Latter half of the 1990s in Finland: Accelerated globalisation of the economy

Trade Union News from Finland, 14 June 2000

Helsinki (14.06.2000—Juhani Artto) Last year multinationals based in Finland employed more than 200,000 people in other countries. This is about the same number of employees as the subsidiaries of foreign multinationals have in Finland and three times more than just five years ago.

The limits of this kind of globalisation, however, are still obvious as the figures represent less than ten per cent of the jobs in Finland.

It was not before the 1960s that the first Finnish enterprise seriously began to internationalise the geographical division of its production sites. The company concerned was Kone, a manufacture, developer and servicer of lifts and cranes. Today, 93 per cent of its total work force of 23,000 work outside of Finland.

It took many years before other enterprises began to follow Kone's example. In terms of the number of employees outside Finland, Kone still ranks third. It was first overtaken in this respect by the communications technology giant Nokia, which employs 28,000 people abroad. The second company to expand abroad was the forest industry company Stora Enso with 25,000 employees working in other countries.

Other Finnish enterprises with more than 10,000 employees in their foreign operations are the paper machine producer Metso (formerly Valmet) with 12,000, the engineering company Metra with 12,000, the food industry company Huhtamäki van Leer with 11,000 and the forest industry company UPM-Kymmene with 10,000.

Of the top-20 largest employers in foreign countries, few employ the majority of their work force in Finland.

Growing trade dependency

In 1994–1999 the value of goods and services exports has varied from 35.1 to 39.1 per cent of Finland's GNP. The export dependency rate has now reached a new record. It was slightly over 30 per cent in 1979-1984 but clearly fell after this time.

Experts estimate that this year exports may exceed 40 per cent of GDP.

The biggest factor behind the radical change of the 1990s is the enormous expansion of Nokia. One fifth of last year's Finnish exports of FIM 270 billion (Finnish mark = 0,17 euros = 0,16 USD) derived from Nokia sales from Finland to other countries.

The export share of the electronics and electrotechnical industries jumped in the 1990s from 2 per cent to 28 per cent, overtaking the traditional leading export sector, the pulp and paper industry for the first time in 1997. A large contingent of Nokia subcontractors have also grown rapidly. One of these, Elcoteq Networks, now has 4,000 employees abroad.

The pulp and paper industry has remained a strong arm in the export sector. Last year its share of the total was 23 per cent. Engineering and metal products form a third export sector segment. Last year this accounted for a 19 per cent share of total exports.

Chemicals, the basic metal industry and wood products each have a 6-7 per cent share.

A rush of foreign investors

Life at the Helsinki Stock Exchange experienced a revolution during the 1990s. Foreign investors rushed in, led by those eager to put their money into the Finnish telecommunications flagship Nokia.

By May 2000 foreign investors owned nearly 90 per cent of Nokia shares. Nokia now accounts for about 60 per cent of the total value of the Helsinki Stock Exchange.

At the end of April foreign investors had a 70.5 per cent share of the market value of Finnish joint-stock companies quoted on the main list of the Helsinki Stock Exchange.

However, it is not only Nokia that has attracted foreign capital. Foreign investors have a majority stake in the world-class forest industry companies Stora Enso and UPM-Kymmene. Of the more than one hundred companies quoted on the main list twelve are companies in which foreign investors own more than half of the capital stock. In 30 joint-stock companies foreigners have a share of at least 30 per cent. Foreign investors have a stake of at least 10 per cent in more than half of all joint-stock companies.

Last year Finns doubled their investments abroad

There is more than ten times more foreign capital invested on the Helsinki Stock Exchange than there is Finnish capital invested in foreign stocks, bonds and financial market instruments. However, last year Finnish investors doubled their foreign ownership.

In investing abroad, the lead has been taken by pension funds, banks, investment funds and insurance companies. 74 per cent of Finnish capital invested abroad was directed at EU Member States. This is followed by the USA with 13 per cent, non-EU European countries with over 5 per cent and Asia with less than 5 per cent. The top 3 recipient countries for Finnish investment capital have been Germany, Sweden and the USA.

Unions understand the need for economic globalisation

In the past, and as late as the 1970s, many trade unions were rather critical of globalisation tendencies in the economy. Now, however, when the globalisation rate is much higher, this criticism has stopped.

Trade union leaders and activists are well aware that the Finnish economy cannot succeed in isolation.

What is now emphasised is the need for fair play in trade and investment.

The level of interest in the behaviour of Finnish enterprises in foreign countries has recently begun to grow. This is one of the many ways in which the Finnish trade unions have identified their responsibilities in the international trade union movement.