GLOBALISATION-FINLAND: Poor Hit in Rich Countries

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Linus Atarah

HELSINKI, Apr 6 2004 (IPS) - Leena Nikula is a 65-year old pensioner. Her monthly pension of 1,550 dollars is just enough to pay for basic needs like food, rent and electricity.

"I feel squeezed," she says. "If my eye specialist prescribes a new pair of glasses or if I fall seriously ill, then my only option is to go in for a bank loan."

But Nikula is not alone. Low-income people in Finland are increasingly facing difficulties because over the last ten years the government has drastically cut back expenditure on social services while privatising many.

It is often thought that globalisation characterised by economic liberalisation and scaling back of government expenditures affects only poor people in developing countries. But that is no longer the case, going by opinions expressed here at a large gathering of the Finnish Social Forum over the weekend.

Whether one lives in the slums of Bolivia in Latin America, Angola in Africa, or in a Nordic welfare state such as Finland, the trend is similar: progressive reduction in public budgets dictated by neo-liberal economic policies exacts a toll on vulnerable groups such as pensioners, single mothers, children and the unemployed.

"At first sight one might think Finnish people who have long been cushioned by a secure welfare state system are immune from the adverse impact of globalisation," says Katarina Sehm-Patomaki, executive secretary of the Network Institute for Global Democracy (NIGD) a Finish think tank affiliated with Nottingham University in the UK. "But that is an illusion that is gradually being dispelled."

Provision of basic social services by the state used to be the cornerstone of the Finnish welfare system. It guaranteed fairly inexpensive day care, health services and assistance to the elderly and the disabled. But these are increasingly being turned into market goods, dictated by the economic logic of liberalisation, members at the Forum said.

Budget cuts in the last few years have left many of the municipalities unable to provide basic services any more. Helsinki city for instance has seen a substantial reduction in the number of day care centres in the last year. In schools lack of money limits recruitment of new teachers to handle an annual increase in pupil enrolment.

Finland’s national health insurance policy covers all of its five million people, but does not provide iron-clad protection, says Nikula. Patients have had to wait long periods of time to see a doctor, even if in need of a major operation, because private medical care is too costly for low-income Finns.

A lot of resentment among young, disaffected people at the Social Forum gathering was directed at the Social Democratic Party that has been in power for nearly a decade, currently in coalition with the centre right. Many Finns say they have seen an erosion of their real income over this period.

"The present government is not sufficiently forceful in resisting more market liberalisation policies coming from the World Trade Organisation (WTO), the European Union or the World Bank," Jarkko Eloranta from a municipal workers union told the forum. "Instead it has consistently demonstrated its willingness to trot along."

Members at the forum pointed out that scaling back in public services goes hand in hand with tax reduction. So while the municipalities complain of lack of funds for public services, income and corporate taxes are being reduced.

"It is an article of faith in orthodox economic reasoning that tax reduction would boost overall economic growth by encouraging companies to invest, and consumers to spend more on goods and services, which in turn would lead to increase in employment," said Timo Voipio, an adviser on development cooperation at the ministry of foreign affairs. But tax reduction has not led to any significant growth in job creation in Finland, he pointed out.

Rosa Merilainen, a Green Party member of parliament pointed to other flaws. "Neo-liberal economists claim that in order for companies to remain competitive in an increasingly globalising economy, and for countries to attract foreign investment, governments should lower taxes, and therefore environmental taxes, corporate taxes and income taxes are being reduced," she said. And yet Finland has not succeeded in attracting foreign investment, she said.

Following a global trend many Finnish technology companies and call centres are relocating across the border in the Baltic countries Latvia, Lithuania and Estonia. Many companies are setting up operations in China.

But Tarja Kantola, head of the international division of the services workers union, said businesses such as supermarket chain stores are driving down wages and trampling on international labour standards as they go along. Kantola urged Finns to be concerned also about the situation abroad.