The commerce sector made progress towards its goals
The Finnish economy had a strong year in 2017: GDP growth exceeded 3% and the employment rate improved significantly.
The favourable economic climate was also reflected in consumer confidence. The key indicators of the Consumer Barometer published by Statistics Finland in February 2018 were at an all-time high. A bright and optimistic economic climate that is favourable to consumption is excellent news for the commerce sector.
Slow inflation, the increase in the number of the employed and the implemented reductions in personal income taxes are all factors that have improved purchasing power. We also welcome the political decisions made recently in Finland to reduce regulation.
It is widely estimated that Finland’s economic growth peaked in 2017. Nevertheless, the outlook for 2018 remains positive.
The transformation of commerce is becoming evident
The growth in the turnover of wholesale and retail trade did not quite match the rate of growth of the Finnish economy as a whole. The turnover of wholesale trade increased by approximately 2%. Our forecast points to a similar growth of 2% in 2018–2019.
The rate of growth in the retail trade was also slightly over 2%, and we predict similar development this year. In 2019, growth is expected to slow down to approximately 1.5%.
The transformation of commerce is becoming well and truly evident as business structures are being changed by automation, digitalisation, the streamlining of operations as well as international and domestic competition.
Growth in turnover no longer leads to an automatic increase in jobs. In fact, the rate of employment in the commerce sector declined last year, and the growth we predict for this year will be insufficient to maintain the current level of employment in the wholesale and retail trade.
The labour market in the commerce sector currently suffers from a job matching problem. There are vacancies, but they are not being filled. There is a particular shortage of candidates who possess a high level of digital competence. Demand is also high for highly competent customer service employees with in-depth product expertise.
The deregulation of alcohol sales began
On the lobbying front, the commerce sector had a busy year in 2017. Right at the end of the year, the Finnish Parliament approved, by a narrow margin, the new Alcohol Act, which allows the retail sales of alcoholic beverages with an alcohol content up to 5.5%. The relatively small increase in the alcohol content provoked tremendous political and social debate.
The Finnish Alcohol Act has long been one of the strictest in Europe. The Parliament’s decision marks a small step towards a more liberal model. The last time any significant amendments were made to Finnish alcohol legislation was in the 1960s.
The present reforms are very conservative and they can be seen as the first step in the liberalisation of Finnish alcohol policy. There is no reason for excessive paternalism, considering that Finland’s total alcohol consumption and youth alcohol consumption have been on the decline for several consecutive years.
The amendments to the Alcohol Act support the domestic market, reduce passenger imports and shift tax revenue to Finland. In addition to being pleased for the commerce sector, we are pleased for the Finnish microbrewery industry, for which the legislative reforms are a shot in the arm.
The Finnish Commerce Federation will continue its efforts to promote more liberal alcohol policy and increased competition in this field. Our ultimate goal is the abolition of Alko’s retail monopoly, for which there is no justification in an open market.
The next step is to increase competition in the pharmacy industry
The pharmaceutical retail industry was another major topic of discussion throughout the year. The long-term goal of the Finnish Commerce Federation has been to increase competition in the pharmacy industry. The aim now is to get a proposal included in the next Government Programme.
Increasing competition in the industry would be a welcome change, as pharmaceutical retailing is an activity that could be performed much more cost-efficiently without compromising on drug safety. More efficient distribution of pharmaceutical products would benefit the entire Finnish society. The deregulation and reform of the pharmaceutical retail industry has produced positive outcomes in several European countries, such as Sweden.
More regulation from the EU to Finland
The past three years have seen significant favourable developments in Finland with respect to the deregulation of the commerce sector. The reform of the Land Use and Building Act has made it easier to build new retail stores and expand existing stores. The deregulation of opening hours has led to increased sales, and consumers have been satisfied with the changes.
It is important to continue on this path, as Finland is still a highly regulated economy compared to its peers internationally.
The goal of the Finnish Commerce Federation is not the abolition of all regulation, but rather the development and improvement of regulation. Effective and enabling regulation is necessary, and it can even be a strength of Finnish society.
Legislation currently being drafted in the EU threatens to introduce new constraints and obligations in the commerce sector. Some of the planned regulations include provisions that would restrict free competition and intervene in the mechanisms of the market economy on political grounds. With these potential developments in mind, we have continuously enhanced our lobbying efforts at the EU level.
The EU is currently drafting mandatory legislation pertaining to the food supply chain. Until now, good business practices relating to the food supply chain have been promoted in Finland through self-regulation based on cooperation between producers, the commerce sector and the food industry. Staying on this path would be the best alternative. Mandatory legislation represents a negative direction of development with underlying political objectives.
Effective from the end of May 2018, the processing of personal information by companies will be subject to the EU General Data Protection Regulation. New data protection legislation is currently being drafted in Finland on an expedited schedule based on the EU GDPR. As certain sections of the EU Regulation are very difficult to interpret, we want to assist our member companies by drafting a code of conduct that covers EU GDPR application scenarios that are typical of the commerce sector.
The new collective labour agreement is fair and balanced
The year 2017 was the first year in which wages were negotiated on a union-specific basis, with export industries setting the framework for pay increases. The previous collective agreement between the Finnish Commerce Federation and Service Union United (PAM) expired at the end of January 2018. The negotiations were long and difficult, and a new agreement was not reached until the beginning of March.
The outcome of the negotiations was fair and balanced. High-priority issues for both parties were included in the new agreement.
In relation to the renewal of the labour market, the key items on our agenda have included increasing the appreciation of part-time work and promoting new forms of work and employment, such as training employment.
One good example of the cooperation with Service Union United was the Ollaan ihmisiksi (“Let’s behave ourselves”) campaign that took place in late 2017. We wanted to draw attention to the growing problem of customers behaving inappropriately towards salespersons. The campaign was not only about promoting good manners. From the perspective of commerce professionals, it was primarily an occupational safety campaign.
Finland grows through commerce
Commerce plays a very significant role in the Finnish national economy. Taking the cascade effects into consideration, commerce represents some 15 per cent of Finland’s GDP. The sector employs nearly 450,000 people. The commerce sector is the second-largest payer of corporate taxes and responsible for the remittance of a large proportion of Finland’s indirect and direct taxers.
The figures make it abundantly clear that the Finnish economy could not survive without commerce. Commerce is also a vital channel for Finnish products in both the domestic and international markets.
With commerce playing such a significant role in the national economy, and with continuously intensifying international competition, it is clear that the Finnish commerce sector must not be burdened with costs that diminish its international competitiveness.
Various programmes supporting the competitiveness of the industrial sector have been drafted and implemented in Finland over the past decades. The content of these programmes has been reflected in Finnish economic policy. However, there have been no such programmes for the service industries.
The Finnish Commerce Federation has called upon stakeholders to participate in the creation of a future programme for the service sector. The objective is to have the goals of the future programme reflected in the next Government Programme in 2019.
Strong and proactive lobbying
The Finnish Commerce Federation has a total of 2,200 corporate members that represent all sectors of commerce: the retail trade, wholesale trade, technical trade, car trade and pharmacies. In addition to corporate members, we have 25 member associations. Our lobbying efforts cover some 7,000 companies in total.
As our strategic goals of lobbying, we have specified a tax policy which supports purchasing power, the promotion of deregulation and better regulation and the renewal of the labour market. Our vision is to create the best possible operating conditions for commerce by means of strong and proactive lobbying.