Roundup: Finnish gov't starts budget negotiations for 2017, employment high on agenda

Finnish government's budget talks for the year of 2017 started on Wednesday, with efforts to promote employment high on the agenda.

At a press conference on Wednesday, Finnish Finance Minister Petteri Orpo described the first day of the budge preparation as "in a gloomy shade."

He said the world economy has no visible impetus to the export-driven Finland, although the domestic demand is showing positive signs.

"The demand for the domestic market is not enough... We will make next year's state budget in very tight frames," said Orpo.

Investment will be made to enhance employment. The proposals in the budget include measures to reduce disincentives to work and to help people move in pursuit of employment.

Orpo said the government will make further cuts if the employment does not improve.

Orpo was the minister of interior before he succeeded Alexander Stubb in June to become the chairman of the National Coalition Party and took the stewardship of finance.

Finnish economic development has remained stagnant since the global financial crisis in 2008. The unemployment rate has been climbing in the past years. Currently the figure is close to 10 percent.

The goal of the government is to raise the employment rate from 68 percent to 72 percent, which would mean a creation of 110,000 new jobs by 2019.

The Center Party, the biggest ruling party in the coalition government, proposed a plan for tax reduction for companies earlier in July, but Orpo did not support the idea.

In an interview with Finnish daily Helsingin Sanomat on Monday, Orpo warned against the thought of the company tax reduction. He said he does not believe taxation is an obstacle to investment.

The proposed tax relief would only help companies that make profits, said Orpo, and he was "concerned about the outfits that do not make profits."

According to the minister, the reform of corporate taxation will be discussed later in autumn, and decisions will be made in spring next year.

Juhana Vartiainen, an MP from the National Coalition Party and former head of the Finnish National Institute for Economic Research, told Finnish daily Ilta-Sanomat on Wednesday that he was concerned about the increasing debt.

Vartiainen said the reduction of the net borrowing is currently very slow or almost non-existent.

This year's budget of Finland is 54.9 billion euros (61.3 billion U.S. dollars), of which about 5.6 billion is to be covered by the net debt.

Vartiainen said Finland's state budget has not been brought to balance for eight years and the public finances are not on a sustainable basis.

Vartiainen also underlined the importance of employment. "If the employment increases, then we get more tax revenue," he was quoted by the daily as saying.

Antti Lindtman, chair of the Social Democratic Party's parliamentary group, claimed to MTV channel on Wednesday that the opposition party will monitor Orpo's budget closely, particularly the measures to improve employment.

"We spend over 5 billion euros annually on the passive support caused by unemployment. This sum of money should be put to active use, and it could lower the threshold for the employment of long-term unemployed," Lindtman said.

According to the Finnish government, the Finance Ministry's proposal for the draft budget will be presented on Friday, and negotiation among the three ruling parties will start at the end of August. The draft budget for 2017 will be released in mid-September. (1 euro=1.12 U.S. dollar) Endit