Dialogue on sustainable growth and employment by strategic research

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Ministry of Economic Affairs and Employment & Strategic Research Council held a seminar, that focused the discussion on two themes: Platform economy and digitalization – the impact on economic growth and employment, and Flexibility of the labour market – means and opportunities. The seminar was addressed mainly for experts and researchers and it was chaired by leader Eveliina Saari. She emphasised that the different projects of SRC strive to provide highquality information to find the answers to the current questions of the society, such as how to maintain people within the ongoing changes of work.


The experts from Ministry of Economic Affairs and Employment, Tekes (Finnish Funding Agency for Innovation) and Ministry of Social Affairs and Health commented the current findings of the six different SCR-projects. Also the expert and research colleagues, who were present, had the opportunity to participate in the debate. The event was organised by Päivi Järviniemi from the Ministry of Economic Affairs and Empolyment and Eveliina Saari, who underlined the importance of the debate on policy planning and scenarios in order to produce relevant research. The experts from the ministries encouraged researchers to take a courageous stand on policy interventions and to bring out clearly the results and recommended measures. The event took place on 24 October 2017 in Helsinki.


Martti Mäntylä: Digitalisation has three layers: business, services and platforms

Martti Mäntylä from the DDI consortium (Digital Disruption of Industry) brought up five different levels of digital change – enhanced functionality, customer experience, new products and services, new business models and “game changer” of the industry. The higher the level the company rises, the greater the impact on the business, but at the same time the recruitment of the necessary, skilled professionals creates a significant bottleneck. Mäntylä presented the estimate of 10 000 new talents needed in the next few years, while up to a million people need an update in skills. Transition towards the era of platfrom economy is currently happening by artificial intelligence. Hyping is justified because the change is so massive, Mäntylä said. The change takes place on three layers: businesses, services and platforms. Mäntylä emphasised that digitalisation and globalisation lead to the development of new industrial ecosystems, where the role and status of established companies change. This requires new talents and the best companies stand out imcomparable ability to create customer value.


Petri Rouvinen: Platforms enhance encounters, reduce costs and lead to uniqe value proposition

Petri Rouvinen from SWiPE-consortium (Smart Work in Platform Economy) stated that the stage of entrepreneurship has not changed in Finland in the 21st century, but there are 60 000 single entrepreneurs more to date than it was in 2000. He emphasised that digitalization has facilitated single entrepreneurship and improved earning potential. Rouvinen adviced to remain cautious on artificial intelligence hype. – We must not end up with the conclusion that artificial intelligence inevitably displaces the human intellect. Platform economy and artificial intelligence’s effect on work can be seen only in the future, so for now the effects are strongly speculation, Rouvinen emphasised. According to him, too often the disappearance of jobs is underlined, not new jobs that replace the old ones. According to the EU comparison, only 3% of Finland’s population has been providing work through a digital platform. Rouvinen notes that platforms enhance encounters and thus create work. Platforms also reduce search and interaction costs, which leads to a unique value proposition for all parties.


Mikko Dufva: Employees and organisations have new meanings in the digital economy

According to Mikko Dufva from PVN-consortium (Platform Value Now) both the employee’s and the organisation’s role is changing and diversified in the digital economy. The importance of line organization decreases in organisation of work or in the flow of information. As an example he mentioned the Morning Star company, where work is organized by people’s promises and commitments to each other. In the digital economy an organization can be purchased as a service. The platform co-ops share the value to the platform users. Block chains enable decentralized autonomous organization and, for example, a self-directed car drives itself to service, which it pays by offering rides. – What is the company if it is, for example, a car owned by itself, asked Mikko Dufva. Employee’s roles are also changed and diversified on platforms. This will require new capabilities. Dufva was pondering on what sort of workers there are in the future – is he or she a self leading project nomad, a co-op who accumulates joint resources, an autonomic algorithm, or maybe all of these together?


Tuomo Alasoini from TEKES commented that artificial intelligence and digitalization are factors that stimulate economic growth. The precondition is, however, that this does not entail negative spillover effects, for example on the amount of work done. This sets great demands on education and institutions. According to Alasoini, the regulatory framework should be developed more proactive. However, the challenge is the slowness of social regulation. Alasoini also called for the idea of a good artificial intelligence society. What objectives are we setting for exploiting new technologies; transparency, accountability and broad-ranging visible societal benefit, Alasoini listed.


The second comment came from Anu Laitinen from Ministry of Economic Affairs and Employment. She viewed sharing economy from the standpoint of legislation and mentioned that legislator’s work is more challenging when the future must be regulated in a sustainable way. The sharing economy challenges the traditional legal environment, said Laitinen. Competition, market access, user protection, taxation, work and liability arrangements must be assessed in a new way from the perspective of different roles. The legislative framework should take into account the role that is currently being taken. Laitinen emphasised that it is important, in any case, to find ways to move flexibly between entrepreneurship and wage work. It is important to make sure, that a job isn’t rejected just because someone doesn’t dare to take a job offered through platforms. In the longer term, also taxation and the social insurance system must be reformed as well, said Laitinen.


From left: Eveliina Saari, Anu Laitinen, Timo Alasoini, Mikko Dufva, Martti Mäntylä and Petri Rouvinen

Merja Kauhanen: The average wage jobs have decreased in Finland

Merja Kauhanen from Work, inequality and public policy, the WIP-consortium, said that the WIP-research has found out through statistical models the structural change of labour market and where the employees in shrinking professions end up. Also the relevance of mobility affecting to the findings has been researched.  According to Kauhanen, the less capable workers end up in more low-wage areas, and the more capable employees are most likely able to advance into higher wage jobs. The structural change in employment in Finland has reduced the average wage jobs. According to previous studies, the main reason for this is technology which replaces the routine work tasks, and outsourcing abroad. There are five alternative labour market spaces for the shrinking professions: staying in shrinking routine occupation, transfer to another occupation (low-wage, middle-wage or high-wage), entrepreneurship, unemployment or left outside the labour market. – The importance of public policy in improving employment opportunities is high and education policy should focus on wide-ranging competence. Also regional mobility should be supported by housing policy, for example, said Merja Kauhanen. According to the findings, the regional migration helps to mitigate polarization.


Jussi Tervola: Employment gaps between immigrant categories are high, but narrowed

Jussi Tervola from TITA-consortium (Tackling Inequalities in Time of Austerity) mentioned that the employment rate of migrants is the fifth lowest in Finland in Europe. TITA-project has researched how the immigration category affects integration. The categories are created from the reasons of migration which are written into Kela’s insurance decisions. The most important reason for immogration is family, the second is work and the third humanitarian cause. “The employment gap between various categories is high, but it is narrowing over time,” said Jussi Tervola. In the refugee sub-category, the differences between men and women are reversed; Among men, those who have come because of family are tackling the best, while women at the same situation are paid the lowest wage. Having children explains a large proportion of the differences in employment between men and women, in which case with parental leave policies it would be possible to promote equal employment for women and men in immigrant families. According to Jussi Tervola, special attention should be paid to the integration of refugees during the financial crisis.


Eira Viikari-Juntura: Sick leaves and disability pensions decreased

Eira Viikari-Juntura from Polkuja työhön-consortium (Paths to work) compared Kela-compensated sick leaves between women and men by the employer sector, in health and social sectors as well as retiring to disabilty pension and returning to work after prolonged sick leaves from 2005 to 2013. According to Viikari-Juntura there is a clear difference in Kela-compensated sick leaves between employer sectors and sick leaves are more common in the public sector. – During the economic recession, behavior concerning sick leaves changes, said Eira Viikari-Juntura. Both sick leaves and disability pensions have decreased. Recent legislative changes aiming to promote return to work have increased participation in work, use of partial sickness benefits and partial disablity pensions, while the amount of full disability pensions has decreased. Higher level of education and change in professional structure explains the reduction of disability pensions. Viikari-Juntura also highlighted the effects of increased remote work and presentism, but the issue has not yet been clarified.


During comment round, Annika Forsander from Ministry of Economic Affairs and Employment added that people also move to Finland to study, not only because of family, work and being a refugee. According to her, there is a lack of clear strategy on what is wanted from immigration policy in the context of labour market. This would be strategically important and for example attention should be paid to getting graduates into labour market. According to Forsander, a major challenge is mismatch – there is no demand at the labour market of the new country for the knowledge that comes within. On the empolyee side the challenge is Finland’s wage level. It does not attract professionals. Annika Forsander also emphasised the importance of second-generation polarisation in the society. The first generation of immigrants adapts to the precariat position, but the other does not.


Ismo Suksi from Ministry of Social Affairs and Health wondered whether presentism has been a slowing factor in recovering from recession. He stated that the pension reform of 2005 estimated the expectancy of retirement age to rise due to a change in the level of education. The findings now show that a change in both the professional structure and the educational structure can be seen on the background. The effects on disability pensions must be regarded, because it is possible that work is being tuned so that disabled workers can handle the job as well.  He said that despite of the partial sickness benefit, the system does not recognise partial disability to work.


From left: Eveliina saari, Ismo Suksi, Annika Forsander, Jussi Tervola, Eira Viikari-Juntura and Merja Kauhanen


Text by Tarja Valde-Brown