Finland: SWOT Analysis

Published On - 16/12/2020

Sudhanshu Vuppuluri Business Intelligence, Competitive Research, Corporate Strategy, Country Analysis, Finland, SWOT

Reading time: 3-5 min.

Target audience: Americans/International citizens (working age group) planning to immigrate and/or invest into EU

 

Introduction:

Did you know—Finland is one of the best places to live in the world?  In fact, Finland has been ranked by the United Nations as “The World’s Happiest Country” for three years in a row! [World Happiness] This article is meant to act as a primer for anyone who is interested to visit and/or move to Finland. Particularly, it is targeted towards young professionals as well as business owners.

In addition, Finland ranks #11 (of 141 countries) in ‘The Global Competitiveness Index/Report (GCI) of 2019’. [Weforum] Within this, they also rank #1 for their productivity pillars (significant for Fourth Industrial Revolution – 4IR): Institutions and Macro-economic stability. With a population of about 5.5 million, located in Arctic/Nordic region, one would wonder how they achieve such a remarkable feat.

[Weforum]

Finland also ranks 5th highest (of 167 countries) in ‘The Economist’s Democracy Index of 2019’. [EIU] The study evaluates 5 major factors of each nation, below is a snapshot of the results.

[EIU]

Fun Facts:

In addition to strong democratic and economic institutions, a country must be a fun place to live to receive so many accolades.  Finns are famous for organizing crazy sports. Here are some interesting ones.

  • Tree Hugging World Championships

We humans love the sense of touch & hugging—fellow humans, pets, or stuffed animals. Due to the Corona pandemic, we are forced to stay indoors and avoid human touch. We have learnt to respect mother nature much more in our ‘quarantine time’. The world’s first TreeHugging World Championships 2020 was held in Levi, in Lapland northern Finland on August 22.2020.

  • Northern Lights

In Finnish Lapland, the Northern Lights are visible on roughly 200 nights a year or every other clear night.

  • Air Guitar

Music lovers: Ever tried playing air guitar? It may not easy, but fun to watch. This summer, the Air Guitar World Championship 25th Jubilee was conducted in Oulu, Finland. You can also watch a 2006 documentary about this event, called Air Guitar Nation.

  • Swamp Soccer

Macho girls/guys: Do you have it in you to play swamp soccer? One must have a well-coordinated & strong body than to be just physically well built. The annual World Swamp Soccer Cup takes place in Hyrynsalmi, northern Finland.

  • Finnish Sauna

The sauna is a national identity for the Finns for over 2000 years; for example, it was once called the “poor man’s” pharmacy, prompting the Finnish proverb “If liquor, tar, and sauna won’t help, an illness is fatal”.

[Riitta Raekallio-Wunderink | TreeHugging World Championships 2020]

[Antti Kurola | Northern lights]

[Aleksi Ollila | Nanami “Seven Seas” Nagura]

[Connor Fleming | Eyes on The Prize]

[SM | Finnish Smoke Sauna]

[Varpu | Finnish Sauna]

History:

Finland declared independence in 1917, they experienced a bitter civil war starting in 1918 and ending in the 1920s—1930s. This war was based on ideological conflicts – between the Red Guards (socialists, workers, and tenant farmers) and the White Civil Guards (capitalists, Swedish descendants, middle & upper classes, farmers & peasantry). Ultimately, the Reds lost the war, and the White Civil Guards took political leadership in the 1920s—1930s. Since then, Finnish governments have a unique mix of capitalism and socialism, that works wonderfully and has created one of the world’s leading democracies. [Finland History, Wikipedia]

[Finnish Civil War]

Do you know the meaning of “sisu”?

The dictionary meaning: ‘Strength of will, courage, and resilience in the face of adversity, regarded as qualities and attributes of the Finnish people’ (NOUN). [Lexico, BBC]

Finnish people also possess excellent resilience to recover from a crisis. This quality was demonstrated in at least two important occasions—

  • 1944—1952: Finland paid its war reparations to the USSR in less than 8 years, which led to its unique ability to co-exist with USSR and later Russia without becoming part of it
  • 1990—1994: Quick bounce back with long-term economic reforms after their worst economic depressions in European history (~4 years)
  • 2008—2015: Finnish economy has rebounded slowly after the 2008 crisis (~5 years, EU average) * but it is rapidly growing now and has been one of the most effective countries in dealing with COVID from both a public health and economic perspective.

* This was primarily due to the dramatic reduction of trade with Russia and the continuing offshore of the pulp and paper industry. The major blow to paper industry was due to the growth of reliable digital alternatives like the iPad. This also led to the loss of Nokia’s dominance in the smartphone market and commensurate impact on its local supply chain. [Finland’s Economic Crisis, ETLA]

Current trends:

Across the world, it is extremely rare to compare a politician to a CEO—accountability and delivering their KPI’s. Each prime minister (& political party) in Finland set out their deliverables, if they fail to deliver, the prime minister and/or their political party quit. This is comparable to a CEO and the Board of Directors of large publicly listed and responsible firm.

Finns also have a high level of trust in media, buy & read more newspapers than most Europeans/Americans. Citizens avoid reading newspapers that are officially or publicly affiliated with political parties. Media is an important arena for policy making, including—policy proposals, panel discussions, political debates with public participation. [Oulu]

Within the Eurozone, Finland (also uses Euro as its currency) is highly competitive—the average long-term interest rates are like major European powerhouses like Germany, France, and the United Kingdom. [Globaledge, OECD]

On a similar note, as the interest rates, the inflation rates are extremely low [39]. Their Financial System’s Stability is ranked #1 in 2019’s Global Competitiveness Index. [OECD, Weforum]

Finland has one of the highest GDP per capita (US $48,600.00), though their disposable income per capita (US $34,500.00) is only slightly above the Euro area average (US $33,700.00). This is partially due to high taxes—funds for free-education, social security benefits & Medicare system. [Ceicdata, OECD, Stat.fi, Statista]

Finland ranks #3 in the Transparency Index of 2019’s Global Competitiveness Index. [Weforum]

Finnish Individuals pay on average about 20% as income tax, with a top personal marginal tax rate 53.75%, which ranks it 4th highest in Europe while VAT for goods & services is between (10-24%). Finland lowered its corporate rate to 20% in 2014, ranking it in the middle of the pack in Europe. [Taxation-of-earned-income, Personal-income-tax, Corporate Tax]

Finland ranks #10 in the Trade Openness Index of 2019’s Global Competitiveness Index. This also includes very-low non-tariff barriers and very-high border clearance efficiency. [Weforum , Finland: Risk Assessment, Tradestats]

[Statista, Tradestats]

Finland ranks high (#17) in the Labour Market Index of 2019’s Global Competitiveness Index. This includes some of the world’s most progressive worker’s rights and active labour market policies. [Weforum]

Future Opportunities:

Finland’s working age population is about 62% (2020), this percentage is expected to have a steady decline by about 0.5-1.0% every 10 years up to 2070. Their short-term (yearly) unemployment rate is significantly higher than the OECD average (6.7% vs. 5.2%), though this unemployment rate is steadily decreasing over the past few years. [Europa.eu, Stat.fi, OECD]

[Sitra.fi]

Finland is one of Europe’s digitally most advanced economies. The government helps citizens embrace and access new technologies that help the economy grow steadily. This includes:

  • Innovation:
    • Finland has a great environment to innovate—policies and R&D investments from government. Many citizens (high % of population) apply for patents, trademarks and co-invent with international partners
    • Income from new advances in technology, and patents are an important income source for the Finnish economy
  • Investments:
    • Huge capital is required to capture benefits of innovations, i.e., even with a huge number of product or services-based innovations, current unemployment is extremely high (30-40%)
  • Potential opportunities for young professionals include:
    • IOTs & associated start-ups, data scientists (data researchers), IT professionals, gaming programmers
  • Marketing:
    • Finnish hi-tech products & services are often unknown to major players in the global markets
    • For instance, the concept of circular economy is extremely useful for developing countries with large populations like India, where natural resources are getting scarce day by day (not marketed strongly in India)

[Co-innovation , Stat.fi , Sitra.fi , Technology-Finland , Goodnewsfinland , Health-Technology, SaloIOTCampus]

Finland has some of the most progressive laws in the world, which include:

  • Consumer Protection Laws
    • The Consumer Protection Act (38/1978) is extremely detailed to help citizens understand their rights as customers. The act also states detailed situations under which each section/clause are applicable. This helps consumers against any kind of frauds and approach the courts for a quick resolution. Their judicial system is rated #1 in The Global Competitiveness Index for 2019 (Judicial independence, Efficiency of legal framework in challenging regulations). [fi, Consumer-ombudsman, Shopping-guarantees-returns, Finnish-society-legislation-and-rights]
  • Anti-Discrimination Laws
    • Equality is a fundamental right, which is guaranteed in Finland. The ‘Non-Discrimination Act’ (21/2004) prohibits any discrimination on the basis of: gender, age, origin, nationality, language, religion, belief, opinion, political activity, trade union activity, family relationships, state of health, disability, sexual orientation, or other personal characteristics .[Equality-and-non-discrimination , fi]
  • Copyright and Patent Laws
    • Finland ranks #1 in the Property Rights Index (Intellectual property protection) in The Global Competitiveness Index for 2019. The Patents Act (550/1967) is regularly updated, it has detailed explanation or each provision under multiple sections in each chapter. This detailed explanation helps individuals/ firms file for patents easily. [Patent, int, Privacyshield.gov, Intellectual-property-rights]
  • Health and Safety Laws
    • Finland’s Workers’ rights and Active labour market policies rank within the top ten in The Global Competitiveness Index for 2019. The Occupational Safety and Health Act (738/2002) gives detailed explanation of the obligations for the employers & employees, and scope of application. The workplace safety aspects—design of working environment, PPE requirements and other criteria—are also clearly explained. Being an equal country with flat work cultures, and with the highest judicious independence, most Finns enjoy an extremely safe and healthy work environment. [fi, Stm.fi, Osha.europa.eu, ILO.org, Health-and-safety]
  • Employment Laws
    • Finland has relatively flat organisations, and employees trust each other. Flexible working hours has been used by some firms for more than two decades. The employers and employees value vacation time and respect personal time (off work hours). The Ministry of Economic Affairs and Employment ensures Labour Laws are relevant to changing times and makes periodic changes to the existing laws. [Flexible-work, Labour-legislation, org, Employee-s-rights-and-obligations]
  • Antitrust Laws
    • Finland’s Competition Act (No. 948/2011) provides a healthy environment for sound and effective competition, and protection form harmful restrictive practices. This act has been in force since 2011 and has been amended periodically. It ensures customers and consumers benefit from competition in the market. [Competition-act, Competition-legislation, Cartels-laws-and-regulations]

[Nomadic Matt | Best Things to See & Do in Helsinki]

Conclusion:

As a young working professional, one would seek a safe, friendly, and open country that provides growth opportunities. Currently, due to trade wars, pandemic induced recessions, many countries have become nationalistic, and polarized towards some sections of their societies (including foreigners). This hampers the growth of their economy and society. To avoid such a hostile society, immigrating to Finland would be a good choice. [90-Day Finn, Helsinki city, Visit Finland]

© Sudhanshu Vuppuluri, 16-12-2020