Finland after the boom: 'Not as bad as Greece, yet, but it's only matter of time'

A sudden flurry of spring snow has dusted the steps of an evangelical church in central Oulu, northern Finland, where about 100 people are crowded together for a Friday sermon. But perhaps the true object of their devotion is inside black binliners by the door.

Once a week, food parcels and a free meal attract a mix of unemployed men, single mothers and pensioners to the church. The most highly prized items are packs of sausages just within their sell-by date. Shops used to donate meat, but now they too are feeling the pinch.

“There is a group of people in Finland that has dropped out of the employment market,” says pastor Risto Wotschke, whose example has encouraged other churches to offer food handouts.

The weakest economy in the eurozone this year might not prove to be Greece or Portugal, but Finland. The Nordic country is entering its fourth year of recession, with output still well below its 2008 peak.

The north of Finland, home to the “Oulu miracle” that was built on the twin pillars of plentiful timber and mobile phone technology, has been hit in particular. Although a paper mill still dominates Oulu’s skyline, jobs in pulp and cellulose have moved abroad, while the collapse of Nokia’s handset business knocked the guts out of the local economy.

With unemployment officially at more than 17% – almost twice the Finnish average – this once-booming city of 200,000 people has gone from a poster child of prosperity to a symbol of deepening cracks in the Nordic model.

“It’s not yet as bad here as Greece, but that’s only a matter of time,” says Seppo, a 43-year-old software engineer who lost job along with 500 others last summer after Microsoft, the new owner of Nokia’s mobile devices and services division, abandoned Oulu. Seppo, who asked that his full name not be used, has since found work, but it is 375 miles (600km) away.

Every Sunday night he leaves his family for a rented room.“The public finances are completely screwed, it can’t go on like this,” he says, as he stands outside a polling booth on the outskirts of Oulu, where people are already queuing to vote early in Finland’s general election on Sunday.

“The politicians are promising everything to everybody, but they won’t take any hard decisions until we are in a really deep crisis.” Last summer was a low-point for the city, when Microsoft’s exit was swiftly followed by that of Broadcom, a US manufacturer of microchips for phones, taking a further 400 jobs.

“That’s when the rest of Finland decided the Oulu miracle is over, the lights have gone out,” says Kyösti Karvonen, editor of the local newspaper, Kaleva. Fewer jobs have meant slimmer wallets. Stockmann, the Finnish Selfridges, announced in February it would close its department store in Oulu.Meanwhile, a new flea market in the city’s indoor athletics arena drew 10,000 shoppers overnight.

Youth unemployment here is the highest in the country, says Maire Mäki, head of the city’s employment service, which encourages people to leave Oulu and seek work in Sweden and Norway. A controversial new nuclear power station in nearby Pyhäjoki, to be built by Russia’s Rosatom, will be a vital source of jobs, she adds.

Talk among the political parties is about cutting Finland’s way out of recession. The country has been a cheerleader for austerity in Europe; Olli Rehn, the Finnish economics commissioner in Brussels during the eurozone crisis, was accused of imposing a “Rehn of terror” on profligate southern EU states. Now with mounting public debt at home, Finns are bracing themselves for a taste of their own medicine.

Wages must not rise for the rest of the decade, early retirement should end and maternity support is too generous, says Juhana Vartiainen, head of the Government Institute for Economic Research in Helsinki and author of a recent review of Finland’s economy.

“We have to adapt the Nordic model to a more market model, like Sweden,” says Vartiainen. So concerned is he about the urgency of the problems that last month he quit the Social Democrats to stand as a candidate for the National Coalition party, the centre-right party of the prime minister, Alexander Stubb.

Stubb has warned that Finland’s “golden era” is over, and that the country faces a lost decade unless it makes far-reaching changes. But he leads a coalition with the left that has disintegrated over the past year, while failing to push through planned changes to healthcare and local government.

Finland is ill-equipped to face up to globalisation, Vartiainen says, while Finns are “extremely conservative and suspicious” of the market reforms he believes are necessary. The population over 65 is set to double during the next two decades; productivity has fallen behind Sweden and Germany, while trade with Russia has slumped owing to EU sanctions over the Ukraine crisis and the falling rouble.

Vartiainen caused controversy in October when ihe appeared to compare the unemployed to “weeds” in a tweet.At least Oulu is spared Finland’s problem with ageing. The city is a magnet for young people in the north and has one of the youngest populations in Europe.

But when voters gathered at the weekend in the city centre to hear Juha Sipilä, a millionaire businessman whose Centre party is 10 points ahead in the polls, youthful faces were conspicuous by their absence.Ilmari, 34, had only stopped for a free sausage handed out by election workers.

He lost his job in construction three months ago, and while his benefits are 60% of his previous wage, it is not enough for his young family – his wife just finished teacher training, but when she went for a job there were 46 applicants. “The overwhelming problem here is jobs for young people,” Ilmari says.

“And when they don’t work there are social problems, like drink and drugs.” Spiliä pledges to curb “reckless” public spending and create 200,000 private-sector jobs over the next decade, double the number Finland has lost since 2008. But Amine, 22, is unconvinced – her boyfriend has been out of work for two years.

“A change of government won’t make any difference – new faces, same shit,” she says. There is no doubting the potential for a new Oulu to emerge, with its young and skilled workforce. But the hi-tech startups in which the city is putting so much store are still in their infancy.

“We lost the game with mobile phones, it was awful,” says Juha Roininen, 40, who left the local steel industry to become a tech entrepreneur. Finns remember the previous economic crisis in the 1990s, he says, so they are wary about the future. “It will take a while for Oulu to bounce back,” he says. “But there is a feeling that we have to do it, there is no other way.”

theguardian.com