Blog: Representing interests after COVID-19
Where are we?
Writing from my home office like many other experts for the last 4–5 weeks, I’ve had some time to read news and think a little bit about where public affairs, lobbying and interest representation in Finland could be headed. The ongoing COVID crisis has been very abrupt and economically steep. No-one knows for certain when the crisis will end and come to halt.
As of writing this roughly 420,000 people are on temporary layoffs in companies employing more than 20 people according to Helsingin Sanomat data desk (1). Yesterday, Ministry of Finance published an economic outlook for spring 2020 stating coronavirus will hit Finnish economy – hard. This year GDP is predicted to decline 5.5% even though in H2/2020 recovery would begin. Another source of concern is that with every passing month lockdown continues will cost national economy approximately 1.5–2% of GDP (in 2019, 240 billion euros (2) equalling 3.5 to 4.8 billion euros per month. In worst case scenario restrictions last for 6 months equalling a whopping 12.2% reduction in GDP for 2020 (3). All this leads to two conclusions for the not so distant future: financial aspects of policy issues will likely dominate political decision-making for the next 3–5 years and secondly, governmental programme will need modification come August.
Every organization is working hard in trying to adapt to rapidly changing business environment strangled by government restrictions and emergency law(s), that have so far had devastating effects on industry and businesses such as hotels, restaurants, event organizers and freelance performers, to name a few. Current crisis is affecting different companies and industries at a different speed and rate. For now, one thing is for certain. As long as lockdown remains in place, traditional use of (political) “power” has returned to national politics with a “Bang”. In his recent internet article, Mr Antton Rönnholm, party secretary to Social Democrats envisioned the return of strong nation states (4). Maybe so. However, as former British PM Winston Churchill came to experience, revolutions tend to devour their offspring.
Having been involved in Finnish public affairs “industry” for over a decade and having also experienced the financial crisis of 2008–2009, EU restrictive measures of 2014 towards Russia due to Crimean war, I must admit the current crisis has had more profound effect on businesses than before. As The Economist stated in its April 11th issue that it’s all about ”The business of survival” as companies making it through the crisis will face a new business climate (5).
Corona meets corporatism
Before COVID-19 outbreak Finnish corporatist system has been struggling for survival. National demographics show prevalent systems’ foundation traditionally based on labour market membership fee collection agreement, national pension scheme and universal working conditions gradually deteriorating. Despite these developments for the time being, the so called “Parties” have instead strengthened their position and influence. Whether this is momentary, remains to be seen. Perhaps not since right after the corona outbreak corporations swiftly rushed to governments aid by agreeing upon employers’ possibility e.g. to lay off fixed term employee contracts which previously wasn’t possible and by introducing temporary changes to layoff procedures.
However, this “emergency contract” quickly passed in to law by parliament, will come to a close at the end of June. It is likely this contract needs to be prolonged for the remainder of calendar year. Confederation of Finnish Industries EK and The Central Organisation of Finnish Trade Unions SAK will have important roles to play in the not so distant future in coordinating industry organizations and interest group views. So far, government decisions to keep economy rolling by allocating capital directly to companies through public business organizations Finnvera (and banks) and Business Finland have somewhat alleviated companies, but general fear is that time will run short in processing all applications despite the extra workforce. Minister for Finance, Mrs Katri Kulmuni (Centre Party) announced, that third supplementary budget would be on the way come May. Financial decision already made by government parties between March and April 2020 climb up to 15 billion euros.
If virus was the Black Swan, Finnish Entrepreneurs (Suomen Yrittäjät, SY) plays the role of dark horse. Representing some 115,000 single, small and medium-sized businesses, Finnish Entrepreneurs have not been part of the prevalent corporatist model. Despite the fact that some 98 to 99 per cent of all businesses in EU are small or medium-sized enterprises (SME’s) and the fact that roughly 8 out of 10 new jobs have been created to these companies after the financial crisis of 2008. Therefore, it is not a minor political issue what will become of entrepreneurs’ position in post COVID Finland. It has become clear, that adjustments (reforms) to prevalent model are needed. Old policies need to give way to the new.
Rebuilding and preparing for the future
Opposition parties have so far more or less supported acting government decisions due to exceptional circumstances. However, it is not – yet – an issue of crafting new policies, but old structure shall begin pave way for the new. In media the conversation about how nation will be steered out of crisis has begun and will get more heated. On April 8th Prime Minister’s Office (VNK) appointed a preparatory working group chaired by Mr. Martti Hetemäki from Ministry of Finance (VM) and Mrs. Kirsi Varhela from Ministry of Social Affairs and Health (STM). Working group is tasked to draft a comprehensive strategic plan by end of May 2020 how Finland will emerge out of crisis taking into account economic, health and social issues and propose immediate “aftercare” measures covering all sectors of society (and business). That is to say, how COVID-19 is taken care of and how to deal with its aftermath. Sub working groups composition reflects classic tripartite corporatism strengthened with Finnish Entrepreneurs (SY). Another interesting issue, although indirectly related to this, is that at the same day (April 8th) Prime Minister’s Office gave out press release on the long-waited state ownership steering decision. In Finland, state-owned enterprises account for nearly 30 billion euros in OMX Helsinki. This is not all.
Prior to this, on April 1st, Ministry of Economy and Employment (TEM) and Ministry of Finance (VM) set up their own “commission of inquiry” chaired by Mr. Vesa Vihriälä, a well-known economist and public official who has previously served Finnish government, European Commission and OECD, to name a few. Groups other appointed members – the four wise men – are Nobel prize winner Bengt Holmström, PhD Sixten Korkman and professor Roope Uusitalo. Their expert analysis’ preliminary deadline is 1st May 2020. Whether this public piece of information links with statement recently made by minister of finance Kulmuni, remains to be seen. Clearly, at least an idea of a roadmap is in place. COVID-19 crisis has also revealed sitting governments informational overpower in its relation to opposition parties.
Aforementioned remarks in some aspects confirm the assessment that COVID crisis is a “hinge point” in national corporate development, which is about to enter new phase. Currently, health, social and security policies have taken halter neck from markets. It is somewhat premature to evaluate the future agenda comprehensively. In any case, the main issue of reconstruction policy agenda will circle around how to pay off the seemingly ever-increasing public debt. Reconstruction policy needs to have priorities, industry perspectives and policy initiatives that will launch GDP to a growth trajectory. This is not only a question of markets and market mechanism, but a question of political choices that favour some industries, organizations and phenomena. Business organizations should ask themselves do they have their stakeholder relations already established. Contacts, friendships are made and alliances are forged before you actually need them. This is an issue most businesses neglect. On which side of the fence – part of solution or problem – will Your organization be?
Takeaways & what public affairs professionals can bring to the table
- Update your PA strategy if you haven’t done so already. “Hope” or “belief” are no strategies. Secure sufficient resources.
- Know your stakeholders: identify allies – and adversaries.
- During ongoing crisis, organisations have more or less proven vulnerable in terms of communicating and engaging. Many will (silently) consider hiring their own resources or outsourcing an executive person to take lead in developing one’s public affairs function(s). Build up the capacity.
- Plan and play for the long-term, but be prepared to play ball from the get-go. Think of alternatives and scenarios and how they would play out.
- When conducting Public Affairs activities, build trust in ALL stakeholders through open and proactive communication. Do not cut corners. Rather you hold the joystick than the competition.
- According to government programme (Rinne/Marin I) lobbying legislation shall be put in place in the beginning of 2023. Lobbying will become a regulated industry. You should be prepared.
The blog was originally published as the AmCham Finland Guest Blog.
The writer is Urho Blom, CEO of Eurofacts.