Finnish public finances have a long-term sustainability gap of around 5 to 6 percent, by most estimates. The Finnish economy is expected to suffer more from the effects of ageing than most other European countries. Old-age dependency ratio will be very high by 2030. This is because of the specific features of the intense post-war baby boom. What economic policies are needed in Finland?
One element should be low nominal wage growth in order to improve cost competitiveness. As wages have increased significantly compared to trading partners, they should increase less in the coming years. Wage increases in the whole economy should be set according to the state of the economy's open sector. The social partners recently signed a centralized wage agreement with relatively low wage increases.