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Challenges - Employment and Economy

When the new Centre Party leader Mari Kiviniemi takes over the premiership she will have to come to grips with the continuing challenges posed by employment and the sluggish economy. Taxation policy is also sure to come under new scrutiny.

Keskustan puheenjohtaja Mari Kiviniemi.
Image: YLE

Economists interviewed by YLE see the biggest challenge facing the government as getting the economy back on the path to growth. The other key issue that Mari Kiviniemi will find her cabinet wrestling with is employment.

The view of the experts is that present trends in the economy are showing enough promise that the government does have the possibility to exploit them and make some progress. However, the government will need to stay actively engaged.

Interviewed by YLE, Professor Aki Kangasharju of the Government Institute for Economic Research expressed doubts about an upcoming increase in value-added tax as a tool for the government to reach its goals.

"Are these kinds of measures, actions that decrease demand, actually necessary right now, or could they be delayed for a while and so ensure that domestic demand is maintained at a high level and the conditions for employment are not worsened?"

The general value-added tax on goods and services is scheduled to go up from the present 22% to 23% at the beginning of July.

Little debt crisis impact

The director of Pellervo Economic Research PTT, Pasi Holm also sees employment and economic growth was the main challengers facing the government right now.

"Efforts should be made to continue to promote and speed up the development of employment so that employment does improve. Solutions that support growth are need," said Holm.

Turning the economy towards a growth path would likely spare the government from the need to make unpopular cuts in state spending before the next elections, according to Eero Lehto, head of forecasting at the Labour Institute for Economic.

"This would give the new Prime Minister a lot of room for manoeuvring. She wouldn't have to start a frenzy of spending cuts just before the elections," is how Lehto sees it.

These economists are more or less unanimous in the view that the debt crisis plaguing Europe will not badly impact on Kiviniemi's government.

"I don't see it as being a great boogieman during the few months that the Kiviniemi cabinet will be in power," says Professor Aki Kangasharju.

"It seems to me that gradually Europe as well will get swept up in economic growth and this will bring relief for the public sector economy. But, indeed, savings measures are sure to be seen in various European countries," predicts Pasi Holm.

Sources: YLE