Blog article guest writer:

Juhana Harju
Partner at Eurofacts

Quick Key Points

  • Finnish policy did not change drastically as a result of the new government. Finland remains a stable and predictable democracy.

  • The new government may look like one united group, but there are competing ideals internally.

  • The success of this coalition depends on Prime Minister Antti Rinne’s ability to keep the team together. Economic development will also play a large role in the government’s ability to last the full four-year term.

  • Executives should focus on new potential taxes on mining, flying, waste production, factors related to environmental sustainability, as well as changes to existing tax policy for dividends and foreign-owned funds.

  • There is new emphasis on innovation policy to move key personnel to Finland and promote connections to the global economy.

  • Finland will create a lobbyist registry. The practices of Public Affairs and Public Relations professionals will have to adapt to the age of growing transparency and accountability.

Questions or comments? Contact our CEO at Suomi Areena

Looking at the Big Picture

Did Finland take a turn to the left? When it comes to rhetoric, it could be argued that it did very much.

However, when it comes to policy, it seems the changes were not as drastic. The fundamentals of taxation, especially corporate taxation, have not dramatically changed. There are new investments into social services and education, but less than hoped for and expected. Furthermore, the opposition is finding its tone of voice. Hyperbole is used as a rhetorical tool way too often, spelling doom and disaster because of leftist policies. In reality, Finland is a very stable democracy, turning left or right slowly and predictably.

The Social Democratic Party’s (SDP) flexibility on policy objectives and how the ministerial responsibilities were divided between the coalition parties are the main enabling factors for the new government’s formation. Prime Minister Antti Rinne expected the five parties selected to government to find enough common ground. No other options were on the table.

We have press pictures that show the government as one united, smiling group, but behind those smiles are some competing ideals: Economic liberals of the Centre Party; the Swedish People’s Party; those who strongly support trade unions; green progressives; and the Left Alliance that is gathering popularity amongst millennials globally. The Green League and Centre Party still have very different views about environmental protection and how much we can utilize natural resources, especially forests.

According to polls, the most popular party in Finland right now is the Finns Party, formerly known as True Finns. It is more than likely that they will continue to be the most popular party for a while. Their presence creates pressure and resembles that of a ghost hovering over the government. If for nothing else, their standing in the polls will act as glue to keep the coalition government’s lines among the parties intact. They know that any rifts in the government leading to snap elections would propel the Finns Party into becoming the biggest party.

After the election, there has been a lot of discussion on the Centre Party’s right to take a seat in the government due to the number of votes and parliamentary seats they lost. The Finnish Constitution does not dictate which parties rise to the government. The only stipulation for the coalition to be legitimate is that the majority of the Parliament has to be behind it.

Will this coalition work in the long run? It all comes down to Prime Minister Antti Rinne’s ability to keep the team together, the true test of his skills as a negotiator and leader. External development, especially in the economy, will be a big deciding factor on what will happen to this government and its ability to hold the office for the full four years. If Finnish exports are in high demand and the local economy is doing fine, or at least not shrinking more than global economy, the government will have a solid foundation.

Top Themes of Government

Like the previous coalition, this government will also have to emphasize the importance of raising the level of employment to at least 75 percent. That is the vehicle the government has chosen to fund the new expenses, as well as control the gap between tax incomes and public expenditures.

Social policy, including social services and social security, is an important theme for this coalition.

And, of course, everything related to climate change is a top priority. During the next four years, there will also be other big issues to tackle that will affect the political discussions and unity: the HX Fighter Program, SOTE (social and healthcare reformation), and policy for government-owned corporations.

The government program is vague in many aspects, including what the concrete road map for implementation will look like. The language is sometimes very politically colored, using strong words and even contradicting itself in some places. There are many open questions that have been left for later. Therefore, it is very important for companies to forge connections to key persons in the government and establish trusted relationships with them.

So, who are these key people you should know from the government? Minister aides, special advisers and state secretaries, are selected amongst the most competent and trustworthy people from the party lines. They generally have extensive experience and have shown an ability to help ministers push their policies forward.

What Should You Focus On?

Even though the government is seen as the most leftist coalition in a long time, it must be viewed in context with the current parliament. It will be more moderate than many industries now fear.

Themes to focus on include new potential taxes on mining, flying, waste (intended to promote circular economy), and using private cars in bigger cities. There is also a mention of a consumption tax, or “climate value added tax”, and withholding tax for dividends and removing tax-exempt status for foreign-owned funds.

There is a risk for collateral damage for companies that are perceived to be breaking the code of conduct of good corporate citizenship. Here, the rhetoric of the new government meets tax policy, and the active implementation of that policy could create a potential political risk for multinational companies.

The Centre Party used its veto power to prevent a major increase of company taxation. The government will now have to find tax income from other sources. Annex 5 of the Government Political Program is about measures against international tax evasion and aggressive tax planning. Even though the measures could be hard to implement and will not be operational soon, they are something to keep an eye on.

On a more positive note, there is new emphasis on innovation policy. Moving key personnel to Finland is becoming easier thanks to new measures and making formerly temporary measures permanent. Finland is an open society that lives off foreign trade, innovation and connections to the global economy.
 

How Can Your Company Be Proactive?

For influencing and advocacy, the new government creates a true change in paradigm. The rhetoric of the Finnish government changed overnight, therefore, so did the message to companies and other parties hoping to influence policy. Decisions can already be made as work progresses, yet it’s too late to be influencing when the votes are cast.

In Finland, lobbying has not been a regulated industry, and there has not been a registry for lobbyists, either consultants or those operating inside a company. This will change now as a registry will be formed together with new regulations and guidelines. This also means that the practices of Public Affairs and Public Relations professionals will have to adapt to the age of growing transparency and accountability.

In short, be proactive and move fast, but at the same time, be smart, transparent and trustworthy. This is the recipe for companies operating under the new government during the next four years.

Questions or comments? Contact our CEO at Suomi Areena