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Finland needs to vastly increase immigration to ensure stable workforce: study

Thursday, 12 March 2015

A recent think-tank report estimated that Finland needs to nearly double current annual immigration levels to ensure its workforce doesn't shrink in the near future -- and to help foot the bill for future public spending.

The immigration issue is likely to be a flashpoint issue in upcoming general elections in April, but as Finland's population ages and the pension burden increases, policymakers will have no choice but to confront the issue.

The pro-business Finnish think-tank EVA recently published a report concluding that instead of the estimated 18,000 immigrants who enter the country every year, Finland would need net immigration of up to 34,000 to sustain its labor force -- nearly double the current influx.

"Finland won't survive without immigration," the authors of the study, researcher Pekka Myrskyla and actuary Topias Pyykkonen concluded.

The reason: the country's working-age population is aging out of the workforce at the rate of 10,000 per year, creating a situation where new pensioners will exceed the number of job seekers entering the labor market, at the same time reducing the employment rate.

The authors noted that a majority of immigrants now in Finland are working-age individuals and that the employment rate among this group -- while lower than among native Finns (69 percent) -- is still a respectable 50 percent.

"Immigration is already significantly slowing the contraction in the domestic workforce. Without immigration, our working-age population would have declined by 26,000 persons last year alone," the report said.

So far, political discourse on the immigration question has remained on the level of general rhetoric with the immigration-skeptic opposition Finns Party, for example, calling for a review of the cost to taxpayers of integrating migrants into the fabric of Finnish society.

The reality though is that apart from paying for social services and care for seniors, Finland will eventually have to figure out how to pay their pensions. Finnish retirees -- who now account for nearly 20 percent of the population -- rely on a two-tiered pension structure: a government system and a parallel scheme of statutory earnings-based funds such as employers' and self-employed persons' funds.

There is cause for concern, however. The Finnish Centre for Pensions ETK estimated that pension payouts have increased steadily between 2009 and 2013.

Back in 2013, the Finnish Pension Alliance interest group TELA reported that the pensions system had crossed a critical threshold. For the first time, pensions being paid out of the system exceeded the amount paid in.

While politicians decide how to tackle the immigration question as part of their election campaigns, they will have no choice but to confront it once the polls in April is over.

 

Source: China Economic Net

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