have attended to the maintenance of employment by creating good operating prerequisites for small enterprises. The need for policy impact assessment has become a timely question in all of Europe's welfare states. Businesses move from country to country more easily than before and are quite open about criticizing an existing policy. Throughout the 1990s, one of Europe's most important business leaders, Percy Barnevik, has been warning of the bad consequences of welfare-state policy. ABB, the major European company which he heads, moved its main office and production from Sweden to Switzerland. Since then, the discussion of social policy in Sweden has been enlivened by a media claim that L.M. Ericsson intends to move its main office elsewhere, in view of high taxes, high-priced labour and an inadequately trained work force. Ericsson has disputed the report. There are several reasons for the outsourcing of functions. In Finland, Elcoteq offers an example of a successful new-sector enterprise whose conscious policy is to locate production operations in low-wage countries. Small companies also assess policy. France has had to deal with an entirely new phenomenon, as small businesses such as hairdresser's shops, citing high taxes and social security expenses, have begun demanding the same rights as those that big enterprises enjoy in choosing where to locate within the EU. Certain small businesses have established fictitious head offices to England, thus securing substantial reductions in tax, social security and labour costs. The focus of political assessment is on taxation. In the taxation discussion, too, matters have to be placed in the proper perspective. The tax level is linked to the services which the citizens receive. If taxes are not collected, neither will there be any money for the social foundation which is essential to the economy. Russia presents an extreme example of a collapse in taxation, and where such a collapse can lead. While the example is extreme, Russia borders Finland and the case is thus inescapably important from the standpoint of Finland's future. Far-reaching questions underlie policy impact assessment. One such question is that of the state's position and mission, an issue which should be considered on a fresh basis during times of transition particularly. As we enter the 21st century, will the nation-state continue to be an institution that people are accustomed to trusting? Will it continue to maintain solidarity? Citizen discontent and the pressures for change in the nation-state are in part discharged through aggression. In all the Western countries, extreme-right and nationalistic movements are on the rise. Movements based on nationalism and linked to birthplace and ethnic group can nevertheless strengthen European solidarity. Scots, Catalonians, Basques and Lombardians emphasize their own identities. Rather than opposing something, directly at least, the movements make their own contributions to the European identity. A vision which underscores the importance of regions stresses that certain matters are handled most effectively on a global scale and certain other matters belong naturally at the European level, but that an increasing portion of the affairs of the EU and the nation-state should in future be handled by the regions. The matters of everyday life are to be organized and directed at a regional level, where people for the most part share the same language, culture and tradition. The European Union has given strong support to various models of administration by provinces and states (in the sense of a state in the United States, or a German Land). In Finland, there is nothing significant of this sort on the horizon. The responsibility of the society Finns have traditionally taken the position that social assistance belongs to those who need it. In the long view, such assistance has not been readily accepted without the recipient's making a contribution in return. In Finland, living on credit is a new phenomenon. It continues to be a difficult matter for personal finances as for the national economy. In light of this foundation of values, the two basic pillars of the social welfare model of the late 20th century - its gratuitousness and its universalism - will inevitably emerge as subjects for political reassessment if the societal transformation continues. In the welfare state of the 21st century, the sore points will be gratuitousness, i.e. the right to receive public money without any obligation to work, to be useful, to make restitution or to earn, in any sense, what one has received; and the provision of benefits and services to all without regard to need or wealth. It is quite probable that every European government will have to take a position on these two questions in the near future. This does not imply any error on the part of economists who stress that the welfare state is essential and without question the best means of controlling risks. The more a society is shaken, the more a state that protects the basics of life and creates conditions for development is needed. A society's ability to govern risks increases if responsibility is broadened to include citizens, and they perceive more clearly their own share in the assumption of the risks. The placement of fees on public services and the classification of those fees according to income categories may conceivably represent a step toward increasing individual responsibility in Finland. The problem is the unrecognizability and incomprehensibility of change. In weighing change with respect to universalism and needs testing, we need to be careful. Haphazard, income-based increases in service charges will lead us into income and incentive traps unless we are constantly examining the impact of the progressiveness of taxation. On the other hand, there is no sense in collecting all the costs of services through taxes if users capable of paying exist. It is however imperative that we discuss the arrangement of these points of emphasis openly. In creating a social welfare system, the people have reached agreement with the state on certain relationships between rights and obligations. Each generation assumes that the agreement will last until otherwise collectively decided. People and the other players in a society cannot plan life on a realistic foundation if the changes are continual. Someone who works must know whether the public system's pension will suffice, or he or she will have to begin saving personally for old age. Businesses must know what their share of taxes will be. The greatest risk is that the welfare state, as it becomes increasingly indefinite, will no longer attract the popular commitment it once enjoyed. People will not consider it particularly their own. In a decade of recession, relying on gratuitous income transfers and the principle of universalism, and without needs testing, Finland has settled on a social welfare model in which the share of the state budget represented by income transfers for households grew from a fifth to a third in five years. This is largely explained by unemployment. Broadly interpreted, 70 % of all public funds are being directed towards social welfare tasks. Public order, national security and general administration consume only 10 % of all expenditures. Pensions represent the greatest share of income transfers. The values discussion concerning the fairness of income transfers has been conducted with varying outcomes in various circles. The leading civil servants at the Ministry of Finance have taken the most conspicuous public role in the discussion. The officials, who are responsible for the state's funds, have conducted the values discussion from the perspective of the adequacy of tax revenues in view of increased borrowing, growth in the public sector and the need for budget cuts. The officials have also noted that Finland's membership in the European Monetary Union (EMU) and the consolidation of the EU will force a lowering of taxes in the context of intensifying competition. The aging of the population is another factor which is altering the foundations of economic sustainability. It is to be expected that a prolonged boom will at some point give way to a downturn. The Ministry of Finance has also broached the subject of the results of income transfers. The following statements, based on the findings of international comparative research, delineate the scepticism: "An examination of educational results suggests that the best learning outcomes are achieved in countries in which the educational expenditures are relatively small." "The research results demonstrate indisputably that economic and social factors in the environment have had a far greater impact on the population's health than medical science and health-care systems have. The important factors related to the population's health include eating habits, exercise, lifestyle, education, living conditions, and the upbringing of children, among other things." "No clear relationship exists between the incidence of poverty and the extent of income transfers." "According to the study, no clear relationship prevailed, in particular, between the volume of income transfers and poverty traps. On the contrary, the comparison indicated that the larger the income transfers' share of all income, the less their levelling effect on income differentials; in other words, as the public sector expanded, progressiveness tended to decline." (Ministry of Finance, Kansantalouden näkymiä ja haasteita [The national economy: Outlooks and challenges] 1997; Ministry of Finance, Public Sector in International Perspective 1997) As a response to the last Committee for the Future report's demand for more versatile social welfare indicators and assessments, the Ministry of Finance, in cooperation with a number of other parties, has evaluated the strengths and weaknesses of Finland's competitive position. That assessment (Suomi taloudellisena toimintaympäristönä 1998) depicts the status and prospects of the social welfare system from many perspectives. In their studies, health and social welfare authorities, research institutions in the field, and university researchers have presented the indisputable benefits of the welfare state. In health care, for example, the point of departure in the Nordic countries is social justice, which is also a very competitive model in economic terms. The same principle of justice and equality has permeated educational policy. Day-nursery care for children, which is a pillar of equality for women, must also be remembered. Elsewhere in Europe, policy-makers are still searching for solutions in these areas. Within the EU, six million new jobs have been created for women in five years. This obliges the public sector to resolve basic issues, such as school meals and day-nursery care, which have already been taken care of in Finland. The entry of women into the labour market is also being slowed by the inadequacy of services for the elderly. The woman's role as one who takes care of children and elderly parents, a role which has thus far been part of the continental European model of the family, is changing. Regardless of the size of income transfers, ineffectiveness has been viewed as their general problem. Income transfers generally move through a long process. According to critics, the more complicated the route that the money travels, the less impact it has on its original target, and the less money is left for the original purpose. In income transfers, the user of the money is also left with less power to decide how it will be used. The bureaucratized income transfer system is viewed as having a demoralizing effect, too. In the debate over our social welfare system, it has also been suggested that the principle of universalism amounts to a double standard. It treats everyone in the same way, but the final result is not fair. It is wrong - the thinking goes - if more than half of all social income transfers go to people who are well off, but the finger of blame is only pointed at those who are not well off. The income transfers received by the former come unnoticed, as services, and often go directly into bank accounts. In contrast, the social assistance received by the less fortunate often consists of subsidies which have to be specially applied for. It should be reiterated, in this discussion, that the basic assumption of universalism is that all benefit. That assumption also ensures that everyone will want to pay. The overarching principle is to bear responsibility collectively in making sure that the risks people confront are reasonable. The municipalities are having economic difficulties. The growth in the number of elderly persons is one of the municipalities' structural problems, too. It is believed that the solvency situation will improve in the decades immediately ahead because the new pensions will be earned pensions rather than basic national pensions. It has been proposed that high-income pensioners pay a greater part of service production costs than they presently do, if the municipalities' financial situation does not improve fundamentally. The problem then becomes the fairness of the payments over the course of a person's life. Those old persons who in their time have worked full-time, obtained an education, paid their taxes and saved their money would be forced to pay - while those who have been less active would be assured care without paying. The responsibility for oneself and one`s family One of the basic value choices in the development of the future societal model will concern personal responsibility for oneself and one's family. There are two main alternatives. According to the first, it is the society's task to create good conditions for everyone and to level out inequalities. The state and the municipalities provide the society's basic services. The individual's responsibility is then to try to make do with his or her own job or business undertaking. In the second model, each person constructs his or her own life. It is assumed that citizens must try personally to educate themselves, find work and arrange for the services that their families need. Only when people fail does the society come to their aid. There are an abundance of intermediate formats, but the basic idea, the primacy of the individual's responsibility, is treated in opposite fashion in these two models. Whatever the social model, the state has long ruled from above. In the long term, what is essential in governing? Only the proper matters should be governed, and only those matters in which government is imperative. The land law of 17th-century Sweden, which then included Finland, instructed those who exercised public power that they must "govern without doing injury to anyone's property or happiness." This ancient wisdom may prove applicable in the 21st century, too, if the word property is understood broadly as stake-holding, entrepreneurship and intellectual, social and productive skill, and happiness is taken to mean the prerequisites for a good life. Defining the individual's responsibility is a matter of values, the society's temperament, social climate and life view more than of money or stony judicial decisions. A change in social solidarity? Both Western and Eastern thinking on social welfare proceeds from the premise that every working generation cares, through its work, for children, young people and the elderly. In the Asian tradition particularly, the family has offered protection in the face of old age, unemployment and sickness. Through a strong state, trade-union movement and Church, the West has developed social security systems, in the name of social solidarity, for the less advantaged and those in need of help. The premises of 20th-century solidarity may not hold in the 21st century. Recently, the unwillingness of some young people to support the standard of living of a growing population of elderly people has come under discussion. The other side of the issue has received less consideration. Two examples, one from the level of the Finnish family and one from the level of the competitive global economy, may illuminate how young people perceive the wealthy generation now in the prime of working age as being self-centred and focused on its own gain. These examples illustrate the changes in concepts of solidarity in both the public and private sectors. From the standpoint of young people, no earlier age group, while in power, has planned and developed such generous retirement-age benefits and such an abundance of health-care, educational and other free public services as today's so-called big age groups have in Finland and everywhere else in Europe. In Finland, in addition to the public pension protection, a generous private supplemental-pension scheme has been developed in recent years. It is paid for in part from state funds, through tax deductions. In hastening retirement the scheme is having a further impact on the resolution of the old-age problem. The same 40- to 50-year-old people have also in large part obtained their most important property - their homes - with the society's help. No earlier generation ever had the chance to purchase homes with the state's assistance in the form of economical interest rates, and them take full tax deductions while high inflation ate up the interest. At the same time, the value of the homes increased rapidly. Today's youth cannot be certain of a job, or of the state's ability to come halfway as it has in the past in the taxation of homes. In this sense, today's young people are in a completely different situation than their parents were. The other side of the issue is that Finland has become wealthier more quickly since the war. This wealth - homes included - will generally be inherited. Another type of example of the change in social solidarity is provided by the compensations given business executives. In a short time, those compensations have skyrocketed. British Petroilia has often been used as a representative example from the world of European business. As recently as the mid-1980s, the salary paid British Petroilia's managing director was only 16 times the average wage paid by the company. In 1990 it was 53 times larger, and today it is more than 60 times larger. In global statistics, the compensation of executives in relation to the average pay their workers receive is highest in Venezuela (84 times the average), Brazil (48 times), Hong Kong (43 times) and Mexico (43 times); in other words, the difference is greatest in relatively poor countries. In the United States, the ratio is 24 to 1. At this point the lowest pay for executives in relation to the pay of those they manage is to be found in wealthy countries - Canada, Switzerland, Japan, Germany and Sweden - in which the ratio is ten to one. In all countries, however, the tendency to raise compensation for executives, for example through stock options, is growing markedly. In the global competition, businesses justify their executives' huge earnings on the basis of expertise and extremely rigorous performance demands. With share and option bonuses, a company will also seek to make professional executives part of the firm or guarantee its long-term development. From the standpoint of social solidarity, the key point is that the new generation of executives is different from the postwar generation. The older generation had fought on the same front as their workers had; the younger generation of executives does not share comparable experiences with their workers. Today's executives grew up in the 1960s, protesting against authority and hierarchy, but, having taken power, have created a clearer disparity between themselves and their workers than the previous generation did. In simplified terms, the hippie generation has adopted yuppie values in the most energetic way. It has been claimed that shareholders want to raise compensation for executives. Isn't it more a question of a new solidarity among professional managers? Decisions about the pay given managing directors are in principle taken by the shareholders' representatives, who are as a rule the professional managers of financial institutions and pension funds. Indeed, after the managing directors, it is these managers who have received the most substantial pay rises. In a Europe whose population is aging, the allocation of expenses between the generations is a primary, shared solidarity issue. There is however a decisive difference between Finland and the major countries of Europe: in the 1960s, Finland became the first country in the world to begin funding employee pensions through agreements between employers and employees. The reasons were many, but from the standpoint of preparing for the pension problem, the final result has been good. In Germany, with 80 million inhabitants, and Italy and France, with about 60 million each, pensions have by contrast been designed for payment from state funds. In Italy, only 5 % of all workers belong to a pension fund. In France most workers belong to a fund, but the pension money has not been collected. Anthony Giddens, a director of the London School of Economics, Europe's leading social-science research institution, has made an interesting new contribution to the solidarity discussion. Mr. Giddens questions the entire old-age pension scheme. In an interview in summer 1998, he noted that "if we put an end to pensions and simultaneously did away with the retirement age, the result would be that ageing people would be in the same position as young people. When they needed help, they would get it, as before. When they wanted to work, they'd be able to work. Why not?" (Frankfurter Allgemeine Zeitung, weekly supplement, July 1998) 4. A healthy public economy: An absolute prerequisite for affluence "The recession was the ultimate test for the welfare state, jeopardizing its very financial foundation. It passed the test with flying colours, and succeeded in mitigating people's problems in coping with financial constraints: neither relative poverty nor income disparity increased during the recession. The price, however, was a decrease in our future margin of manoeuvre." (Government report 1997, 21) "If we measure risks and dangers scientifically, by calculating the probability of various undesirable events, it turns out that we live in a far safer world today than ever before in history." (Government report 1997, 104) The framework of Finland's economic and social policy has long been developed on the basis of a strong and well-functioning public economy. The policy has yielded good results. Economic growth has been brisk. Popular trust in Finland's legal and political system has remained high. The government has assured citizens of an adequate income when they are not able to earn a living themselves in view of sickness, unemployment or some other unexpected cause. Public social welfare services have levelled out standard-of-living disparities. The services have been offered economically or free of charge. Well-organized public services, broad-based universal education, and income transfers are important factors in competition. In all the countries of the West, the future of the public economy has emerged as an important subject of discussion in the 1990s. In Finland, attention has focused on the public economy's long-term structural development features (Prospects and Challenges for the Public Finances 1998; Suomi taloudellisena toimintaympäristönä 1998). Resolution of the problems of the state economy must not be deferred until the problems have reached the acute stage. There are several factors behind the looming problems. Because of the recession of the early 1990s, public expenditures grew explosively in relation to national product and the financing base. Finland's governments managed the expenditure pressures by making budget cuts representing more than a tenth of the domestic product (about FIM 60 billion). In addition, the state has taken on debt corresponding to about 60 % of GDP. In spite of the economies, state expenditures as a whole have not decreased in the 1990s: in view of the growth in debt service and employment management expenditures, the economy measures have only made it possible to stop the expansion of state expenditures. In spite of their substantial size, the state spending cuts have not touched the foundations of the system. No important benefits have been terminated completely, and functions have not been eliminated. The basic income network has been preserved. The reforms have primarily been made in benefit levels and the fine points of the system. Families that have had to face overlapping cuts in different benefits have in some cases suffered unreasonably. In spite of everything, decisions which improved social welfare services were taken in every year of the 1990s recession. The most important of these were the expansion of the child's right to day-nursery care, the lengthening of the paid parental leave, an increase in child benefits, and an expansion of dental care. As a result, the municipalities have taken on more responsibility, and some of them are in financial trouble. Structural reforms of municipal finance appear necessary, but are difficult because budgets are prepared for a year at a time. The investment of money in reforms often is often frustrated by the fact that future cuts are difficult to see and admit to. Structural reforms are not effected because there is little room for manoeuvre, budgets have to be balanced from year to year and administrations are prisoners of their expenditure frameworks. In international comparisons, Finland's public expenditures in relation to GDP stand with Sweden's and Denmark's at the top of the world's list. A large part of Finland's public expenses are being engendered directly or indirectly by high unemployment. The European Union's prospects and points of departure Structural changes in the global economy are to be taken into account in predicting the development of the public economy, too. From the standpoint of formulating policy, the key concern is that, as Finland becomes a member of the EMU, more and more of Europe's economic questions will constitute an aspect of the domestic economy. The EMU calls for a streamlining of finance policy at the European level. Although switching to a common currency will present Finland with new opportunities, it will also place more and more stringent conditions on success. With globalization, some of the state's traditional tasks are being shifted to the global level, and others to the European level. States which share a uniform foundation of values have intensified their cooperation in promoting their interests in international negotiations. The aim of the monetary union being created by the European Union is to enable the monetary union's member states to ensure maximal economic growth and a high level of employment and to improve their competitive positions at the global level. The crises in Asia and Russia have made it clear to all of Europe's governments that they are not able by themselves to defend their interests quickly in changing financial markets. Once monetary policy has been shifted to the European Central Bank, finance policy, which will remain under the jurisdiction of the national governments, will assume new importance. With the EMU in place, finance policy will however take on new types of tasks and objectives. It will have to support a solid currency and create latitude in counter-cyclical policy. Although finance policy will continue to be each country's internal matter, the European Commission, by making general recommendations annually on economic policy, will also be taking a position on the finance policy to be practised. The first set of general economic-policy recommendations, submitted in spring 1998 and considered in the relevant EU organs (including the European Parliament), included positions on how state-economy equilibrium should be accomplished, i.e. by reducing expenditures rather than increasing state indebtedness. The Commission also took a position on what sort of tasks should be favoured and what sort of tasks will not promote employment and economic growth. The creation of the EMU will thus place pressures on Europe's governments to harmonize finance policies. As a result of the swift and major structural changes in the international economic operating environment, Finland's public economy is confronting other pressures - in addition, that is, to the servicing and repayment of a huge state debt. According to a 1995 population forecast, the proportion of persons over the age of 60 in the populace will rise to 25 % by 2010 and 31 % by 2030. The proportion of working-age persons will decrease correspondingly. The aging of the population will reduce the demand for labour and the growth in production - the dividend - while at the same time increasing public expenditures (raising the tax rate) because of the higher costs of for social services and health care. If the age of the population continues to rise after 2010, and if people are retiring as early as they are now, in 2030 we would be close to having one pensioner for every worker. The Ministry of Finance's conclusion regarding this forecast emphasizes raising the work participation rate, improving the productivity of labour, and constraining the pressures which retirement places on the state. The Ministry opposes all measures which diminish production resources. It is also evident that international trends in taxation will in future be reflected in Finland more directly than before. Under the influence of market globalization and international integration, Finland will face pressures to decrease taxes on labour, which are higher than in competing countries. According to the Ministry of Finance, the tax system's greatest problems are the high level of overall taxation, severe taxes on earned income, and the highest marginal tax rates. On the other hand, Finland has low corporate and capital gains taxes. In the Ministry of Finance's view, the tax rate needs to be decreased incrementally in the years immediately ahead, since the taxing of gainful work obviously has to be reduced. This will require accommodating public tasks to the financing possibilities - in other words, a reduction in public sector expenditures. Sustainable financing of the public economy can only be achieved if public expenditures as a whole are adapted to the framework allowed by competitive taxation and the economy's carrying capacity. Disturbances engendered by the market and market mechanism lie behind the expansion of public tasks. The market mechanism is not a just system. It does not guarantee economic security or a fair distribution of income. For this reason, public social welfare services have become the government's most extensive task. Public expenditures break down into three categories, which are fairly equivalent in size: state expenditures account for something more than a third, the municipalities' share something less than a third, and social security funds about a third. Seventy per cent of public expenditures are applied to social welfare functions (education, health care, social security, social services, housing and communities, and recreational and cultural services). Of these expenditures in turn, social security and health services account for more than 70 %, and thus more than half of all public expenditures. The public-expenditure share accounted for by the state's traditional functions - administration, security and public order - has shrunk to 10 %. Aid to business and infrastructure (transport) outlays account for another 10 %, as do debt service expenditures. In terms of expenditure type, almost half of all public outlays are income transfers. Almost half of these, in turn, are employee pensions and national basic pensions. These rough figures, which depict the breadth of the public economy's tasks, demonstrate how directly the public economy is involved in the citizen's day-to-day life and livelihood. For that reason, the efficiency of the public sector will in future be an extremely important factor in social welfare. The aging of the population, demands for tax cuts, the harmonization of European finance policy and globalization will generate pressures for a reduction in public expenditures. For this reason, Finns should be discussing the following questions: - What aspects of social welfare are considered important? - How will the government participate in social welfare functions - by defining rights and responsibilities, by producing services, as an owner, as a payer, as an organizer? - In which functions will it be possible to utilize service fees, reduce the government financing share and increase excesses (deductibles)? - Which government functions will it be possible to transfer to the private sector? - Which current public functions will it be possible to eliminate? - Which current public functions will be needed in greater measure? The greatest expectations are being placed on the re-evaluation of public social welfare functions generally and income transfers in particular, since they represent the largest portion of budget expenditures. In 1999, for the first time in ten years, the state economy will have a surplus: in the FIM 187 billion budget, revenues exceed expenditures by FIM 0.3 billion. Proceeds from the sale of state property and the privatization of state-controlled enterprises provide a partial explanation. It has been estimated that the deficit would otherwise be about FIM 6 billion, or about 1 % of GDP. It is projected that, without new savings, the deficit will remain at this level, even if the economy grows at a 3-4 % pace, in the next few years. The OECD has warned Finland about the possibility of an overheated economy, and the problems that would bring with it. External problems The committee's last report (TuVM 1/1997 vp) considered the deregulation of capital, the merging of major enterprises and, in general, globalization, whose impacts have yet to be seen. In the spring and summer of 1998, the United States, whose economy, aside from being large and stable, is also the world's most self-sufficient and independent of other economic powers, has been forced to admit that the crises in both Asia and Russia affect even its economy. Worldwide in 1997, GDP broke down as follows: Japan and the rest of Asia, 33 %; the United States, slightly more than 20 %; the EU, slightly less than 20 %; Latin America, 9 %; the other developing countries, 8 %; and the former socialist countries just under 5 %, with the remaining industrialized countries accounting for the remainder. According to some estimates, 40 % of the world's economies have been forced into a recessionary cycle which began with the Asian crisis. In the case of the Asian and Russian crises, globalization has been visible more immediately in those Western countries which have direct investments in Asia or Russia, or which, by virtue of complicated networks, are in back of the financing. The crisscrossed financing has meant that when the economy of one major financing economy coughs, everyone coughs. When Japan, for example, ran into serious problems, it was inconceivable that it would meet the fate suffered by Indonesia - hardly a major economic power - since, Japan, like the United States and the rest of the Western economic powers, has invested in both East and West. The problems are shared, too. In some sectors, Finland has production facilities in crisis areas - or those areas are Finnish export targets. Unlike the United States, Great Britain and Germany, Finland has only suffered indirectly from the losses incurred by Western financial institutions. Finland does not produce or export financial, insurance, or comparable services. Changes in the world economy come fast. The growth in world trade has been cut in half. According to the WTO, world trade, which increased 9.5 % in 1997, will increase only 4-5 % in 1998. Measured in dollars, world trade will stagnate or even shrink. The autumn of 1998 witnessed major movements in share prices. Even Finnish businesses, whose own production and economic matters have been in excellent shape, have been suffering. The consideration being given to re-instituting control of financial markets provides one indication of the fact that the global economy is not without its problems. Paul Krugman, who has been mentioned as a possible Nobel laureate and in recent years has been considered an economic dissident in the United States, has continually expressed doubts as to the ability of unfettered market forces alone to resolve the economic problems being created. In his view, financial policy is needed in addition to monetary policy, which has become very independent. He has proposed returning to a world of controlled capital and controlled currencies. He takes the position that the International Monetary Fund, with its policy of unregulated capital, has failed miserably in Asia. Among Asia's so-called little tigers, Malaysia, which has been one of the Asian economic miracle's model countries, and had perhaps proceeded the most energetically with deregulation policy in the 1990s, announced that it was instituting close regulation of currency trading in accordance with Mr. Krugman's advice. Chile is being mentioned for its successful regulatory measures. Mr. Krugman compares China and Russia: China has developed its economy successfully through regulation, while Russia, which has opened up its currency and market, has failed. The European Central Bank's assessment of the Asian and Russian economic crises concludes that the finance market's environment within the territory of the euro has got much worse. According to Wim Duisenberg, the bank's director-general, the finance markets' difficulties, along with the swings in share prices, are clearly slowing the world economy down. The bank takes a different position than the rest of EU officialdom. In their statements on Russia, the EU's commissioners have underscored the meagreness of the Russian trade. In his statement, Mr. Duisenberg did not mention any country, but he did note that the possibility and utility of currency regulation cannot be entirely excluded in certain countries. According to him, such a move might be compared to suspending share trading in an exceptional situation. With regard to the connection between EMU membership and swings in monetary markets, it might be noted that the three-month market interest rate at the end of August 1998 was 3.59 % in Finland, 4.39 % in Sweden, 4.56 % in Denmark and 7.82 % in Norway. From Finland's viewpoint, it will be worthwhile over the long term to note the reactions of the countries that have become the focus of problems - whether through speculation or otherwise - during the turmoil which has prevailed in financial, stock and currency markets in autumn 1998: some are closing free markets and some are seeking the shelter of monetary and economy alliances ever more urgently. Of the Nordic countries, only Finland is a member of the EMU. The more effectively states protect themselves one way or the other, the fewer targets there are for those who profit through speculation. Norway has had the North's most abundant natural resources and, accordingly, a strong economy, but it too has become a target for currency speculators operating globally. In the case of Russia, it is noteworthy that the country's share of world trade, according to estimates, has fallen to a mere 2 %. The entire Russian economy has as much meaning as a 1 % swing in the Tokyo Stock Exchange. Finland's exports are for the most part destined for markets outside the EU: successful new exporters in particular are operating worldwide. Exports to Russia have represented 3 % of Finland's national product. For Finland as for all of Europe, Russia's social instability is a greater threat than its economy. First, if there is no stable system of justice, if the concept of ownership is not clarified, and if the banks, tax systems and other basic attributes of a stable society do not begin gradually to function, there will be no sustainable economy, either. Second, Russia remains a political superpower. Even minor conflicts can lead to unpredictable consequences, since the country's boundaries encompass a number of areas which are sensitive in geopolitical terms. As for internal structural dangers in the West's own economy which have an impact on Finland, we should note the possibility that too much value is being placed on the information society and the related high technology. Might the importance and impact of the new technology in fact be less universal than the crystal-gazers have supposed? No one disputes the impact of modern telecommunications or the Internet on production sectors both new and old, but, in searching for the reasons for the recent rapid drop in U.S. stock exchange averages, the possibility has been advanced that the overvaluation of shares in the information technology sector has burst the bubble. The Committee moves for the approval of three statements concerning this chapter. IV SUSTAINABLE DEVELOPMENT "No major changes in environmental policy are foreseen in the industrialized countries. Environmental problems that are related to technology or industry, or that are managed by institutions which have proven their efficiency, will remain comparatively simple to manage in the future, too." (Government report 1997, 66) 1. Premises of assessment Sustainable development, in the broad sense of the term, has already been considered in Government reports from 1993 and 1996, as in the most recent, 1997, report. On 4 June 1998 the Council of State - the Government - approved a sustainable development program. In parliamentary consideration, the Committee for the Future has proposed some new premises and emphases. This was particularly true of the Committee for the Future which was serving at the end of the last parliamentary term. Its report considered the direct and indirect impacts of global environmental problems on Finland. The Committee took the view that the biggest threats - population growth, poverty, and environmental destruction - are intertwined. The Committee emphasized, however, that positive change is possible if we act in time. Assessing the future of the environment on the basis of political values and action is difficult. First, unanimity prevails at the level of ideal values, but opinions vary on the subject of means. Second, from the standpoint of the Committee's earlier reports, nothing significant and new either in Finland or affecting Finland has come to light. On the contrary: we have proceeded unhurriedly on the basis of the old policy. The reasons may be numerous. There has been no genuine need for substantial new actions or delineations of principle. People have thought that economic growth will also facilitate better management of environmental matters. Environmental policy has become mundane. The environment has become a shared, collective matter. Businesses have fulfilled their responsibilities better than before. The tenor of the discussion in Finland is connected to the re-evaluation now taking place in the international discussion of the environment. Environmental issues were introduced vigorously in the Western industrialized countries almost 40 years ago. The discussion has included strong accusations. An environmental movement or party has in recent decades become an important influence in every country. In the 1990s, environmental questions have receded somewhat from the spotlight they had taken in the public discussion in the 70s and 80s. The re-evaluation also indicates that there are problems with the credibility of forecasts. Criticisms have for example been directed against the gloomy predictions made by researchers in the Club of Rome's 1972 study "Limits to Growth." In the nearly three decades since those predictions were made, the world's supply of minerals and metals has not been exhausted. It was forecast that oil resources would disappear in the 1970s, but known oil reserves are today larger than ever before. Since 1950, world population has more than doubled, but food production has more than tripled. There have been famines, but they have for the most part stemmed from wars and catastrophes, not from abuse of the environment and its carrying capacity. Calling the researchers who made the erroneous predictions to account can also be viewed as giving the environmental discussion a new start and added dimension. Doubts about traditional methods have also grown in the 1990s. It is becoming increasingly evident that all the well-intentioned international environmental treaties have not improved the world's natural and human environments, except possibly in the wealthy countries. The poor, developing countries approve the agreements, but they do not have the prerequisites to fulfil the promises. Strong doubts have been expressed to the effect that the developing countries need a new environmental policy which is not copied from the Western countries. A need exists for fewer nice philosophical objectives - and more simple deeds. Breaking from tradition, the new model would emphasize economic growth, legal order, taxation, corruption-free administration and, naturally, good education. The UN Development Programme (UNDP) takes a very positive view of consumption - in spite of the fact that humanity now consumes six times as much money per capita as it did in 1950, and the richest fifth of the world's population presently uses 86 % of private-consumption resources while the poorest fifth is left with 1.3 %. The development programme takes the view that consumption, when properly directed, feeds and sustains human life - that consumption is a vital condition for human development. A guarded hopefulness radiates from the UNDP report on the status of world development. The report illuminates how sustainable development, an increase in education and the struggle against poverty can be combined. It is in any case indisputable that such major environmental problems as climate change, air pollution (fine particulates), the decline in biodiversity, the disappearance of forests and the lack of fresh water will be left to the 21st century to resolve. The sustainable development programme approved by the Government is aimed at ecological sustainability and the creation of economic, social and cultural prerequisites which will further that sustainability. The programme will also seek out measures aimed at achieving those objectives. The present report will now turn to the environmental problems central from Finland's standpoint: climate change, the health problems caused by air pollution, and the decline in biodiversity. 2. The Kyoto agreement: A first step towards abating climate change "The foreseeable climate change will probably not have an adverse economic effect on Finland in the next century. In fact, it may even improve forest growth and agricultural conditions. Its effects on biodiversity are not very well known, but it is a fair assumption that it will not be beneficial for existing ecosystems." (F1 1997, 68) Climate change: A threat to sustainable development The UN Conference on Climate Change, held in Kyoto in December 1997, after the preparation of the Government futures report, confirmed the belief that climate change is one of the worst environmental threats. The Government's sustainable development programme considers the slowing of climate change to be of the utmost importance from the standpoint of sustainable development. Human activity is transforming the atmosphere alarmingly. As a consequence of fossil-fuel energy production and the destruction of forests, the atmospheric concentration of carbon dioxide is increasing constantly. The result is the greenhouse effect - the warming of the climate. According to climate researchers, the average year-round temperature in the 21st century, at Finland's latitude, may rise several degrees if the growth in carbon dioxide emissions continues at its present pace. Winters in particular will become warmer. Climate change will lead to a shifting of climate zones, desertification, melting of ice sheets, and a rise in the level of the sea. Climate change will probably increase the incidence of extreme weather phenomena such as cyclones and torrential rainstorms. The strength of the El Niño phenomenon may be connected to climate change. Zones of cultivation will shift and the ranges of tropical diseases will grow. Many plant and animal species will not be able to adapt to the warming of the climate, so that biodiversity will decline. From Finland's standpoint, the worst risk stemming from climate change will be a significant slowing or cessation of the Gulf Stream. As a result, the average temperature in Finland may drop several degrees from what it is now. According to some studies, the faster the climate change is, the greater the risk becomes. The Intergovernmental Panel for Climate Change has estimated that carbon dioxide emissions must be reduced by 50-70 % from current levels if climate change is to stop. Climate change can no longer be prevented, because the atmosphere's carbon dioxide concentration has already grown. The world's seas slow down warming. The Kyoto agreement At the 1992 UN Conference on Environment and Development in Rio de Janeiro, the industrialized countries promised to try to freeze their carbon dioxide emissions by 2000, at the 1990 level. The goal has not become a reality: on the contrary, carbon dioxide emissions have increased as before, except in the case of the former socialist countries, where the economic collapse has decreased emissions. At the Kyoto conference, the industrialized countries agreed to reduce their greenhouse gas emissions, by 2008-2012, to levels 5.2 % lower, on average, than the 1990 level. The EU committed itself to reducing its emissions by 8 %. As part of this commitment, Finland is to reduce its emissions to the 1990 level. At the World Energy Conference held in Houston in September 1998, energy producers, other energy-sector players, experts and researchers stated that implementation of the Kyoto Protocol may prove difficult and expensive. Without special measures, it is estimated, emissions in most countries in 2010 will be 20-30 % higher than they were in 1990. The increase will result from economic growth, even although advances in technology will bring about a 1 % annual reduction energy intensity, i.e. energy consumption per national income unit. Citing economic reasons, the United States in particular is opposing ratification of the Kyoto agreement. Many U.S. energy companies claim that no climate change has taken place. The bottom has fallen out of this claim, however, as indicators, including satellite measurements, have demonstrated that climate change is progressing as predicted. 3. Towards a more sustainable energy policy "Sound economic performance, a balanced domestic economy and a sustainable economic policy are vital ingredients for welfare and prosperity. Steady growth makes life - and the balancing of the public purse - easier and more predictable." (Government report 1997, 90) "In the long term, a more ecologically sustainable energy policy is a national necessity. A national strategy for reducing greenhouse gas emissions will enable Finland to act methodically in international climate policy." (Government report 1997, 73) Economic growth and an environmentally friendly energy policy When we consider means of protecting Finnish energy production, we have to remember, with regard to the premises of sustainable development, that consumption breaks down unevenly in the world. Approximately 20 % of the world's people - the population of the industrialized countries - consume 80 % of the natural resources. Energy consumption also breaks down unevenly. In view of the perceived threat, total consumption of natural resources should be reduced by as much as 50 % in order to reach a sustainable level and protect living conditions for future generations. In order for consumption also to be more fairly distributed than it is now, the industrial countries' consumption of natural resources would have to decrease to 10 % or even less of its present level. The challenge can be met by increasing the productivity of natural resources - by deriving more benefit from less material. Quantitative growth will be replaced by quality, sustainability and services. Since improvements in efficiency have their limits, so-called sufficiency thinking is also needed: we will have to be satisfied with less and distribute what exists more evenly. Many experts in the field say that the connection between consumption and well-being needs to be re-evaluated: does a given piece of merchandise or the service thereby derived genuinely enhance well-being? Wealthy industrial countries, Finland included, are expected to develop energy technology which poor countries will also be able to apply. The development of technologies for renewable energy (solar energy, wind power, bioenergy) will expedite the shift away from the old, nonrenewable energy sources. In order to protect the public purse and the society's well-being, Finland is pursuing a goal of 2-3 % yearly growth in the years immediately ahead. This will require industrial production to grow at twice that rate. According to industry's assessment, this is possible but will require, among other things, growth in the energy-intensive processing industry, growth which energy policy will have to take into account. As noted in the Government report also, the Finnish forest industry's competitive forte is modern types of paper which contain mechanical fibre. These paper types have been developed in Finland. Increasing their production will boost the need for electricity. Energy-self-sufficient production based on chemical pulp is being shifted increasingly to developing countries where the trees used for the fibre are ready for utilization after as little as seven years' growth. In Finland, the industrial structure and the target level for growth in national income mean that consumption of electricity will according to estimates grow by almost 50 % between 1990 and 2010 (Ministry of Trade and Industry, The Finnish Energy Strategy, 1997). If we continue with the present structure of energy production, the growth will amount to almost 4,000 megawatts of electricity. According to calculations by the Ministry of the Environment, Finland's greenhouse gas emissions are, as of autumn 1998, at the 1990 level. Finland's problems with the implementation of the Kyoto Protocol may be reduced to a simple question: How will we produce 50 % more electricity than we did in 1990, without increasing carbon dioxide emissions? It can be assumed that the need for heating energy will remain roughly the same until 2010, since improvements in the energy efficiency of buildings will compensate for growth in floor area. Traffic emissions may also remain constant: technical improvements in automobiles will compensate for their growth in numbers. Methods for reducing carbon dioxide emissions Many approaches have been proposed for reducing the 1990 level of carbon dioxide emissions from electrical production by 30 % before 2010. These methods include improving the efficiency of production and consumption, increasing the combined production of electricity and heat, energy conservation, raising taxes on energy, boosting the share of natural gas consumption relative to utilization of coal, increasing nuclear energy production, boosting the production of hydroelectric power, increasing the use of wood for energy, boosting production of electricity, increasing the production of solar power and wind-generated electricity, and increasing the number of carbon sinks. Cooperative energy-purchasing projects, such as power plants shared by several countries, will also open up new possibilities. An assessment of various means of reducing anticipated carbon dioxide emissions by 2010 follows. Making the production and use of electricity and other energy more efficient. To an extent, the forecasts have already taken these techniques into account. New power plants operate more efficiently than old ones. Renovation of old plants reduces carbon dioxide emissions. The efficiency of electric appliances is improving as technology becomes more sophisticated. It is often worthwhile to exchange old appliances for new ones. According to the Motiva Energy Conservation Service Centre, 10 % of today's electrical consumption could be conserved economically. Increasing energy taxes. Energy taxation can be used to promote conservation. Replacement of coal with natural gas in combined production of electricity and heat. Estimated reduction in carbon dioxide emissions: 5-8 %. Replacement of coal with natural gas in electricity production. Estimated reduction in carbon dioxide emissions: 5 % (per 1,000 MW). Replacement of coal-generated energy with nuclear energy. One nuclear power plant will reduce carbon dioxide emissions by 10 %. Increasing the use of wood for energy in combined production of electricity and heat. Potential reduction in carbon dioxide emissions: 5-10 %. Increasing industrial production of back-pressure power. Burning of waste liquors from the cooking of pulp presently produces 10 % of Finland's energy. The locating of new pulp plants in tropical countries limits possibilities for increasing that share. Increasing production of hydroelectric power. The construction of the Kollaja and Vuotos plants would reduce carbon dioxide emissions by an estimated 2 %. Increasing wind-generated electricity production. The wind conditions on our coasts and fells are good. Compared to other EU countries, however, wind power is in its infancy in Finland. When wind power generates an additional 1 % of all energy produced, carbon dioxide emissions decline by 2 %. Increasing production of solar power. Solar power is not competitive in Finland, compared to southern countries, but is appropriate for summer cottages and the production of electricity for remote telecommunication stations. Solar heat is suitable for heating water. Possibilities for reducing carbon dioxide emissions unrelated to the production of electricity include the following: Utilization of geothermal heat in the heating of buildings. In Finland, geothermal heat is at present only being used to heat 10,000 one-family houses. Sweden has more than 300,000 geothermally heated homes. Geothermal heat replaces two-thirds of the energy needed for heating. The remaining third is electricity. Electrical consumption increases, but total energy consumption drops substantially. Importation of electricity. The predicted emissions levels assume that importation of electricity will remain at the current level. If imported electricity has to be replaced with coal-generated electricity, emissions will increase by 10 %. Reduction of carbon dioxide emissions from traffic. In Finland, traffic generates a fifth of all carbon dioxide emissions. Road traffic's share is 14 %. Technological improvements are cutting emissions. Emissions will also decline if, for example, traffic flow is improved and appropriate tax incentives are introduced. Enhancing mass transport's competitive position relative to private motoring will also reduce emissions. Cutting emissions by increasing the number of sinks. Finland's growing commercial forests presently absorb almost as much carbon dioxide as energy production generates. The total carbon sink will shrink gradually as the utilization and regeneration of commercial forests come into equilibrium. Taking sinks into consideration is problematical from the standpoint of the forest industry's future. Emissions trading. Emissions trading was discussed in connection with the Kyoto Protocol, but agreement was not reached. Emissions trading might enter the question between businesses. The essential thing is that emissions trades should lead to a genuine decline in emissions. The costs of these emissions-reduction approaches vary tremendously. The Research Institution of the Finnish Economy (ETLA) has studied the impacts that would be felt by the national economy if the emissions target were to be implemented by raising energy taxes. ETLA compared that scenario to one in which there were no emissions limits (ETLA no. 641/1998). According to the study, the emissions target could be realized without additional nuclear power if the use of natural gas were quadrupled and the carbon dioxide tax were almost quadrupled. In that case, national income in 2010 would be 6 % (FIM 50 billion) less and real wages 8 % less. Well-being would decrease by 8.5 %. The emissions goal would be realized by tripling the energy tax, if two additional nuclear power plants were also built. National income in 2010 would not decrease, but real wages would be 1.5 % less and well-being would decrease by 0.5 %. 4. Fine particulates and their threat to health "The health hazards associated with environmental changes caused by humans will probably not increase from their present level." (Government report 1997, 66) In the 1990s we have awakened to a serious environmental problem which had formerly not been noticed - fine particulates, which cause significant health problems and increase acute mortality. Studies indicate that combustion-generated particulates floating in the air cause diseases among adults and increase mortality substantially. When one breathes, fine particulates - those less than 2.5 micrometers in diameter - go directly to the pulmonary alveoli and penetrate them. Studies have found that high fine-particulate concentrations lasting a couple of days precipitate acute pulmonary diseases and increase acute mortality. Thus far, research results on long-term impacts have come only from the United States, where it has been found that long-term exposure to high concentrations of fine particulates increases the incidence of heart and lung disease, and mortality from such diseases, by as much as 5-15 % relative to levels for average small-particulate concentrations. Particulates originate in the combustion products of combustion-based power plants and internal-combustion engines. Some of them are small carbon particles, to which toxic combustion compounds have bonded. In the air, some form sulphur compounds (sulphate particulates) and some form nitrogen compounds (nitrate particulates). When current technology is used, peat-, coal- and oil-fired power plants produce the most fine particulates. Roughly estimated, a wood-chip-fired power plant produces a half, and a natural-gas-fired plant a third, of what a coal-fired plant generates. Diesel engines produce 50 to 100 times as many fine particulates as petrol engines equipped with catalytic converters do. Traffic accounts for more than a third of fine particulates generated in Finland. Street dust and other particulates from the land and sea also float in the air, but they are usually larger and therefore do not get into the lungs or pose the same danger as fine particulates. Fine particulates travel with air currents for hundreds and thousands of kilometres, forming an almost even mass of pollution over large areas. In the centres of cities, small-particulate emissions increase the concentrations locally. Rain clears the air of fine particulates, but acid rain is a threat to the environment. Because of the health dangers of fine particulates, their concentrations must be reduced. The European Commission has proposed a directive aimed at limiting particulate concentrations (directive proposal 97/0266, SYN). The directive would apply to particulates which are smaller than 10 micrometres in diameter (PM 10), since fine particulates (PM 2.5) have not yet really been measured in Europe. Of PM 10 particulates, perhaps half are less-dangerous particulates. In Helsinki these include the sand particles left over each year from street sanding. The proposed EU directive refers to a yearly average concentration of fine particulates for 2010. The figure is slightly below Helsinki's current levels. The European Commission has estimated that reducing small-particulate pollution in accordance with the directive would save ECU 25-220 billion yearly. The savings would originate in reductions in disease and mortality. The range of possible savings is great, since the concentrations and impacts of fine particulates are not yet precisely understood. 5. Protecting biodiversity "Biodiversity will probably deteriorate until the effects of the complete overhaul of the forest legislation and nature conservation legislation are felt in full." (Government report 1997, 67) "Finland's new forest legislation and guidelines place the preservation of biodiversity on a par with economic productivity." (Government report 1997, 67-68) The interrelationship of climate change and biodiversity Environmental experts feel that we are in the midst of the world's sixth great wave of extinction. The disappearance of species and populations stems from human activity, and above all from changes in land use. A third of the world's natural resources have been lost since 1970. Between 1970 and 1995, a third of all marine ecosystems were damaged. In the same period, 10 % of the world's forest cover has vanished. Every year, a forest half the size of Finland disappears (World Wide Fund for Nature report 1998). Biodiversity is considered more important to humanity now than ever before. Nature will be less and less able to adapt to climate change if its gene pool shrinks. Simply a decline in the population of one species can cause a chain reaction in the food chain. That process may also affect human beings or an economically important species. No one knows when pulling one nail may sink the ship. Researchers emphasize that caution is wisdom, since we do not know what gene we may need for processing or the development of medicines, for example. In the 1992 Rio Treaty, the world's states committed themselves to resolving the biodiversity crisis. The European Union's Habitat Directive and Birds Directive and Finland's new Conservation Act require the achievement of a favourable protection level for all species and biotopes. This means that the reduction of the number and range of species and biotopes must be stopped. The connection between the Kyoto climate change agreement and the Rio biodiversity agreement is of crucial importance. Ensuring global biodiversity means controlling the greenhouse effect. Aside from reducing biodiversity, the loss of forests worldwide is dangerous because growing forests serve as carbon sinks. Further, the rapid, artificial climate warming caused by human beings is in itself increasing the threat to many already endangered species. Without healthy, undamaged, structurally functional ecosystems and diversified species gene pools, nature will not be able to adapt to the challenges of changes in the climate. Experts warn that the protection of the environment and climate - Kyoto - is not to be played off against the protection of biodiversity - Rio. Finland, which is largely dependent on forest and land ecosystems especially, could otherwise be facing unforeseen environmental threats. Further, the Natura 2000 nature reserve network, which has been approved in Finland, should be evaluated on the basis of long-term objectives. The network may be particularly inadequate in the country's southern half, less than 3 % of which is protected. The protection of endangered species may also prove inadequate. Forest policy and biodiversity Seventy per cent of Finland is forest, and about a half of the country's endangered species are forest species. For Finland, the disturbance of forest-related ecosystems would pose a serious economic threat. Proper forest protection and forest policy constitute a productive investment in the future. Some claim that intensive, non-diversified forestry is the key reason that these species are endangered. Finland has 1,692 endangered species. Forestry has been named one reason for the decline of about half (805) of those species, and is judged to be the most important reason for the endangerment of 692 species. In recent years, progress has been made in the protection of forests by enacting new forest legislation, new forest management directives, and the first protection programme ever for old-growth forests. The reforms may not suffice, however, to solve the problems of forest biodiversity. It is felt that there is little time remaining for the protection of old-growth forests especially. Our country has more wood than at any other known time. There should be enough forest for both utilization and protection. In the southern half of Finland, only 0.5 % of the forests are protected. No comprehensive study of the need to protect southern Finland's forests has been performed. In commercial forests, it is believed, management directives could accomplish a great deal. According to the Finnish Forest Research Institute, today's level of cuts could be increased by at least 20 % - sustainably. The sustainable use of forests will increase, not decrease, job opportunities. For example, expansion of the diversified use of forests and the performance of first cuts and thinnings for wood-energy production also offer job opportunities. One means of ensuring diversity is the environmental labelling of forest products. Environmental labelling indicates that the forest is being managed in accordance with principles of sustainable development. 6. The Baltic Sea algae problem "New approaches have emerged alongside the traditional, still usable policy of regulations and standards, namely economic instruments and cooperation agreements between the State on the one hand and industry and other economic actors on the other." (Government report 1997, 71) The eutrophication of inland waters and the Baltic Sea is one of Finland's most conspicuous environmental problems. The eutrophication manifests itself as massive algal blooms. In the last ten years, the Baltic has shown many symptoms of poor health. At the beginning of the 1990s, thousands of birds died, probably from algal toxins. In summer 1996, the long sequence of events had already progressed to the point that the oxygen supply was exhausted in the lower strata of coastal waters and the eastern Gulf of Finland, and bottom-dwelling species were dying off over broad areas. The summer of 1997 was the hottest of the century, and blooms of blue-green algae covered almost the entirety of the Gulf of Finland's open-sea areas. Large amounts of blue-green algae were also found in the Finnish archipelago and the northern Baltic. In the archipelago, the blooms of algae also washed ashore. Eutrophication, which stems from the addition of phosphorus, nitrogen and other nutrients to waterways, is in fact the greatest threat facing the Baltic. According to the research, the Gulf of Finland will not withstand its present nutrient load without damage. The Baltic Sea generally and the Gulf of Finland in particular are shallow, sheltered, vulnerable marine areas. About 20 million people live in the gulf's drainage area in Finland, Russia and Estonia. The biggest pollution sources in the region are farms, population centres, vehicular traffic, energy producers and industry. In the case of the Gulf of Finland, St. Petersburg is the biggest single source of loadings. Nutrient concentrations in the lower strata of the sea have been rising for several decades. The amount of nitrogen in particular has increased tremendously. The farther east one goes, the more eutrophic the water is. The Gulf of Finland accounts for 15-20 % of the entire Baltic's nutrient load, even although it represents only about 8 % of the sea's surface area and only about 5 % of its water volume. Protection of the Baltic involves numerous countries and administrative sectors. International cooperation within the scope of the Helsinki Commission, for example, has already led to agreements aimed at limiting nutrient loadings. Major changes will be effected by reducing St. Petersburg's emissions. That in itself will not stop the eutrophication, however: every Baltic Rim country has to cut its emissions. The dispersed loadings originating with agriculture will play a crucial role. International collaboration is the key to protection of the Baltic. Waste-water treatment inaugurated through regional collaboration has proven productive. According to a study done by Sweden's Academy of Science, financial savings are also involved. The study found that reining in eutrophication problems is extremely expensive, but also that the economic benefits generated by a 50 % cut in the Baltic Rim countries' nutrient emissions would more than compensate for the cost of the protection programme. As far as Finland's emissions are concerned, results could be obtained by balancing environmental needs and support for agriculture so as to make agriculture more environmentally friendly. Making fish farming more environmentally friendly would reduce maritime loadings from emissions fundamentally. Vehicular traffic generates polluting nitrogen emissions in particular, but here a major cut in emissions is the most difficult, because we would have to reduce the volume of the emissions-generating traffic substantially. 7. The constructed environment "The existing community structure is one consequence of Finland's growth and structural development over the last few decades. Our main concern is how to develop it in the current period of social transition." (Government report 1997, 35) The term constructed environment refers to activity which people direct at their environment, by means of which activity they utilize and shape that environment as a material and a space. Construction governs the human relationship to nature. A building - a structure - is a human shelter against external forces. Humanity's adaptation to its environment is cultural. In shaping our environment, we tie ourselves to the aesthetic values, ideologies and attitudes of our time. We construct our environment on the foundation which our culture has built up, like sedimentary rock, over time. Architecture comes into being as a product of construction. In architect Keijo Petäjä's words, "architecture is constructed mental space." A space consists of fixed points and the gaps between them. A good place is like a poem: it distils some unique experience, and everyone develops his or her interpretation of it. The essence of architecture thus lies not in the space, but in the stirring of emotions. Urban space should be experienced through the reactions and observations of children. A good scale and the recognizability of places facilitate moving about in an urban space and promote an affinity with that space. The pleasantness of an environment is especially important to children. Of the time that we spend outside in our entire lives, 80 % takes place when we are children. The constructed environment should therefore be designed from the perspective of children especially. If the environment functions well in a child's daily activities, it will also be a good environment from the perspective of old people and people with disabilities. There are various ways of eliciting a child's viewpoint. Children in day nurseries can draw suns on a map to indicate beautiful, pleasant places; they can draw x's to designate scary, ugly places. Various small-group interview formats and other techniques can be used, too. Each of us has images of what a good environment is. Those images are usually constructed around our childhood recollections of good feelings about a place. Research on human ethology (inherited behaviour) is just beginning. Inherited behaviour is most powerfully visible in children on whom the environment and ratiocination have not yet had an impact. Going against that inheritance can lead to displeasure, conflicting feelings and stress. A certain type of ethologically bad living environment is known to have a positive correlation with violent crime. Research on architecture and the constructed environment is a very young field in Finland. Interdisciplinary environmental research on the constructed environment gained momentum only in the early 1990s. A scientifically solid foundation for defining the visual quality of the constructed environment is therefore still lacking. Aesthetic tastes are thus the prevailing tastes in our cultural frame of reference. A landscape classified as worth preserving accordingly reflects the childhood memories of those making that determination, rather than objective features intrinsic to the landscape - those features, indeed, may even seem ugly to us. A good constructed environment can be measured by qualitative, technical, economic and legislative yardsticks and standards. Its creation can be called for in the spirit of sustainable development. We nevertheless make such an environment good through our affinities, images and caring. The worst threat to a good constructed environment is the Euro-aesthetes who dwell in a virtual reality in which they selfishly give form to their own trendy predilections. Such people have little or no cultural attachment to the place or space in question. The Committee moves for the approval of seven statements concerning this chapter.
"A society emphasizing sustainability encourages creativity and competence, adjustment to change and sparing use of nonrenewable natural resources. A good society provides its members with an opportunity to increase and use their own resources and encourages them to do so: creativity calls for the opportunity, resources and will to take risks." (Government report 1997, 19) 1. The governance of change - major, minor and exaggerated The first chapter of this report brought up value-definition problems as an aspect of a major technological-economic transition. The suspicion was raised that, seen against the sweep of history, or simply the dizzying course of events at the end of the 19th century, the technological changes of our era may not be so revolutionary after all. We may indeed be living in relatively peaceful and predictable times. Throughout the 1990s, Finns have spoken a great deal about the tremendous import of information technology (IT) for the entire society. No one disputes that our economy and production have been permeated by the new technology, and that telecommunications has risen to become our most successful export sector. As a result, both working life and training for working life have had to undergo renewal. Governance of new matters and an ability to solve problems are among the most important conditions for success. It is characteristic of our time that these skills are required of people both as individuals and in the most varied communities - or "networks," to use the lingo of the information society. This chapter deals with governance of the information society, and assumes that substantial, even earthshaking changes are in progress. There is therefore good reason to begin by considering that there may not be any great upheaval at hand after all. A period of stable and quiet development nonetheless fails in any sense to justify a full-speed-ahead mentality. On the contrary: it is precisely then that the foundations of well-being need to be strengthened. Throughout the 1990s we have heard claims that the new technology has created a new economy and a new economic paradigm. The claim that we are exceeding the limits of growth has been debated: the statistics indicate otherwise. The best gauge of technological change continues to be traditional statistics which mark a rise in productivity. In neither the United States nor most of the other developed countries has the growth of productivity accelerated. Productivity has grown less in the last 25 years than in the preceding 25 years. The inferiority of the indicator has been put forward as an explanation of this seeming impossibility. It is evident that the productivity statistics do not properly illustrate the impacts of the new technology. The biggest change in the latter half of the 20th century has been the rapid advance of automation. Automobile assembly lines no longer bustle with hundreds of workers: robots do the work. A robot which stacks up cellular phone components with lightning speed has replaced thousands of woman workers. Automation has destroyed a huge number of industrial jobs. The jobs have shifted to the service sector, where increases in productivity are modest. An article published in Great Britain's Financial Times on 8 July 1998 compared predictions made more than 30 years ago with the statistics' message as to technology's modest impacts on growth in productivity. According to the article, many futures-research institutions, such as the Hudson Institute (in The Next 33 Years: A Framework for Speculation, the classic 1967 study by H. Kahn and A.J. Wiener) correctly predicted many social changes originating with the anticipated IT inventions and advances in electronics. In sum, many future changes in IT were foreseen as early as the 1960s. Personal computers and the immense increase in data-processing capacity were not anticipated, however. According to the article, the essential thing is not which details of the scientists' predictions for electronics became a reality and which did not, but what did not become a reality in terms of large-scale developments. Transport has not undergone any fundamental renewal in the last 30 years. The energy-production inventions have not been made. The predicted emergence of new materials has not taken place. In matters of food and nutrition we remain, for the most part, in the same situation we were in the 60s. Chemical methods for improving learning and memory are still just ideas. The oceans have remained largely unutilized. Communities have not been built under the sea, for example. In short, in all areas except IT, the inventions and innovations have remained rather few. Is productivity static because, in spite of everything, telecommunications and other new technologies still represent too small a portion of production and the economy to improve the productivity numbers? This time, the statistics may be telling us a fact that we either don't see or don't want to see. Even although the last 30 years have not really seen any epoch-making inventions in technical fields other than electronics, such inventions are certainly on the way, since, in accordance with the principles of the information society, investments have been made, and continue to be made, in scientific research, applied research and product development. Smart materials are at the breakthrough stage. Magnetic levitation trains are coming. Genetic technology is expected to revolutionize food production. Commercial nuclear power is 40 years old, but it is predicted that in 2010, fusion energy will only be in the demonstration stage. In many sectors, the greatest revolution in the near future may be based on the broad application of IT. The introduction of electric motors in the first half of the 20th century freed up energy for use where it was needed. Today, small, powerful computers have made it possible to process data where needed. Household appliances, equipment and systems are becoming intelligent. Smart houses, cars and home appliances will take care of things which their users must now take care of personally. The trend is still in its initial phases. Computers are for the time being primarily used in office tasks and information retrieval. If there is however some substance to the suspicion that the new technology's importance is illusory, the situation in Finland is even more problematical in that production in our country has been too narrow in scope - as it typically is in small countries. In exports we formerly relied on wood and paper. In the global economy it will be essential to find those sectors of production in which Finnish labour and expertise is superior or can be made superior. In fields where technological breakthroughs are making themselves felt, new possibilities will be created. Finland has succeeded splendidly in exploiting the breakthrough in communications. The export business, which once depended solely on paper and wood, has welcomed a newcomer, electronics, whose exports have now surpassed those of paper. A large part of the electronics sector's increase in production has involved one company: in 1997, Nokia Group products accounted for 13 % of Finland's exports and 5 % of the country's industrial jobs. Preserving and increasing market share in the midst of the international competition depend on both innovative ability and the level of knowledge and expertise. In spite of all this, and although Nokia's attractive power has helped to generate some important subcontracting and production-cooperation chains and other network operations, the activities of many other enterprises and people have not renewed themselves as they might have. The possible exaggeration of the technological breakthrough may lead to miscalculations, and to distortions in the basic factors bearing on tomorrow's well-being - in education, for example. Today's prevailing concepts of the technically oriented knowledge and skills required in working life have perhaps missed the mark. The employment of an aging population is not failing for a lack of training in IT after all. Big fish swim in still waters. It is good to flow with the current, but new and great discoveries may be made elsewhere. Whoever is one stride ahead of the pack, as the century closes, in the leftover sectors of the late 1900s, will be at least as big a victor as whoever takes the IT laurels - the object of the great race in all the developed countries. 2. Are the values of the information society dividing Finns? "More varied skills will be required in the future: social skills (interaction and communication), responsibility and independent initiative, resilience and adaptability, preparedness for lifelong learning, and information literacy. The reputation of manual skills must be rehabilitated." (Government report 1997, 18) What sort of values will be important in the information society of the future? In its last report, which examined globalization and the course of events of Europe, the Committee for the Future stressed understanding and wisdom as well as information. The Turku Academy's first professor, Michael Wexionius, championed these same values in 1642, when he said that "for all children, the rule must be that we choose what is good and eschew what is evil. It is for that reason that wisdom has a memory, with which it examines the past; understanding, with which it examines the present; and concern, with which it examines the future." Personal ideals can come together Finns share at least some of the information society's values. For most Finns, certain things will presumably remain collective, especially if they are values tied to the ideals and objectives of the individual. The basic life motives which by virtue of our humanness are universally pursued and collectively accepted may be described as follows: Self-determination - the supremacy of the internal. We wish to live on our own terms, without constant external supervision. We wish to formulate our own ways of living, present our opinions and discuss things openly. We want to improve ourselves and exercise our skills and propensities. Self-determination is a basic value in governance - not simply of our own lives, but also of the world and its changes. It is also a prerequisite for new creation. Security. We want the conditions for existence, life and earning a livelihood to be protected. We also want to preserve our freedoms to act, those freedoms including our basic political rights. Inward security provides a foundation for self-confidence - which is why such matters of psychological security as close personal relationships, love, friendship, camaraderie and companionship are crucial. Social respect. We want to be valued as individuals, as ourselves. If we don't receive respect, we don't respect ourselves, either. Without self-respect and the respect of others, we lose the meaning of life and slip easily into apathy and cynicism. Self-respect will be a pillar of the demanding society of the future. Understanding. We want to understand what is happening in us and around us. It is difficult to live in an incomprehensible world. Without knowledge and understanding we are not able to reach good, sensible decisions. Understanding means the formation of a dependable image and view of the world, the development of a picture of the person and society, and the creation of a life view. The key question is, What status is given to these idealistic values in the real world? How will they evolve among the various groups in a polarized information society? Will they remain ideal values or may they largely also become values according to which people act and assume that others will act? The increase of instrumentalization and supervision is said to be characteristic of the information society. Goal-values are not implemented. Another fundamental feature of the information society appears to be differentiation among the values of human groups that live differently. It is the natural goal of groups to strengthen their internal solidarity. If work continues to be the most basic factor separating people into two groups, it will become harder for the employed and unemployed to share values in the information Society. Does the threat of a new kind of class society exist? It can be assumed that, unless policy intervenes forcefully, separate values will develop for each emerging group. Around their shared values, the groups may even develop into new social classes, each with its own position in the society. Researchers who have analyzed the evolution of industrialized Western countries are already distinguishing different social groups or classes, and their values. The following categorization of these emergent groups was compiled with the aid of Professor Juhani Pietarinen's concepts. The world may wind up with class societies of this sort if social exclusion and inequality are not dealt with firmly - if the conditions for success are not protected for everyone as broad social rights. The winners. The educated, active and wealthy elite of business life, politics, science and art will respect knowledge, expertise and personal prosperity. The members of the elite will give effect to post-materialist values - autonomy, activism, self-respect and self-realization, good human relations, culture, self-governance and internal equilibrium. Only psychological security, of all the values generally perceived as good, may falter. The lifestyle will however be strongly hedonistic and the ideals will be individualistic, even to the point of narcissistic egoism. The winners will demand a society strongly oriented towards consumption. The survivors. These are the everyday toilers who will survive because their unexceptional work contributions are needed. Imitating the values and lifestyle of the winners, the survivors will be more passive than their models, and more easily led. Their values will come from mass entertainment. Their physical security will be satisfactory, but their psychological security will be a question mark because of the superficiality of both their knowledge of reality and their lifestyle's foundation of values. The losers. The losers will for the most part be outside the working world. They will have no place in the society. Their autonomy will be limited, their psyches undisciplined. They will not receive social respect, and they will try to compensate for that lack of respect by opposing the society. Their physical and psychological security will be minimal and their ability to understand their own life situations, the society and the world will be deficient. They will be the targets of mass entertainment and strong manipulation. The group will include terrorists, gangs, and other violent persons. Alternative-seekers. Those who reject the prevailing values of the information society will adopt new, alternative values from many sources. Environmental movements, animal protectionists, feminists, mystical-religious movements, defenders of national cultures and many artistic currents will become active and powerful. Some groups, such as champions of new art forms, will however take a favourable view of the new technology. The change which communication and automation technology has occasioned in working life may have a much more powerful impact on functional values - on ways of life - than any other individual factor will. This will especially be the case if predictions of the disappearance of most normal jobs (four-fifths of all industrial jobs and a third of office jobs) become reality. Information workers who have mastered the new technology will become the elite of the working world - while other workers will have to content themselves with low-paying temporary service jobs. The elite will determine the money flows. With the rise in the number of unemployed, poor, and poorly paid persons, the state will not have the resources to maintain social services. Poverty and social exclusion will be passed down from generation to generation. The cycle will be difficult to break. In a developed society which is already largely an information society, the differentiation and hardening of attitudes can proceed unnoticed. In Sweden, for example, reasons have been sought for the swift rise of neo-Nazism. Almost half of all Swedes support restoration of the death penalty. This has been viewed as a very new and inexplicable phenomenon. Although the changes in values and attitudes manifest themselves, in this instance, as the deeds of extremists, they may be signs of a deeper, broader, but hidden change in values and attitudes. If these assessments of social trends hold true, the tasks of policy in the information society will increase. Ability cannot be a privilege extended only to a few. The responsibility for being capable or incapable will readily fall on the individual, although the equality of opportunities which has been created by the society will remain very important. 3. Work in the information society "Employment: IT is creating new jobs, but at the same time it is rendering old ones obsolete; a significant proportion of new jobs generated by the information society are simple routine work." (Government report 1997, 119) The new division of work tasks and the change in the nature of work It is believed that the evolution of the information society has led and will lead to major changes in work tasks and the very nature of work. In an industrial society, employees are divided into three main groups: blue-collar workers, office workers and management. In addition there are independent entrepreneurs. As the information society has evolved, the division has lost its meaning and no longer serves its purpose. In his Work of Nations, Robert Reich, now the U.S. secretary of labour, proposes a division of trades appropriate to the information society - routine production tasks, personal services and symbolic analysis. The routine production work consists of repetitious tasks which are performed routinely. Industrial assembly line workers are the standard example of routine production workers. Many routine computer programming tasks are comparable. These jobs do not require rigorous training. They can be done in any country. Routine tasks have in fact been transferred to developing countries. In the developed countries, the number of routine production workers has been dropping steadily as a result of automation. On the other hand, highly sophisticated automation and the emphasis on expertise are bringing factories back to the developed countries. Cheap, poorly educated labour ceases to help when most of the product's price consists of things other than labour costs. The growth in subcontracting is having a similar effect. Quality and fast, just-in-time delivery are more important than a low price. Salespeople, waiters and waitresses, hairdressers, secretaries, cleaning persons, maintenance personnel and car mechanics perform jobs which fall within Reich's second, personal-service grouping. The worker must have a moderate level of education - comprehensive (elementary) school and vocational training - and an ability to get along with people. Personal services are tied to a place. An adequate clientele is a prerequisite for creating the jobs. This condition is lacking in Finland's sparsely populated areas, a circumstance which will slow down new-job creation. Reich's third group, the symbolic analysts' group, encompasses all jobs that require creative effort. Symbolic analysts include researchers, product developers, architects, business leaders, advertising managers, lawyers, writers, artists and journalists. A symbolic analyst recognizes, solves and mediates problems by dealing with symbols. The tools include mathematical formulas, scientific principles, research findings, models, financial plans, insights into negotiation or entertainment, conclusion chains, and other expert approaches applicable to problem-solving. Symbolic analysts generally have academic degrees - advanced degrees, often. Learning continues on the job, and skill improves through the performance of progressively more demanding tasks. The symbolic analyst works alone or in small groups which may form a global network. Often groups spring up around a project and break apart when the undertaking is completed. Earnings depend on output. Earned income can be sufficient to become rich. Generally, the changed work tasks and working habits of the information society are viewed as requiring deregulation of the economy and trade. Goods and services will be produced where they can be generated most economically, and the jobs will be located accordingly. Natural and other resources will be used better than they are now. This means that, regardless of the objectives, which are good in themselves, there are plenty of unresolved problems, new and old, ahead of us. In Finland, the change in the nature of work manifests itself when, for example, representatives of industry predict that in the near future they will need some 30,000 new workers. Of these, 19,000 will be completely new, while the remainder will replace workers who have left (Teollisuuden Osaamistarveluotaintutkimus [Survey of needs for industrial expertise] 1998). It is predicted that the electronics industry will generate a quarter of the new jobs. Businesses operating in the province of Uusimaa will take on the most new workers - 12,000 of them. When one takes into account the multiplier effects (subcontracting chains, tax revenues, the rise in purchasing power), the new jobs will in fact mean work for 70,000 persons. The change is essential from the standpoint of demands for expertise, for instance, but is at the same time problematical, since industry has traditionally been a sector in which less well-educated persons have also been able to get jobs. Education is threatening to become a bottleneck in Finland. For example, almost half of the 8,000 workers being hired by the electronics industry will need to have a graduate engineer's degree, while a third will need a polytechnic degree. The current number of degree-holders in the field is far smaller. The lack of trained personnel is thus threatening the industry's growth. In order to satisfy the demand for workers who hold university-level degrees in technical fields, the number of places for new students has been increased a great deal. In autumn 1998 Finland had openings for 4,300 students in technical fields at the university level and 8,500 openings at polytechnics. The numbers represent a rise of more than 50 % in four years. Instructional resources have only been increased slightly. In technology faculties and universities of technology, it is common for students to drop out. Only two-thirds of those who enrol take their degrees. As the 1990s draw to a close, Finland is trying to train almost a quarter of an entire age group as engineers. The problem is that those who have taken the university entrance examination in general mathematics number only as many as the places available for new students in technological fields - and general mathematics is a requirement for 7,000 student places in other fields, too. The number of girls seeking entry into technological fields continues to be small. In addition to the change in work tasks, the information society is offering new ways to work. Work can be done at home as distance work which exploits new communications links. Many people who do creative work will readily be able to work part of the time in their offices at home, but that will also be possible for many routine production workers in the IT field. In the 1980s, when the arrival of personal computers first made distance work possible, it was predicted that 40 % of all workers in the United States would be distance workers by the end of the century. The forecasts have since been revised downward, and it is now predicted that a fifth of all jobs will in future be distance work jobs. Better opportunities for distance work are opening up as broadband communication links find their way into homes, and worldwide data networks are brought into use. Opportunities for service vocations in Finland The Committee for the Future has commissioned a comparison of service-sector employment in Finland and the U.S. state of Wisconsin (Klus and Kalscheuer, Finland - Wisconsin: A comparative study focusing on the job opportunities for Finland 1997). Both Finland and Wisconsin have five million inhabitants, and the forest industry is the main industrial sector in both places. The electrical and electronics industries in Finland and Wisconsin employ comparable numbers of workers. The chief difference is that in Finland the unemployment rate is more than 10 %, while in Wisconsin it is only 3.5 %. In enterprises which provide technical industrial services such as machine maintenance, Wisconsin has 65,000 high-paid workers, while Finland has only 30,000. In part the differential may stem from the fact that in Finland, appliance maintenance and the like are still performed in-house. If service enterprises become independent, more jobs may be created, since even small businesses can then use their services. Wisconsin has more than 105,000 jobs in business services, and the figure is growing 10 % each year. In Finland there are 65,000 such jobs. Business-service enterprises attend to mailing, advertising, data processing, market research and real estate management tasks. Many of the jobs are high-paying. Tourism in Wisconsin produces more than USD 6 billion in total annual sales. According to the authors of the report, Finland is much more economical from the standpoint of tourism, so that developing tourism here offers great potential and the prospect of new jobs. In Wisconsin, businesses offering household services have grown the fastest. These enterprises mow lawns, clear snow, exterminate insects and provide other domestic services. The report describes Finland as a self-service society. In Finland, the structure of wages and taxation slows growth in service jobs. The OECD's international comparisons find that wages (gross wages adjusted according to purchasing power) that are low on Finland's scale are relatively high in international terms, while wages at the high end of Finland's scale are relatively low internationally. The low wages in Finland are the 7th best in the 14-nation comparison, although average pay is the lowest among the group. The taxation of wages is high, and that has its own impact on the creation of service jobs. As noted several times in the earlier chapter on the faces of work and unemployment, comparisons between countries and peoples with varying social models, traditions and cultures is very problematical. In Europe - Finland included - people feel that service tasks usually fall within the sphere of government, while in the United States they are part of private business activity. In Europe it is expected that services will be offered equitably and economically. Health-insurance and pension schemes furnish another illustration of the structural differences. In the United States, people usually have to take care of their own health insurance and pensions. To put it simply, if one doesn't pay the premiums and contributions, one doesn't get the benefit. In Finland these matters are handled as a mandatory part of taxation and the labour costs of businesses, the state and the workers themselves. The total price of labour is for this reason significantly higher in Europe than in the United States, in low-paying service jobs as elsewhere. Deep-rooted social inequality has a surprisingly broad impact on a society. At the practical level, one basis of the difference between the social structures in Finland and the United States is that the latter has a large number of immigrants and persons of colour, who perform most of the low-paying service jobs. This is an alternative to unemployment and living on low public assistance payments. 4. Other means of building the information society "One threat for future growth is that [intangible investments] will prove as inefficient as our material investments were previously. . . The proper allocation of training and research resources is as essential to future growth and welfare as it is to increase such resources." (Government report 1997, 124) Research, product development, and support for technological enterprises Research and product development, in addition to good values, work and education, are cornerstones of the information society. According to the Government report, Finland is being developed into an information society characterized by its citizens' high level of training and expertise, the principle of lifelong learning, and superior research work. Efforts to strengthen the links between research and practice are also crucial. Superior research requires, first, adequate resources and, second, the smooth functioning of the entire research system. According to the objectives established by the Science and Technology Policy Council of Finland, Finland's investment in research is to equal 2.9 % of GDP in 1999. This target will be reached. In 1997, Finland's total investment in research represented 2.7 % of GDP, or about FIM 17 billion, of which the private sector accounted for some 70 % and the public sector 30 %. Both private- and public-sector investments in research have increased rapidly in recent years. The growth in public research investment is based on the Government's supplemental research-funding programme for the years 1997-1999. The Technology Development Centre (TEKES) has been one of the basic factors in Finland's success. Fundamental to TEKES's operating principles is the promotion of close project-specific research collaboration among dozens, even hundreds of businesses, universities and research institutions concerned with technology. This open collaboration has at the same time altered the working and learning formats of engineers and others engaged in the field, and has also enhanced the productivity of innovation activities. The Finnish work culture, which has traditionally been a matter of doing things alone, should reorient itself towards genuine cooperation in doing and learning. The multidimensional character of innovations would thus become more understandable and the whole innovation chain would be easier to control. With growing research investments and purposeful development work in science policy, we will be able to strengthen fundamentally the foundation which will be essential of our country's economic, social and cultural well-being in the first decades of the 21st century. The level of Finnish research is monitored regularly, for example through the Academy of Finland's triennial survey of the status and level of science in all its sectors. The first survey of this kind indicated that, in many sectors, Finnish research meets the highest standards in global terms, while in other sectors reaching that level is a realistic objective for the next few years. Experiences in 1998 with the selection of ad hoc centres of excellence point in the same direction. There are many times more high-quality projects being proposed than can possibly be financed. In all there were 166 applications to the Academy for research support, as opposed to the 20 to 30 centres of excellence which can be selected. The danger will soon be that excellent researchers will get frustrated when their units do not become centres of excellence, even although those units may be scientifically qualified as such in comparative international terms. Through measures taken by the Ministry of Education and the Academy of Finland, our country is establishing a researcher training system, as one result of which the number of Ph.D.'s graduating each year is growing rapidly. In 1990, 490 doctorates were granted; in 1997, 934. In international terms the numbers remain less than impressive. Sweden, for example, grants twice the latter number of doctorates. The trend is however significant in that the average age of persons receiving the highest degree is dropping rapidly: students are taking their doctorates earlier. This in turn has enhanced the competitive position of Ph.D.'s in the private-sector labour market. The studies performed and the research Ph.D. system created in Finland demonstrate that collaboration between universities and the business community is entering an entirely new phase. A new generation of researchers is emerging, a generation whose know-how and international contacts will constitute a significant advantage as Finland takes its place in the worldwide economic and scientific collaboration and competition. Finnish research has historically been international, and is today increasingly so. The trend is in many ways auspicious and inevitable. The problem of how to attract top foreign researchers to Finland persists. One approach has been to invite researchers to Finland with Finnish financing. The basic solution is to create such excellent research groups in Finland that they will attract young foreign talents in particular. In both the top research units and EU research undertakings, good examples of this approach already exist. Increasing the amount of education and research will not suffice as a solution. We must also ensure quality. Industrial design was Finland's competitive forte during the postwar period. In recent years, however, Finland has lost its vanguard position. More than aesthetic values is involved. Good design is part of product life-cycle thinking and also plays a key role when we are devoting our best energies to the development of information society products appropriate to the needs of different people. Successfully executed, industrial design adds value to Finnish merchandise in the consumer's eyes, makes it more competitive and thus increases the national product and the consumer's enjoyment of the merchandise. Industrial design is also a part of the nation's image. Although Finland is among the leaders in industrial design, research and training in this industrial field is not good enough. Problems also exist in industry's ability to utilize the existing design expertise. According to a study from the Finnish National Fund for Research and Development (SITRA) (Pekka Korvenmaa, Muotoiltu etu [An advantage by design] 1998), designers should consider how they might improve their service offerings as a business activity which would fit in better with industrial decision-making, production and marketing. The study concludes that an assessment and repositioning of Finland's entire design field is called for in view of the international competition, which is investing increasingly in design. Science is the basis of the information society. It is therefore important that science be respected and promoted by various means. Finland demonstrated its respect for science by establishing the Academy of Finland 50 years ago. Scientifically and economically successful countries have separate scientific academies in addition to scientific communities as such. These countries include Sweden, Norway and France. In our country, the position of science could for example be bolstered by forming a Science Development Centre and a separate Academy of Finland out of the current Academy. This approach would underscore the importance of science and enhance the respect in which it is held. As far as its national academy is concerned, Finland could then present itself as an equal in the community of countries that respect culture and science. The objective of national innovation policy is to create a large number of technology and other small enterprises which will benefit from the findings of scientific and applied research. The creation and growth of enterprises such as these is impeded by the fact that, while the products are promising, a lack of capital delays their development, entry into the market, and generation of income. For Finnish organizational and private investors to put more money into Finnish targets, and for Finnish business to be the object of increasing international investments, many different kinds of investment targets and fund models are needed. When investment funds are established, other alternatives should be created alongside the traditional mixed-fund model, in which public and private investors have equal positions. There are many models. England has begun encouraging private individuals to put venture-capital money into small and medium-sized enterprises in order to alleviate start-up difficulties for technology firms. No tax has to be paid on the investment. If the enterprise fails, the investment is lost; if it succeeds, the capital invested can be recouped tax-free, provided that it has been retained in the business for a certain number of years. So-called asymmetric investment funds primarily utilize public investors, who have additional objectives for the invested capital, above and beyond the best possible return. This objective might for example be the availability of private capital to technology and other small enterprises in their start-up and growth phases. Another example is the investment of pension institution capital so as to support the desired development of business nationally. The latter model makes it possible to define the fund's principles for the distribution of both the repaid capital and the yield thereon, in such a way as to attract money from various sources. For example, it is possible to define the right of Employees' Pension Act investors to a preferred yield in accordance with a negotiated level. Business parks and comparable expertise models It is a long way from theories and models to successful solutions and a functional reality. Such is the case with IT as with other fields. As we seek paradigms and ideas for building the information society, California's Silicon Valley continues in many ways to provide a timely model. By many yardsticks, it is the most productive region of new manufacturing and information that the world has ever seen. It has always been at least one step ahead of the rest. In 30 years it has been able to renew itself repeatedly. Since 1992, 200,000 new jobs have been created in the valley, the average salary being USD 46,000, as compared to the national average of USD 30,000. Almost half of U.S. industrial growth since 1993 has taken place in the valley. The new sectors are telecommunications, the Internet and biotechnology. The Silicon Valley, population over 2 million, is a mostly park-like belt of cities, nearly 100 km long, within the San Francisco metropolitan area, population 7 million. Almost all of the Silicon Valley's working residents are employed in the small cities close to Stanford and San Jose State universities, which serve the needs of technology and the economy. An abundance of venture capital, combined with intellectual talent, open-mindedness, a strong military-technology tradition, a young and multinational labour force, and a networking approach which takes the place of hierarchical organizations have often been mentioned as the valley's success factors. The valley's recent resurgence is founded on the new contributions of well-educated Asian engineers who maintain vital links with their native countries. Of the newest enterprises, one in four has been created by Chinese or Indian immigrants. Since the crisis years of the early 1990s, the Silicon Valley has again been an object of attention among those interested in technology and the information society. The valley has been copied, with varying degrees of success, in various parts of the world, including Cambridge and France's Sofia Antipolis. Money and a political decision do not in themselves guarantee the success of a science park. Kansai Science City, being built in Japan, illustrates what an ambitious project can involve. The city, located 60 km from the Osaka airport, was established by an act of Japan's parliament in 1987. The state and the rural municipalities in the area are supporting the development of the city with business tax breaks, among other things. Kansai's total area will be 15,000 ha. Plans call for building 12 separate scientific and cultural centres within the area. As of this writing, 70 research institutions are operating in Kansai. They employ a total of 3,000 researchers, a substantial number of them foreigners. Projects have succeeded in Kansai, but the spread-out area continues to lack a centre, and has not developed the sort of culture of enthusiasm which is characteristic of the best science parks. Finland has for the most part succeeded, albeit on a modest scale, in copying the Silicon Valley model. At Teknopolis-Oulu, Otaniemi's Innopoli, Tampere's Hermia, the Jyväskylä Technology Centre, Kuopio's Teknia Technology Centre and Turku's Biocity, one can see the same foundations of success as in the Silicon Valley. There have been failures, too. A new urban zone of expertise is presently being developed in the Helsinki metropolitan area, on the Otaniemi-Keilaniemi-Ruoholahti axis. The idea is that the Helsinki University of Technology, the Technical Research Centre of Finland, the many other research and educational institutions in Otaniemi, the Neste Corporation, the Nokia Group, SITRA, TEKES, and the Academy of Finland, as well as the numerous small and medium-sized enterprises and organizations clustered along Ring Road I at Spektri and Innopoli in particular, will thus acquire better opportunities for cooperation and interaction in the areas of information, expertise and internationalism. Finland has acquired a reputation as a leading country in communications technology. The country's science policy has been appreciatively received and the country has internationally recognized research units in many fields. Otaniemi is an internationally important centre for technical research. The University of Helsinki has made great strides in biotechnology, for example. On this basis the possibility has been broached of Finland's creating an international business-and-science park, to which foreign researchers, research institutions and enterprises would be attracted. The corporate park could for instance be situated alongside Ring Roads I and II, in an area where an abundance of high-technology enterprises are already making their presence felt. The corporate park would curve around to Viikki. The basic requirements for a business-and-science park - major, internationally respected universities, an international airport, swift local transport connections, superior residential areas, and high-quality cultural services, with an abundance of undisturbed natural areas nearby - are already either in place or buildable. In Europe, England has gone far as an information society in many sectors. Germany has fallen behind by virtue of its attachment to outdated heavy industry, a circumstance to which the unification of the Germanys contributed. Now, however, at the end of the 1990s, several ADP and communications enterprises, highly productive and large even by international standards, have sprung up in Germany. One of the achievements which has occasioned the greatest amazement has been the rise of the village of Walldorf, alongside the Rhine at the edge of the Black Forest, as one of Europe's most important centres of expertise in data processing. SAP, which operates out of Walldorf, is Europe's biggest producer of software. Farther east, Bavaria is specializing in IT. The German state, which has 12 million inhabitants, initiated the DM 500 million Bavaria On-Line Project, which produced, among other things, a network linking homes, schools, government offices and businesses. Flexibility can be realized best in decentralized systems based on their users' choices. Hierarchy, over-management, top-down power flows, elitism and the deeply rooted tendency of many state cultures to be stingy with information are the sort of factors which conflict right from the start with the information society's successful work models. For innovation and the search for the new, a different sort of seedbed must be created. Since Finland is seeking to be the EU's information society laboratory, it can only depend to some extent on the EU's doctrines and support. In many questions Finland is ahead. As a small, flexible, self-renewing country, with the whole world as its field of operations and humanity as its point of departure, Finland enjoys a good chance of future success as well. 5. Finland as the EU's information society laboratory "Lead the transition to an information society, seeking a role in the European Union as an 'information society laboratory'. Use the information society as a tool for increasing Finland's human and social capital." (policy summary, Government report 1997, 19) Good prerequisites The Government report depicts the multidimensional nature of the information society. The report distinguishes among interpretations based on technology, economics, vocation, culture, and the importance of investment factors. The Committee considers the set of future objectives to be properly oriented. SITRA, TEKES and the Academy of Finland are preparing extensive studies and programmes on the subject of the information society. The results of SITRA's extensive project will be made public in late autumn 1998, and will be evaluated at the international Politics&Internet Conference being held at the initiative of the Committee for the Future on 6 January 1999. The Committee for the Future applauds the objective of making Finland the EU's information society laboratory and feels that good prerequisites exist for implementing the objective. Finland's points of departure for the 21st century are very good in many areas of expertise. In the OECD's 1998 science policy comparison, Finland shares first place with Denmark, Iceland, Holland and Ireland. Finland received particular praise for its research funding, its policy on centres of excellence, and its model Science and Technology Policy Council. In 1997 and 1998, at the order of the Committee for the Future, SITRA completed a technology assessment project on communications and information technology in instruction and learning. Education is undergoing a fundamental change in perspective, and even in operations as a whole, shifting from an instructional focus to active learning. Advances in communications and information technology are giving the change momentum. Multimedia technology is becoming widespread as a means of processing and expressing knowledge. Increasing cooperation among research institutions, institutions that offer distance learning, producers of instructional and study materials, manufacturers of hardware and software, and others players in the communications field is making learning environments, study materials, instructional pedagogy, and other learning support services more user-friendly. Parliament and the Council of State - the Government - have decided to make lifelong learning a cornerstone of Finland's success. From the standpoint of each citizen, it is essential that we develop various modes of communications and data transfer so that they will be available to all and adapted to the education of different types of people. The substance of instruction and learning will always be more crucial than the technology of data networks. The production of pedagogically superior learning materials and the development of open learning environments suited to distance learning must form an integral part of IT development. For the information society, ensuring equality is a challenge. The school's exacting task is to produce critical individuals who know how to analyze media content. Improving media literacy will be a great challenge. Easy access to information is characteristic of the information society. Strong personal life values, a readiness to learn to learn, and a realization of the foundations of phenomena will become more conspicuously important as the amount of available information grows with increasing speed. Instead of learning in school, in-depth hands-on learning and methods of retrieving, controlling and adapting information will be emphasized. Collective learning and project-type work among pupils - working together, with the support of the teacher - will also be stressed. Different academic subjects will be integrated with one another. Multimedia expression - the shaping and harmonized presentation, by means of text, sound and picture, of several components of knowledge - will be emphasized as a learning method. Multimedia formats are expanding the individual's traditional potential for self-expression significantly. People must be educated not simply as recipients of multimedia, but also as multimedia artists, as individuals who can use multimedia to express their ideas actively. School is only one learning environment, albeit the most important one. The home, information and communications networks, work, nature, and hobby and recreational clubs, for example, are also important. The age of networks and IT has changed the role of teachers. Increasingly, the teacher is a support person and organizer of learning, an analyst and nurturer of personal growth and community development, and a developer and custodian of information-retrieval and work methods that stress cooperation. The teacher's pedagogical and technical skills have a fundamental impact on the potential for the use of communications and information technology, and on the appropriateness of that use. There continue to be serious deficiencies in those skills. There is a serious shortage of digital material suitable for Finnish educational institutions - and people do not know how to use the existing material, either. The accessibility and usability of IT suffer from the shortage of hardware, software and study materials more than we have imagined. In the light of research findings, it is also worrisome that experiences, operating models and materials provided by development projects are not brought into wide use. We are unable to reap the benefits of good practices. In spite of the problems, today's educational institutions are gradually becoming local, mutually complementary, networked centres of learning. Libraries are becoming media centres that support learning and preserve culture. As an outgrowth of the changes in communications technology, the shift to digital TV and radio broadcasting will greatly encourage educational quality and highly effective learning-material collaboration. We will be able to shift to a fully open educational system; that is, to the continuous availability and transmission, via TV and radio channels, of high-quality information and illustrative material, in the form of distance learning for all. The natural objective is open and diversified network collaboration among different players in electronic communications. The country's best educational personnel could be recruited for the production of content, and high-quality education could thus be guaranteed for all age groups throughout the country. The Finnish Broadcasting Company, which is under the control of Parliament and functions as a public service, has an especially important task. It is appropriate that an adequate part of its resources be directed towards activity which supports national cultural education, lifelong learning, and the development of the information society. In one field, however, we have clearly remained in place. The intention is to enter the 21st century relying on the traditional operating principles of democracy and our political system. Some have perceived a lack of genuine personal participation in social decision-making as a problem. At the beginning of the century, Finland was a trailblazer in expanding popular power. Equal and universal suffrage became a reality in Finland in 1906. Falling through the cracks of democracy and the nation-state On his recent visit to Finland, Professor Manuel Castells, whose books include the series The Information Age (1996-98) pointed out what may be the Achilles' heel of Finnish information society thinking. To listeners at a seminar held at Finlandia Hall on 12 February 1997, he raised the problems of democracy in the information society: Overwhelmed by global flows, and challenged by specific cultural identities, or by ideals defined outside the political realm (such as religion), the modern nation-state seems to be unable to control what matters, capital, and to represent what counts, its subjects. . . . The resulting outcome is not the disappearance of the nation-state - that will survive out of inertia and of the vested interests of the political class - but the emergence of a new form of state, the network state. It is a state made of bits and pieces of nation-states, multilateral alliances, supranational institutions, regional and local governments, and even non-governmental organizations, and their associations, forming a network of interaction and shared responsibility. here the essential task is not that of commanding the subjects but that of surfing the Net. . . . To live, and indeed prosper in the Net, we need to know who we are. In the Information Age our lives, and our world, will depend on our capacity to link up the Net and the Self. What might Mr. Castells' message mean from the standpoint of the creation of the Finnish information society? The focus of our evaluation here is the information society not in terms of production, public services, globalization or data security, but as a matter of democracy, of popular political participation. The universal weakening of the nation-state's position lies behind the problems of democracy in the information society. In the 1990s, researchers have begun to speak of the end of the nation-state. State organizations, say nothing of the states themselves, are long-lived, however. It is nonetheless obvious that even in Finland the nation-state alone is no longer able to control the essence of power - capital and the economy. Nor will it be able, in the 21st century, to represent its citizens adequately. The nation-state will be too small to take decisions or exercise power in matters that have become global - but it will also be too big, distant and inflexible to attend to the important everyday problems of citizens possessing a multitude of identities. We have learned from experience that many problems have to be resolved at the level where they emerge. Since climate change, the instability of foreign and domestic currencies, the use of child labour, and the other social problems typical of our age primarily originate in factors external to Finland, we must look beyond our borders to grapple with the roots of these problems. A great number of the problems awaiting care have become international within the last five years. As such they can only be resolved internationally. The same need for collective effort and international collaboration also applies to the creation of what is new - to economic governance and the building of the information society. We need a supernational governance system, such as the United Nations, which is broader than regional structures. Supernational decision-making must be based on an international democracy in order to function acceptably, controllably, and with adequate efficiency. In the same fashion, we should not attempt to take care of matters close to people from too far up or too far away. These developments will mean a simultaneous streamlining of both supernational and local governance. Personal opportunities for participation and governance of one's own life must be expanded, for example by strengthening civic society and local economies. Throughout the 1990s, the European Union and the Council of Europe have supported the strengthening of regional democracy. In almost all European countries, democratic administrative organs have been created at the level of the province or state (in the sense of a German Land). In all the Nordic countries except Finland, provincial autonomy has long traditions. Regional democracy has been enhanced most recently in Belgium, Scotland and Wales. The leadership of Greater London is now elected. Provincial self-government is being developed in Italy and Poland, which is seeking EU membership. As a country with a centralized administration, France has also come a long way in this area in the 1990s. In Finland, responsibility for regional development has been transferred from the provincial state offices to regional councils of municipalities. Since Finland does not have elected organs at the provincial level, no broad civic discussion of the development of provinces has taken shape. Compared to many other European countries, however, municipal self-government is strong in Finland. As a part of the European trend, but especially by way of resolving perceived problems in Finland, Finns too have gradually started to discuss how to strengthen the foundations of provincial decision-making and planning, for instance through openness and democracy in provincial administration. From the standpoint of the individual's life, might we think that society consists of these three operating environments - the state, province and municipality - all of which should include new elements of popular power and democracy in the 21st century? We will exist and function as citizens. The state and the municipality will be the important organizations. We will work and have work done. Business and the market will be players. We will pursue our pastimes, exchange our opinions about world events, and participate in the care of matters which do not appertain to the state, the municipality, or our roles in either. Associations and organizations will be players. In spite of the upheavals, the sustainable solutions will be anchored in the communities in which citizenship is born, and in the civic society in which that citizenship is fulfilled. Solutions are being sought for the organization of democracy in the new network economy and, possibly, the new network state. If Finland genuinely intends to be the EU's information society test laboratory, it will also have to be active in the renewal of democracy. Human development or a loss of human control? It is believed that the information society will give people new possibilities in a society which is intellectually more open and egalitarian than today's society. The ill omens which are already visible have received too little attention. Several examples follow of trends about which researchers have warned us. Some have claimed that technological development progresses at the cost of the positive forces of life. Objectification, automation and the rise of external direction are eating away at self-esteem, undercutting personal autonomy and destroying the joy of living. The term external direction refers to market forces, the economy, administration, work, technology, communications and other things which intrude on our everyday lives. External direction of the family is also increasing. The models, examples and ideals come from outside the family. The tasks and influence of parents have been diminished. In communications, the entertainment industry controls the market, shapes our experiential world and, in fact, directs human activity from afar. The end result may be an increase in the number of people who are internally insecure, lacking in initiative, dependent, docile, and short-sighted in their thinking. The danger exists that, in an increasingly technical world, surrounded by the scattered splinters of knowledge, people will lose their grip on life. The fear that, in the new society, "the amount of information will increase, but understanding will decrease" may become true for most people. In the flood of disjointed information, the conceptual knowledge which underpins our views of the world is likely to be washed away. It has been stressed that, in order to avoid compartmentalization, we must ensure that comprehensive (elementary) school, secondary school and vocational training will provide an enriching general education suitable to the information society, an education which will also include the basics of natural science and technology. In communication and the media industry, a masculine culture of communication has come strongly to the fore in the 1980s and 90s. IT manipulates not simply the flow of information, but also the flow's content and the information's recipients. When this phenomenon is wedded to material gain - the pursuit of profit, in most cases - the end result may be a world far harder and colder than the one we know today. Researchers are also reminding us to be realistic: the people and institutions that are creating the information society include forces that have not the slightest interest in human improvement. Their goals are profit, control of the masses, and the manipulation of human activity. Cellular phones and the Internet have opened up whole worlds, but they have also made it easier to create systems of surveillance. What we do and where we go can be monitored closely. The individual's private world is shrinking - our comings and goings have become subject to registration. The benefit cards used by retail chains collect a substantial body of information on our habits of consumption. Data security is lagging behind technological advances. In spite of the dangers, it is felt, as noted earlier, that the information society will give people new opportunities in a world which is intellectually more open and egalitarian than today's. Computers, the Internet and the new media in general will be available to all for the retrieval and processing of all manner of information. One of the most important steps forward is the capacity to convey information about impending threats at the speed of light, from a single terminal at the far side of the earth. High walls and closed doors will no longer completely conceal anything of consequence. The information society must not be reached by drifting Analysis of the social impacts of the information society has been fairly modest. The discussion of the information society is still too dominated by professionals and amateur practitioners in the IT field. The impacts have not yet been brought within the realm of political discussion. To make the information society a public issue, its general objectives should be delineated, and very soon. The information society can be utilized. Its benefits must be made as far-reaching and relevant to people as possible. Finns must also know how to sell their expertise. If the information society is not commercialized, Finland may lose the economic benefits of its expertise, in the manner of our health-care sector, or the Linux computer utilization system, as mentioned earlier in this report. We have a lot of know-how - but do we know how to sell? The United States and Europe look at the Internet differently. In the United States, the Internet is above all an instrument and target of commerce. The U.S. administration is considering how the shift to the next generation of Internet technology will be made in the next few years. In his State of the Nation address, President Clinton promised that Internet speeds would increase a thousandfold, thus facilitate the network's use in business and research. The European attitude toward the Internet is characterized by a search for a common set of operating regulations. Finland must monitor the social impacts and problems of the Internet and modern communications. Since Finland is among the front-runners in communications and IT, its opportunities are quite different from what they would be if it were following the lead of others. The growth potential of the communications and IT fields is immense, if one takes the transformation of work tasks into account. It is estimated that close to half of the world's trade is already based on information and information work. Fewer than 1 % of the world's people have Internet connections: as of July 1998 there were only slightly more than 36 million Internet service agreements. In March 1998 there were only 226 million cellular phones. It took 20 years to get to that point. It is estimated that there will be a billion users by 2005, and the growth will continue thereafter. Only 15 % of the world's office workers have personal computers, and of them only 10 % have Internet e-mail and 7 % access to the worldwide web. In 1997, 82 million personal computers, 18 % of them portable, were sold. 6. Futures work and Parliament: Building Finland "The welfare state must be sustainable reformed: the intelligent welfare state must now be our goal." (Government report 1997, 135) A step ahead In a world of intensifying competition, preparation for the future is a vital condition for the private and public sector both. Finland has taken note of this matter. From the political perspective, the problem is the scarcity of bold assessments made independently of the state. This is partially explained by the fact that, in a small country, there are no opportunities for research institutions which analyze past policies and assess the future from different points of departure. England, by contrast, has think tanks which are independent or tied to major political parties, public or private, research-oriented or practically oriented, whose task is to evaluate implemented policies and illuminate what should be done next. In Finland, universities and various sorts of research units have their roles, but from the standpoint of assessing society and the future, their drawback is often a narrowly theoretical viewpoint far removed from the realm of practical political action. Decisions on structural reforms of Finnish society are made in Parliament, which is the most suitable place for the reform of the society's values, objectives and operating models. Parliament possesses both social and expertise capital. In principle, Parliament is a lively, multifaceted forum for public engagement, where theory and practice come together. The public and private sectors share the attention. Players from different areas, sectors and levels of society work and meet there, in various contexts. Parliament has the opportunity to hear the country's best experts in different fields. Parliament is a meeting point for the various strata, social classes and groupings within the populace. Discussions are as a matter of course open and public. The business community takes the view that, in an increasingly global world, those enterprises that are a step ahead of the rest in the process of change will fare the best. The business community also underscores the need for the would-be winners to adopt the latest technology quickly and broadly, so as to benefit all their functions. Parliament's responsibility is to observe the world's changes, analyze them and take a timely position on what the future will require of Finnish society and its players. Democracy is not realized simply by accepting changes that have already taken place. Lively, wide-ranging discussion is the sine qua non of innovation. The logic is the same as in commerce. The best marketplaces have always been found on the best routes of travel, in the natural meeting places. In Parliament, the competition for the best and wisest thoughts, ideas and analytical scenarios should be at its toughest. Parliament differs from universities, research institutions, product development departments, ministerial management groups and other centres of thought in five fundamental ways. It represents all of Finland and all Finns democratically; it has attracted social capital from far and wide; it exercises ultimate power, taking the decisions on the matters under discussion; it has the prestige to effect change; and it has the means to oversee the implementation of decisions. How then might Parliament promote innovations in practice? First, Parliament must create a good seedbed for innovation in technology and other fields. To do so, it will employ directive formats both old and new. The latter, one hopes, will be developed as quickly as possible. Businesses produce innovations, and Finland must therefore be a good country for businesses to operate in. Second, in enacting laws and deciding on the budget, Parliament's criteria should include weighing the extent to which a law or a budget appropriation creates new things rather than simply preserving the old unreflectively. More of the society's resources would thus be directed to the creation of the future. Third, Parliament should act more clearly, at an early enough stage, to open up public discussion of issues - long-term structural problems included - which policy can affect. In a parliamentary system, independence and activism are limited, especially when a broad-based coalition government sits for an entire parliamentary term. In the exercise of power today, it is essential that Parliament delineate long-term policies. There are many barriers to Parliament's innovation work. One unseen impediment is the fact that things come to Parliament in pieces that are too small and disjointed. The time span is too short, the objects of Parliament's direction too immediate. Although in numerical terms more EU norms than national norms are enacted, the national legislation is more important from the standpoint of the individual's life. In addition to its own national law, each EU member state carries on its books the abundant, and abundantly detailed, enactments of the EU. International norms, agreements and recommendations have proliferated, especially since World War II. Diminished respect for the law has become a problem. Statutes which are perceived as unjust, and whose enforcement cannot be overseen, lose their meaning and credibility. In spite of the profusion of national norms, many problems require international commitments and the norms which they create. The Government futures reports have made long-term political assessment of various fields possible in forms other than legislation. The Committee for the Future The Committee for the Future embodies Parliament's innovative approach to taking the evolution of society into consideration. The Committee was appointed for the first time in 1993, and reappointed in 1996. The objective was to introduce a long-term perspective into parliamentary decision-making. The Parliament of Finland is a pioneer: no other country's legislature has a futures committee, but interest in establishing such a body has been kindled in several countries. Parliament has also been innovative in initiating the evaluation of the social impacts of technological developments, and in entrusting that evaluation to the Committee for the Future for handling in collaboration with other committees. The same sort of evaluation has been performed in a few other countries' parliaments, but none of them have a separate committee for the purpose. The first assessment initiatives have provided valuable experience with both the assessments themselves and the collaboration with other committees. In addition to the actual collection of factual data, the interaction between MPs and project researchers has been very fruitful: it has enhanced the understanding of other viewpoints and ways of thinking, which is important from the standpoint of political decision-making and the development of the information society. The Committee for the Future is the only parliamentary committee which is not a sector committee. It considers all of life - everything from biodiversity and global ethics to the problems of poverty in urban neighbourhoods. It can and must move simultaneously on the macro and micro levels. It draws the map and indicates th landmarks; it acknowledges realities but does not sacrifice ideals. These attributes give the Committee a remarkable role in Finnish futures planning. In order to be able to move from a reactive policy to a proactive futures policy, to be something more than Europe's best accommodator, Finland needs a parliamentary player that seeks out possibilities for Finnish prosperity - that looks at the threats and strengths, the trouble spots and resources. With the aid of wide-ranging expert hearings, reflection, and open discussions liberated in an uncommon way from the politics of partisan advocacy, the Committee for the Future produces material which is valuable to the work of drafting legislation. A good Finnish tomorrow requires that we be able to perceive the problems of daily life, but it also calls for keen long-distance vision. We need information, but we also need a viewpoint and instinct. Frantic, near-sighted, one-budget-at-a-time parliamentary activity needs the complement of bold, incisive planning for what lies further ahead. At this juncture as never before, we need to grasp issues in their entirety. More and more - and more and more quickly - everything in the world is linked to everything else, and that translates into the risk of being carried away by the ascendancy of one thing - be it money, knowledge, or brains - which is perceived as the fountainhead of prosperity. For that reason it is imperative that someone in Parliament take on the work of wondering, questioning, and doubting, too. The objective of bringing a longer-term perspective to parliamentary decision-making has at least partially been achieved. The Committee for the Future has been conducting a dialogue with the Government on future outlooks and has thus fostered the readiness of MPs and the public administration to come to grips with new subjects and problems. Through reports and discussion programmes, the Committee has at the same time given impetus to the public discussion. The Committee's work has been hampered by a number of practical problems. It was not appointed right at the beginning of the parliamentary term, so that it has not had an officially agreed-upon meeting time, as Parliament's other committees do. It has not been possible to utilize the Committee for the Future's inter-administrative role in Parliament's work, either. Each of the other committees has a responsible ministry within the Council of State. The Committee for the Future does not. Taking the development of the information society into account, the Council of State might with good reason include a minister for the future, for example in the Prime Minister's Office. That would give the Council a firmer grasp on the issues of the future. The Committee moves for the approval of 11 statements concerning this chapter. Chapter I VALUES IN POLICY AND AS AN OBJECT OF POLICY The report presents two interpretations of the change in values. One line of thought proceeds from the revolutionary nature of globalization and the new technology, the belief being that our entire foundation of values is in a state of upheaval because of the frantic changes taking place. The other interpretation does not perceive any qualitatively new phenomenon and takes the view that globalization affects only a small part of the economy, production and trade. Whatever the interpretation of the change may be, humanity needs a culturally sustainable base in addition to economic and technological success factors. Humanity needs a global ethic to underpin its activity. A values base does not progress in tempo with the frantic change alluded to above. Christian values, for example, are as fixed as ever. Ancient philosophy continues to offer an intellectual challenge to contemporary life. In the opinion of the Committee, educational and cultural values are the foundation of a nation's success. The Committee calls for the inclusion, in educational programmes, of adequate time for the nurturing of humanness. The understanding of phenomena and the quest for and comprehension of the deliberative, critical and creative must receive room alongside other instruction. The rigorous demands of a highly efficient economy, combined with the worship of intelligence and information, have led to a situation in which the development of emotional life has not received due respect. Emotions and instincts have not been treated as real things. A human being is a feeling, thinking creature. Emotions cannot be stamped out: they will burst to the surface, at the latest in extreme situations - usually in the form of hate and rage. The violence which has got Finns talking recently may result from the fact that social exclusion has reduced the individual's ability to confront, process and tolerate emotions and formulate ideas. In the opinion of the Committee, the reality of our lives is challenging educators, parents and professionals to bring experience into children's lives, because only experience opens the world of the senses and emotions. The Committee calls upon the Government to take action to ensure a comprehensive experiential education which brings together parents, child-welfare clinics, early education, the schools and youth work. This can be accomplished as a part of established functions. The process would utilize the help of artists, with whom highly individualized, creative solutions would be generated on a regional and school-specific basis. Chapter II THE MANY FACES OF WORK AND UNEMPLOYMENT A person's working life is not a line segment which begins and ends at precise points. Fewer and fewer people retire from the jobs with which they began their working careers. Life is divided up according to the changing challenges which a turbulent labour market and the person's daily life present. Many find it difficult to reconcile the demands of work and everyday living. The pressure manifests itself as queasiness, even disease. In the opinion of the Committee, a need exists for life-phase thinking, whereby the individual can harmonize the demands of his or her job and personal life situation more flexibly. This may mean a chance to take care of small children at home, a shorter work day for the parents of schoolchildren, taking care of old people in one's immediate circle, or partial retirement. The Committee calls for support for more flexible ways of harmonizing work and everyday life through appropriate social security arrangements and amendment of the Employees' Pension Act. Work in Finland is not distributed equally. Some suffer from unemployment while work leaves others too exhausted. Different models for the distribution of work can level out a situation which has become unreasonable. An investment must be made in helping people cope on the job. Alongside sabbaticals and 6 x 6 working-hour models, various options for shortening working hours warrant consideration. In office vocations, for example, working hours have in practice increased, even although the official working hours have decreased. The accelerated work pace and the competition for jobs are forcing people to work unofficial overtime. In the opinion of the Committee, legislation on working hours must be revised. An investment needs to be made in helping people to cope with their work, and the qualitative and enduring features of working life must be emphasized. On-the-job learning and the improvement of vocational skills are a part of the working day. To improve them, incentive systems must be created. In view of the diversity of working life and work tasks, labour legislation must allow for solutions suited to a variety of situations. Those solutions must be based on frameworks that define the equivalent, guaranteed rights and responsibilities of all. An open discussion of future working hours needs to be conducted. The Committee calls upon the Government not to drift into decisions that reduce or increase working hours, but rather to draft frameworks for the working hours of the future - frameworks that will protect competitiveness, social security, and the worker's everyday needs. High taxes on earned income, compared for example to low capital gains taxes, create a situation in which labour is in effect subject to a nuisance tax. The system encourages investment in automation rather than people. In the opinion of the Committee, taxation should be neutral relative to labour and automation. Appropriateness to purpose should be the deciding factor. The Committee calls for sharing the tax burden by extending taxation further, for example to include environmental and energy taxes. Ageism, which classifies workers according to their age, has become a familiar concept in public discussion in Finland. Among those with temporary jobs, women of child-bearing age clearly rank first. The position of older persons in working life has suffered. Persons of different ages bring different strengths to working life. The young person's strong points are a recent education and a desire to advance in his or her career. The strengths of older workers are moderation, interactive skills and experience. In the opinion of the Committee, recruiting is the employer's right, but distortion of the age structure of jobs looms as a future risk factor in many sectors. In public administration, the threat is a preponderance of aging workers, while in new technological enterprises especially, the danger lies in the weaker risk-management skills that young people have. In the opinion of the Committee, provisions that treat different age groups in different ways must be weeded out of the pertinent legislation. There can be no age-based factors bearing on an employer's obligations. The Committee calls for cutting the risks of hiring older persons from the employer's expenses. These risks involve pension responsibilities, for example. By the same token, the child care expenses of persons who are starting families must be shared more equally. Making self-employment easier and improving the operating environment for small and medium-sized enterprises which create jobs constitute key elements of employment policy. Some forms of economic support distort competition. It is more important that every businessperson be able to take care of officially established requirements personally. In the opinion of the Committee, major enterprises in the global economy are outsourcing their functions and reducing labour forces, but are seeking operating environments in which the small-business networks which they need function well. The prerequisites for social and organizational innovations must be enhanced through business, labour and education policies. The network economy operating model must be given emphasis. The crucial elements are intellectual entrepreneurship, skills in working together, and the dissemination and utilization of expertise and knowledge developed by different parties. Alongside the economy of scale, nation-states must ever more consciously create an economy of smallness which understands small-business activity. Young people take a sceptical view of business as a career. A small-business loan tailored especially to young people could serve as an encouragement. The Committee calls for simplification of the administration and regulations affecting small-business activity and self-employment, so that entrepreneurs will have more resources to devote to actual business operations. Chapter III TROUBLE SPOTS IN THE SOCIAL WELFARE SYSTEM The social welfare system's financial foundation is essential to envisioning the future. In the public discussion, structural reforms are often demanded without further particularization. From the standpoint of the future, an important structural agreement must be made. The agreement would clearly delineate state and municipal responsibilities and tasks, as well as financing. The emphasis of financing has changed. In the financing of municipal services, the portion represented by progressive state taxation has diminished and the portion represented by the municipal-tax component has increased proportionately. In the opinion of the Committee, the allocation of responsibilities among the state, the municipality and the individual is not clear. The relationship between state financing and municipal responsibilities must be clarified. There must be a clear agreement as to the individual's sphere of responsibility, too. The municipalities' business and age structures vary. Today's state funding share scheme is no longer adequate to respond to swift changes. The Committee calls for a clarification of the division of labour between the state and the municipality. In addition, the rights and responsibilities common to all citizens regardless of their municipality of residence should be defined. Flexible financing models must be sought - models which take into account sudden structural changes in the municipalities. The advantages provided by the social welfare system include stability, social security, and superior, broad-based expertise. Taxation and the social security scheme make up a complex whole. Protecting the financing base will require reforms. In the opinion of the Committee, every individual should be able to understand his or her rights and responsibilities without studying the issue at hand in great detail. For the citizen, equal security consists of basic social benefits, income security, and social services. The Committee calls for a simplification and harmonization of taxation and social security schemes, with the goal of providing uniform, supportive basic social benefits. In the global economy, nation-states will have to compete for favour as business locations. We are being forced to make the environment business-friendly, sometimes even at the cost of the citizen's well-being. The same sort of competition for businesses and jobs is taking place among Finnish municipalities. In the opinion of the Committee, it is the municipalities' task to enhance the prerequisites of business activity and to create favourable conditions for doing business. It is however wrong for municipalities, in their competition for jobs, to subsidize thriving enterprises with limited tax resources. The means of affecting the global economy are limited, but the competition-distorting subsidy mechanism used by Finnish municipalities could be done away with. The Committee calls upon the Government to clarify whether municipal subsidization is distorting healthy competition and whether businesses are being supported needlessly with tax resources. Chapter IV SUSTAINABLE DEVELOPMENT Biodiversity is considered more important to humanity than ever before. Nature is less and less able to adapt to climate change, and nature's gene pool is shrinking. Researchers emphasize that caution is wisdom, since we do not know what genes we may need for processing or the development of medicines, for example. The Committee calls upon the Government to develop directive measures aimed at protecting biodiversity. The management of environmental issues constitutes an entity, not a collection of attempts to resolve individual problems. Environmental matters, international competitiveness and job creation are not mutually exclusive objectives; indeed, they complement one another. In many environmental matters, Finland is a trail-blazer. Fear-mongering and the pondering of catastrophe have given way to a more businesslike search for solutions. In the opinion of the Committee, solutions satisfactory to all Finns can be found for many environmental questions. Within the realm of environmental policy, future energy production options awaken the most controversy. Attempts at conserving energy are in the common interest of the Finnish people. The Committee calls upon the Government to establish ecological structural change as its objective and, in cooperation with such players as research institutions, the business community and civic organizations, to begin the preparation of long-term directive economic measures such as the reform of subsidies and environmental taxes. The Committee further calls upon the Government to establish ecological structural change as a central objective of its EU policy. The Kyoto Protocol requires that Finland reduce its greenhouse gas emissions to the 1990 level by 2010. Carbon dioxide is by far the most important greenhouse gas. In order to protect the social welfare system, Finland is aiming for 2-3 % annual economic growth in the next few years. For this reason, in the worst scenario, carbon dioxide emissions may increase by a third. Other emissions which threaten health and the environment would increase at the same time. Cutting emissions while raising the consumption of electricity is extremely difficult. There is no simple solution. The Committee calls upon the Government to clarify, as soon as possible, realistic methods for implementing the obligations established by the Kyoto agreement, and to devote attention simultaneously to other emissions from energy production. Fine particulates (particulates less than 2.5 micrometres in diameter) which originate in the combustion processes of power plants and internal-combustion engines have very recently been shown to pose a major threat to health. In the average concentrations now found generally, fine particulates can cause numerous diseases and increase annual mortality by several percentage points. Because of the danger of fine particulates, an attempt must be made to reduce their airborne concentrations by all means, i.e. by favouring transport corridors and energy-production modes that generate fewer particulates. In cities, the worst source of fine particulates is diesel-powered vehicles. Reducing their emissions is important. The Committee calls for a study of small-particulate concentrations in Finland, their sources, and their deleterious impacts in comparison to sand dust. Further, the Committee calls for measures aimed at reduction of small-particulate concentrations. The eutrophication of the Baltic Sea and inland waters is one of our most visible environmental problems. Reports of blue-green algae blooms have caused even the most apathetic Finns to contemplate both the fragility of the environment and humanity's dependence on an unpolluted environment. Protection of the Baltic is a question of uniting many administrative sectors and countries in a far-reaching effort. In the opinion of the Committee, regional cooperation represents the most productive Baltic Sea policy. Measures directed at the protection of the Baltic also help to protect biodiversity. The Committee calls for a clarification of the environmental impacts of agricultural subsidies. The less the environmental impact, the greater the subsidy must be. Licensing conditions for fish farming must be made more stringent in order to prevent the eutrophication of waterways. Agricultural environmental problems, quality factors, making a living, and national and international competitiveness form an intertwined complex of problems, which neither isolated environmental regulations nor intensive agriculture and the subsidy policy based thereon will be able to resolve. Demand exists both in Finland and abroad for natural production, and the supply is not always able to satisfy that demand. In the opinion of the Committee, long-term change is needed if we are to ensure high-quality, competitive, natural agricultural production. The Committee calls upon the Government to draft a programme for natural agriculture. Human adaptation to the environment is cultural. Different types of constructed environment have been valued at different times. How good the constructed environment is depends on the life situation of the person making the judgment. Childhood accounts for more than 80 % of the time that the average individual spends outside during his or her lifetime. From the child's perspective, the pleasantness of the residential environment is especially important. Residents of a municipality can evaluate the pleasantness of their environment by marking pleasant and dangerous or unpleasant places on a map of the municipality. In the opinion of the Committee, residents of a municipality must have more of a chance to influence the planning of their environment. A good environment for children is also good from the perspective of old people and people with disabilities. Bringing the child's perspective into municipal planning can also serve to prevent disorderly behaviour. The Committee calls for improving formats for participation by young people and children in particular in the design of the constructed environment. In taking decisions on planning, the child's viewpoint must be incorporated alongside the clarification of environmental impacts. Chapter V AN ACTIVE FINLAND AND THE GOVERNANCE OF CHANGE In Finland, appropriations for research and development activities have been increased so that their share of GDP will rise to 2.9 % in 1999. These investments have produced results. For example, high technology, which accounted for 6 % of all exports in 1991, accounted for 16 % in 1997. The Committee considers the Government report's main delineations of policy on expertise indispensable. According to the report, research and development's share of GDP will continue to be boosted after 2000, Finland will seek a role for itself as the EU's information society laboratory, and our culture and competitive position will be based on a national strategy of lifelong learning. The Committee calls upon the Government to promote measures that will raise Finland's profile as a pioneer in expertise and social innovation. When research and development appropriations are further increased in the years immediately ahead, a state share of at least 40 % will be maintained. The problem with Finnish innovation activity is the long duration of product-development processes. Finnish product developers are not able to get to the international market quickly enough. Measures are needed which will enhance the attractiveness of investment in technology and other small enterprises. On the basis of plans and successfully implemented practices in different countries, it should be possible to develop much that is suited to Finland, too. In the opinion of the Committee, a design programme is another national necessity. The aim of the programme would be to make Finnish products and services more competitive by raising the standard of Finnish design and intensifying collaboration between the design field's players on the one hand and, on the other, product development and production in various sectors. The Committee calls upon the Government to increase and improve measures which will hasten the transformation of research and development results into internationally successful products. These measures include both investment in the development of business-and-science parks and increased appropriations for innovation activities and the information service operations of universities and research institutions. The swift changes in working life are making increased vocational expertise and mobility and the purposeful improvement of work processes the key issues for adult education. Educational formats which are anchored in work and ensure ongoing personal development and the internal renewal of work communities are very much needed. In the opinion of the Committee, recent years have seen a clear rise in inequality. Public administration and small and medium-sized enterprises neither take adequate care of their personnel's training nor invest in the improvement of work processes and necessary support services. The Committee underscores the need for action to improve the supplementary vocational training of workers, especially in the public sector and small and medium-sized enterprises, by developing diversified training subsidization schemes and supplementary training programmes, both general and sector-specific. The Committee calls for the continuation of measures which renew working life. Such measures should give greater depth to the principles of a learning organization which were defined in the Government report. Special importance should be attached to the ongoing protection of the worker's vocational development and, as aspects of that protection, both the underlying need to cope on the job and the cooperative improvement of work processes. Further, the Committee calls upon the Government, through its subsidy financing and other measures, to launch pilot projects throughout the public sector, to help develop good practices for both the maintenance of vocational skills and the enhancement of personnel expertise. The slow development of the content to be created and transmitted by means of the new technology has emerged as a problem in the development of the information society. The national information society strategy must stress production of the content of study materials and the improvement of the learning environments and pedagogy of educational formats which use electronic networks. In the opinion of the Committee, much larger investments must be made in the quality and quantity of supplemental training for teachers, so that each teacher will be able to meet the challenges of developing the information society. The Committee emphasizes that the state's appropriations policy must be used to encourage educational institutions and players in the fields of communications technology and IT to join in network-based cooperation so that, within the years immediately ahead, high-quality virtual instruction networks will be available everywhere in Finland, at all educational levels. The Committee calls upon the Technology Development Centre to organize a user-friendly information society programme - a new national technology programme - by means of which the qualitative improvement of education will be hastened through cooperation among developers of cultural content-production and new communications and information technologies. The goal of the programme would be the generation of internationally successful products. The information society consists of the different values and expectations of different kinds of people, as well as communications technology and information which originates with many sources. That information in turn consists of a diversity of perceptions, as well as words, pictures and sound. To succeed, we will need the sensitivity to understand the diversity of people and information in a versatile way. We will also need the ability to use the information society's tools and develop its models. Gender differences and the differing expectations based thereon, as well as the action needs facing the information society, represent both equality questions and resources. In the opinion of the Committee, information technology and the information society are not gender-neutral. Substantial differences exist between boys and girls especially. The joy of learning is greatest when the learners find out things themselves. To stimulate the child's desire to experiment, learn, and have adventures, a great variety of solutions will be needed. The Committee calls upon the Government to consider the gender perspective in information society development measures, to develop the methods needed for the assessment of successfulness, and, especially, to support the participation of women and girls in the development and use of technology and its applications. There is a shortage of the professionals that working life in the information society needs. The situation is especially difficult in electronics and communications technology, in which the shortage of skilled workers is imposing severe limits on the development of the industry and the service sector. An attempt has been made to raise the number of persons taking degrees in technical fields at universities and polytechnics by rapidly increasing the number of places for new students. More than ever, the instruction is mass instruction. In the opinion of the Committee, it has not been possible to ensure the quality of the education. Instructional resources have lagged behind and deficiencies exist in the abilities of entering students. Interest in technical studies has not been adequately generated among girls. Further, for example, only two-thirds of those who begin graduate-engineer programmes complete them. The Committee calls upon the Government to take effective action to improve the quality of university education and especially to bring the number of persons taking degrees in electronics and communications technology into line with labour market demand. The dissemination of the viewpoints of basic research and in-depth scientific thought so as to support public decision-making is important to the information society. In Finland the advancement of science is the responsibility of the Academy of Finland, which also, in administrative terms, includes professors from different realms of science. The Committee calls upon the Government to investigate the possibility of bolstering scientific research and respect for science, for example by reshaping the present Academy of Finland into a Science Development Centre and a separate Academy of Finland. University instruction has encountered difficulties in recent years because it has been necessary to reduce state budget resources. The situation has been particularly difficult in fields in which swift industrial growth has required a significant increase in the number of students. Polytechnics and other university-level institutions have limited possibilities for responding to the changing and growing needs of the business community. In a number of countries, private individuals and enterprises who make gifts to universities receive tax breaks. The national economy and, by extension, the state will benefit in many ways if outside donors are in a position to support university operations in their present difficulties. The Committee calls for an investigation to determine whether it would be justified to raise the current limit on tax-free gifts to universities. Most of Finland's municipalities are the right size to attend to local matters, but too small for the many demanding functions of the future's social welfare system and international competition. An adequately broad population base and close interaction and collaboration between people and their communities represent a point of departure for research and development work. It is the Committee's opinion that, to reinforce regional equality, both an infrastructure which ensures the development of the information society and functions which encourage participation in that development should be created at the provincial level. Today's society no longer needs old-fashioned administration, based as it has been on a strong central government and the subservience of the people. The Committee calls upon the Government to clarify to Parliament the implementation options for autonomous provincial administration in Finland, with the goal of increasing citizen involvement in municipal and provincial decision-making. The state must nonetheless also fulfil its own responsibility for equitable regional development. New regional development models must be promoted by making regional experiments possible. Global challenges such as environmental and developmental issues and the evolution of the international economy call for a global response. We need effective, functional, supernational governance and guidance systems which will be able together to deal with such sector questions as the environment, social development, security, and the larger economic picture. Oversight and the assurance of adequate authority will require a democratic foundation. In its policy, Finland has been active in questions of the future of humanity. In the opinion of the Committee, the United Nations, in spite of its problems, constitutes a forum for the deliberation of these issues. At the turn of the century, the UN's General Assembly will be considering global governance and the organization's future. The Committee calls upon the Government, as its goal and an objective of its term as EU president, to take vigorous action to renew and democratize the UN's system and to create effective supernational systems of governance. As an part of this activism, functional formats for supernational structures such as the taxation of currency trading need to be sought out. In order to guarantee its operating prerequisites, the Committee for the Future should be appointed at the same time as other parliamentary committees, and should be assigned a meeting time on the parliamentary calendar. The work of the Committee for the Future should be developed so that, in addition to its futures reports, it will submit statements on matters handled by special committees when those matters are fundamental from the standpoint of societal development and have a clear future dimension. The assessment of the social impacts of technology should continue to be the Committee for the Future's task. The technology assessment reports should be handled in plenary sittings, through the mechanism of current-events discussion. Draft resolution Having deliberated the Council of State's report to Parliament on the long-term future, the Committee for the Future respectively moves that Parliament bring the present report to the attention of the Council of State and approve 28 statements (the Committee's draft statements). The Committee's draft statements: 1. Parliament calls for the inclusion, in educational programmes, of adequate time for the nurturing of humanness. The understanding of phenomena and the quest for and comprehension of the deliberative, critical and creative must receive room alongside other instruction. 2. Parliament calls upon the Government to take action to ensure a comprehensive experiential education which brings together parents, child-welfare clinics, early education, the schools and youth work. This can be accomplished as a part of established functions. The process would utilize the help of artists, with whom highly individualized, creative solutions would be generated on a regional and school-specific basis. 3. Parliament calls for support for more flexible ways of harmonizing work and everyday life through appropriate social security arrangements and amendment of the Employees' Pension Act. 4. Parliament calls upon the Government not to drift into decisions that reduce or increase working hours, but rather to draft frameworks for the working hours of the future - frameworks that will protect competitiveness, social security, and the worker's everyday needs. 5. Parliament calls for sharing the tax burden by extending taxation further, for example to include environmental and energy taxes. 6. Parliament calls for cutting the risks of hiring older persons from the employer's expenses. These risks involve pension responsibilities, for example. By the same token, the child care expenses of persons who are starting families must be shared more equally. 7. Parliament calls for simplification of the administration and regulations affecting small-business activity and self-employment, so that entrepreneurs will have more resources to devote to actual business operations. 8. Parliament calls for a clarification of the division of labour between the state and the municipality. In addition, the rights and responsibilities common to all citizens regardless of their municipality of residence should be defined. Flexible financing models must be sought - models which take into account sudden structural changes in the municipalities. 9. Parliament calls for a simplification and harmonization of taxation and social security schemes, with the goal of providing uniform, supportive basic social benefits. 10. Parliament calls upon the Government to clarify whether municipal subsidization is distorting healthy competition and whether businesses are being supported needlessly with tax resources. 11. Parliament calls upon the Government to develop directive measures aimed at protecting biodiversity. 12. Parliament calls upon the Government to establish ecological structural change as its objective and, in cooperation with such players as research institutions, the business community and civic organizations, to begin the preparation of long-term directive economic measures such as the reform of subsidies and environmental taxes. Parliament further calls upon the Government to establish ecological structural change as a central objective of its EU policy. 13. Parliament calls upon the Government to clarify, as soon as possible, realistic methods for implementing the obligations established by the Kyoto agreement, and to devote attention simultaneously to other emissions from energy production. 14. Parliament calls for a study of small-particulate concentrations in Finland, their sources, and their deleterious impacts in comparison to sand dust. Further, the Committee calls for measures aimed at reduction of small-particulate concentrations. 15. Parliament calls for a clarification of the environmental impacts of agricultural subsidies. The less the environmental impact, the greater the subsidy must be. Licensing conditions for fish farming must be made more stringent in order to prevent the eutrophication of waterways. 16. Parliament calls upon the Government to draft a programme for natural agriculture. 17. Parliament calls for improving formats for participation by young people and children in particular in the design of the constructed environment. In taking decisions on planning, the child's viewpoint must be incorporated alongside the clarification of environmental impacts. 18. Parliament calls upon the Government to promote measures that will raise Finland's profile as a pioneer in expertise and social innovation. When research and development appropriations are further increased in the years immediately ahead, a state share of at least 40 % will be maintained. 19. Parliament calls upon the Government to increase and improve measures which will hasten the transformation of research and development results into internationally successful products. These measures include both investment in the development of business-and-science parks and increased appropriations for innovation activities and the information service operations of universities and research institutions. 20. Parliament calls for the continuation of measures which renew working life. Such measures should give greater depth to the principles of a learning organization which were defined in the Government report. Special importance should be attached to the ongoing protection of the worker's vocational development and, as aspects of that protection, both the underlying need to cope on the job and the cooperative improvement of work processes. 21. Parliament calls upon the Government, through its subsidy financing and other measures, to launch pilot projects throughout the public sector, to help develop good practices for both the maintenance of vocational skills and the enhancement of personnel expertise. 22. Parliament calls upon the Technology Development Centre to organize a user-friendly information society programme - a new national technology programme - by means of which the qualitative improvement of education will be hastened through cooperation among developers of cultural content-production and new communications and information technologies. The goal of the programme would be the generation of internationally successful products. 23. Parliament calls upon the Government to consider the gender perspective in information society development measures, to develop the methods needed for the assessment of successfulness, and, especially, to support the participation of women and girls in the development and use of technology and its applications. 24. Parliament calls upon the Government to take effective action to improve the quality of university education and especially to bring the number of persons taking degrees in electronics and communications technology into line with labour market demand. 25. Parliament calls upon the Government to investigate the possibility of bolstering scientific research and respect for science, for example by reshaping the present Academy of Finland into a Science Development Centre and a separate Academy of Finland. 26. Parliament calls for an investigation to determine whether it would be justified to raise the current limit on tax-free gifts to universities. 27. Parliament calls upon the Government to clarify to Parliament the implementation options for autonomous provincial administration in Finland, with the goal of increasing citizen involvement in municipal and provincial decision-making. The state must nonetheless also fulfil its own responsibility for equitable regional development. New regional development models must be promoted by making regional experiments possible. 28. Parliament calls upon the Government, as its goal and an objective of its term as EU president, to take vigorous action to renew and democratize the UN's system and to create effective supernational systems of governance. As an part of this activism, functional formats for supernational structures such as the taxation of currency trading need to be sought out. Helsinki, 13 October 1998 The following persons participated in the Committee's decisive deliberation of this matter:
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