Growth of orders has levelled out – situation in Russia already having an impact
The turnover of companies in the technology industries in Finland totalled EUR 65.2 billion in 2013. Between January and April of this year, turnover was slightly lower than twelve months earlier, with the largest drops being experienced in the metals industry and electronics industries. The turnover of the information technology sector grew by 13 per cent.
The growth of new orders reported in early 2014 stopped as spring turned into early summer. The value of order books at the end of June was seven per cent less year-on-year, and three per cent below the value reported at the end of March. The positive development in the number of calls for tenders has continued, but at a slower pace.
The reduction of personnel employed by the Finnish technology industry in Finland has continued in January–June, with the total number of employees being approximately 278,000 at the end of June. This represents a decrease of 48,000 employees since 2008.
The turnover of technology industry companies is expected to remain roughly equal to last year's level in the autumn. The crisis in Ukraine and recession in Russia, in addition to the economic sanctions against it, are hindering the technology industry's potential for achieving growth.
The technology industry's Russian exports in January–April were 18 per cent less in comparison to the corresponding period last year. The value of steel products and non-ferrous metals exported to Russia has been cut in half since 2013. The full impact of the economic sanctions against Russia has yet to be felt, however. The crisis may slash the technology industry's exports to Russia even further in the future.
Companies not investing into Finland
The economy cannot sustain long-term growth without investment. Finland's industrial production capacity has dropped considerably since 2008. Industrial investments are currently 27 per cent below the level of 2008, and zero growth is anticipated for this year. Investment is retarded by our country's high cost level, the weak profits of companies, the unpredictable nature of corporate taxation, and the poor investment incentives offered by the taxation system.
The size of the ballooning public sector should be curtailed in order to reduce the tax burden and halt the growth of national debt.
An agreement on a pension package that would decrease the public economy's current sustainability deficit is also required soon. The average age of retirement must be increased to at least 62.4 years by 2025. Solutions to the flaws and problems in the current industrial peace system must also be found this autumn.
Competitiveness must not be forgotten in the government budget session
The technology industry reminds Prime Minister Stubb's government of the promise made in the Government Programme not to add further burdens to Finland's industry. For this reason, the decision to increase the energy tax for the mining industry, made in the previous discussion on government spending limits, must be withdrawn.
The government must also promote digital services and the invitation of tenders for services in connection with the restructuring of the public sector.
In addition, licensing processes also require simplification to expedite the growth of industrial investments. It is vital for Finland to invest in expertise and renewal.
Further information:
Jorma Turunen, CEO, tel. +358 9 192 3310, +358 500 445 444
Risto Alanko, Executive Vice President, tel. +358 9 192 3347, +358 40 502 6411
Mika Nykänen, Director, tel. +358 9 192 3312, +358 40 825 7329
Jukka Palokangas, Chief Economist, tel. +358 9 192 3358, +358 40 750 5469
