The interdependence of the global economy means that good news for one country is usually bad news for another. Often, local issues within that same country may have different ramifications. Comparative examples are many, and rarely are they about apples and oranges. Or even fruits and vegetables.
Canada is but one obvious example. The fluctuations of the currency are followed with either glee or despair. A weak loonie means headaches for those, such as pro sports teams, forced to pay wages in the US dollar, but profits for America’s trading partners. A strong loonie (coupled with the weakening greenback) means East coast fisheries workers are laid off, for the Americans find their products too dear. Textile workers bemoan the tariffs that NAFTA has not removed. Again, jobs lost.
A better example can be seen in Finland, where the once successful telecommunications manufacturing industry is laying off hundreds of workers. Finnish cell phone components are now to be made in Asia. These days it is far cheaper to manufacture products in China, where the wages are far lower, benefits non-existent. And so the pendelum swings. Ca-ching. Someone’s cash drawer is, however, always full.
The euro was launched to avoid these issues on the continent, and it may be why Estonia is so eager to adopt the currency, hoping to be the first of the present batch of EU candidate countries to do so. Estonia has already been through the turmoil of currency reform. Pegging the kroon to the German mark was a sign of confidence then, bankers are now claiming the same with euro-readiness.
A cynic would note that Siim Kallas, recently named as Estonia’s candidate for EC commissioner (to be confirmed by the Europarliament) would be able to provide all the advice necessary, having, as he had as Eesti Pank’s president, later Finance Minister, intimate knowledge of the reform from the rouble to the kroon, via the US $. Let’s leave that for Brussels to decide.
One concern that the Estonian Rothschilds and politicians will have to answer to is the inevitable inflation, loss of buying power. As the now famous Italian cappuccino case demonstrates, prices are always rounded up, not down, the conversion to the euro will hit the pocketbooks of the common people hardest.
Estonia would do well to look across the Gulf to Finland, and learn from our kin about their experiences in changing from the markka to the euro. One obvious factor to be considered is that now both countries will be using the same currency.
During Soviet occupation the markka was the favoured hard currency on the black market. Many Estonian fortunes began during late Soviet, eraly indepencence times with a trip to Finland, working as an illegal labourer for real money, which was later converted into tangible local assets. Estonia is now rapidly economically catching up to Finland, the euro as common currency will accelerate the process.
Finns are naturally concerned that jobs may move south, to Estonia. The telecommunications down-sizing is in the back of everyone’s minds.
PM Juhan Parts took the opportunity while on a two day visit to Finland this week to assuage concerns. His Finnish counterpart Matti Vanhanen agreed, expressing the belief that at present the Baltic States pose no major threat to Finnish jobs. The two PMs told press Monday, that economic co-operation between Finland and Estonia is the way to deal with the problem of jobs going to countries with low labour costs.
Discussion centered on jobs moving from Finland to China, as well as to Estonia. Parts is of the opinion that that this will not become a major problem for the neighbours, major trading partners. In his typically brusque manner, he told press that "it is not just one-way traffic. This is a win-win situation. Finnish companies get to do business in Estonia. This is not charity.” Parts also added that production costs are going up in Estonia as well.
Now, in any such situation, the wealthier country has the advantages - think tariffs, protectionism once more. Parts had no choice but to agree with Vanhanen, when the latter voiced as Finland's position, that the 10 EU-candidate countries should only be allowed free movement of labor two years after admission to the European Union this May. Vanhanen promised that the process of granting work permits to Estonians would be "as flexible as possible".
Two former PMs, Esko Aho of Finland and Estonia’s Mart Laar also spoke up this week on the issue. Both attended a seminar - “When will Estonia pass Finland?” held by European Parliament members of the National Coalition Party . Aho told the “Helsingin Sanomat” on Tuesday that he does not see the Baltic States as a serious threat to Finland. He said that combining the low production costs of the Baltic countries, as well those of as Poland and Russia, with Finnish know-how can result in products and services that are competitive on the global market.
Laar used his speech at the seminar as an opportunity to recommend that Finland adopt Estonia's model of a flat 26% income tax. He also went out on a limb, by predicting that Estonia would reach Finland's standard of living in 20 years. Those who have been in Tallinn and Helsinki lately would argue that parity has almost been reached in the capital cities (think Talsinki) - it is the rural economic landscape that drags far, far behind.
Then again, there truly is some serious catching up to do. This was best underlined by an brief article in “Postimees” this week. Agents from the Eastern Finnish city of Lieksa were in Estonia last week, seeking to hire Estonian MDs as temporary locums until their own shortage gets resolved. Such is the doctor shortage in small town, rural Finland, that it sounds almost like Canada! With a huge difference. Estonian doctors would cost Lieksa city fathers only half of what they would have to pay Finns. The mayor of Lieksa said that this was no barrier - interest shown by Estonian doctors in the locum positions was great. This in Tallinn, Tartu and Saaremaa, by all accounts wealthier regions of the country.
Until wages catch up, then this will remain to be the case. Even professional Estonians will choose to work abroad on a contract basis, if it is only an issue of compensation. That, not cheaper factory labour in China or in the Baltics, remains the biggest local Finnish Gulf work-force issue, euro or no euro.
Leader: Ca-ching, up to the Finns (4)
Viimased kommentaarid
Kommentaarid on kirjutatud EWR lugejate poolt. Nende sisu ei pruugi ühtida EWR toimetuse seisukohtadega.
Membership in the alphabet soup of the world - WTO, UN, NATO, EU etc requires conforming to the rules of those orgs. Fact is, the rich are getting richer, catching up is no longer guaranteed by being part of an elite group of monied nations. The question that the writer may wish to address next time on this topic is - will the rural parts of Estonia ever catch up to the Tallinn, Helsinki levels presently enjoyed by the young money men.They are mostly men, it seems. Or is the fate of the second Estonia, poor and rural to be determined by the laissez faire economiescontent to let the countryside drag far behind. (Anybody been in rural West Virginia, or parts of Indiana lately, knows that even the US has this glaring discrepancy) Interesting topic, - did the PMs past and present discuss these issues in Finland?
Noh, siis loe kaks korda läbi, kuni selgeks saab! ;> Ennem hästi sisukas, kui lahja võitu...
Tõnu kirjutab alti häid jutte. Minu arvates on ta lood kohati isegi liiga sisutihedad, nii et lausa raske neid lugeda.
Arvamus
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