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Modernising traditional sectors and introducing new technology

This country of 187 000 lakes has succeeded in recent years in steering its economy in a new direction by focusing, among other things, on the potential offered by new technologies and the information society. The country's new Objectives 1 and 2 programmes for the 2000-06 period share this aim.

Twenty years ago, hit by the recession of the late 1980s and the break-up of the USSR, one of its principal debtors, Finland was struck by an unprecedented economic crisis. The public purse could not simultaneously support the sudden increase in unemployment and a generous system of social security. The Finnish mark was devalued by 25% at the start of the 1990s. After its accession to the European Union in 1995 the country rediscovered economic growth rates that are among the highest in the Union. But an unemployment rate of close to 12% puts Finland among the European also-rans in this regard. The situation is particularly alarming in the case of young people and the long-term unemployed. The number of women excluded from the labour market has also increased considerably. One immediate consequence has been a flight from rural areas with attendant population growth in urban centres. The local economies are often too dependent on the traditional sectors of timber, chemicals and metal-working, monopolies of large companies. In addition, Finland has relatively few small and medium-sized enterprises and employment vacancies in isolated regions are concentrated almost exclusively in the public, agricultural and forestry sectors.

Sampo 2000 : Sweeping away economic pessimism

Finland: Areas eligible The aim is to overcome the prevailing sense of depression. A distant goal in the region of Parikkala-Saari, in south-eastern Finland. Devastated by the 1991 recession, industrial employment fell by 50% in 5 years in the Parrikkala sub-region. Since 1996, however, small, sector-specific development projects have emerged. In response, the Regional Council of Southern Karelia and the municipalities of Parikkala and Saari decided to put together a major action plan focussing on innovation and the cooperation of all parties concerned. Baptised "Sampo 2000", the project aimed to develop existing companies and, most especially, to encourage new companies to set up in the region. "Sampo 2000" has received ERDF aid amounting to EUR 42.847 million.

To help the companies already established in the region, "Sampo 2000" offered genuine consultancy services by analysing their needs and market opportunities, by establishing financing plans or by drawing up suitable development scenarios. More than 50 companies profited from this assistance. Thirty jobs were saved as a result and 50 created. When these companies operate at full capacity, they should generate another 50 new jobs. The project's other priority was to attract new companies. Pariwood Oy was the first to set up in the region. This Austrian owned company produces planks using local raw materials and should employ between 70 and 80 people by 2003. Five new companies have so far set up in the region, with a significant knock-on effect on the local economy.

Contact: Municipality of Parikkala, Marjatta Pahkala, Municipal Manager, Harjukuja 6, FIN-59100 Parikkala, Finland,

Tel: + 358 5 686 1250,
Fax: + 358 5 686 1290,

The Finnish development programmes 2000-06

Less developed regions

The Commission adopted two Objective 1 programmes for the 2000-06 period. They attract a Community contribution of EUR 948 million, two thirds of which is allocated to Eastern Finland and the remaining third to northern Finland.

The two Finnish programmes cover Kainuu, Northern Karelia, North Savo, South Savo, Lapland and the regions of Northern Ostrobothnia, Central Ostrobothnia and Central Finland. In all, 20.4% of the Finnish population will qualify for assistance from the four Structural Funds (ERDF, ESF, EAGGF and FIFG) between 2000 and 2006.

Most of the Finnish areas covered by Objective 1 already received Community aid in the period 1994-99 under Objective 6 (sparsely populated areas).

The Finnish Objective 1 programmes are based on four major priorities:

  • Business development
  • The development of rural regions
  • Knowledge, technology and employment
  • Infrastructure

The conversion of areas in difficulty

30.2% of Finns live in regions qualifying for Objective 2. This Objective incorporates Objectives 2 and 5(b) from the preceding period (1994-99). The Community budget for Objective 2 in Finland amounts to almost EUR 500 million. The aid is concentrated mainly on industrial and rural areas.

An interview with Veijo Kavonius
Director of regional development at the Ministry of the Interior

Finland is experiencing enviable economic growth, but is still struggling to bring down high unemployment. How many jobs were created with Structural Funds' assistance during the 1994-99 programming period?Veijo Kavonius

We estimated in October 1999 that Objectives 2, 5(b) and 6 together had created 40 000 jobs in the period 1994-99. This is slightly below what we forecast. However, the total number of jobs created as a result of structural assistance in the previous period cannot yet be quantified exactly since the programmes are still under way this year. The programmes also have long-term effects that are not easy to quantify at this time.

It is also extremely difficult to assess the number of jobs maintained with the help of these programmes. However, the figures advanced represent twice or even three times the number of jobs created, i.e. 80 000 or 120 000 jobs maintained.

Still on the topic of job creation, what do you expect to achieve in the next programming period?

Two programmes for Objectives 1 and 2 will be implemented in Finland in 2000-06. These new programmes should make it possible to create about 80 000 new jobs, 30 000 of which will be in the Objective 1 regions. It is also expected that the programmes will save 160 000 existing jobs.

Has assistance from the Structural Funds resulted in an increase in the number of SMEs?

The Structural Funds' aid for company development focused primarily on developing SMEs and encouraging new company start-ups. According to our estimates, 5 000 new companies were created by October 1999 as a direct result of the Structural Funds support.

What are Finland's priorities in the 2000-06 programming period?

In this programming period, regional development will focus more on a strategy of reform: efforts will be made to raise the region's competitiveness rather than maintain a policy of preservation. That will require the development of technology and know-how and various forms of cooperation between universities, research institutes and companies.

This strategy is also being supported through private funding. The priorities in the Objectives 1 and 2 programmes are generally similar and aim to improve, on the one hand, the region's attractiveness and business competitiveness and, on the other hand, to develop skills and expertise, human resources, technology, the regional structure and the environment. In the rural regions covered by Objective 1, the diversification of production and structural improvements are our main areas of concern.


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