Chapter 17. Finland

Figure 17.1. Structure and performance of the SME sector in Finland
Figure 17.1. Structure and performance of the SME sector in Finland

Sources: Charts A, C, D: OECD Structural and Demographic Business Statistics Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Chart B: OECD Timely Indicators of Entrepreneurship Database 2018, Chart E: OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset.

 StatLink http://dx.doi.org/10.1787/888933925122

SME business conditions and access to strategic resources

Institutional and regulatory framework

Finland presents a business friendly regulatory environment by OECD standards, with strong insolvency framework and contract enforcement regime and relatively low tax compliance costs. On December 2015, the independent Council of Regulatory Impact Analysis was established at the Prime Minister's Office to improve the quality of new legislation and assess the impact of government proposals. The 2017 annual review of the Council revealed that the impact on enterprises represented the most common area for improvement in impact assessments in draft government proposals.

Market conditions

Sustained international demand has benefited Finnish SMEs in computer programming and consultancy, which is the largest subsector for SMEs in the country. In 2018, the merge into the new Business Finland of existing programmes to support SME internationalisation aimed to smoothen and enhance their services. A new Law on public procurement came into force in January 2017 to simplify bureaucracy, increase transparency and allow contracting authorities to better take into account quality, innovativeness and responsibility of bidders. The reform is expected to enhance the chances of SMEs in competitive bidding.

Infrastructure

The quality of Finland's transport infrastructure is high by EU standards, with the timeliness of shipments showing marked improvements between 2014 and 2016. Finland has also a well-developed internet infrastructure in place with the second-highest wireless broadband subscription rate among OECD countries. In 2016, the “Implementation plan to promote high-speed broadband connections” was introduced. The national broadband scheme supports the construction of fibre networks in areas that lack business incentives to build high speed networks. Finnish authorities advise local municipalities on how to set up entities to partner with other government bodies and/or private partners and the central government provides part of the funding.

Access to finance

Bank lending to Finnish SMEs has expanded steadily over 2015-17, with the economic upswing contributing to an increased demand for SME finance. In 2015-16, Finnvera, the public financing company, increased its risk-taking capacity to finance start-up, growth companies and companies expanding their international operations. In 2017, the European Commission adopted the SME initiative programme in Finland. The programme will provide guarantees to financial intermediaries that give loans to SMEs, and are expected to unlock over EUR 360 million of fresh loans for Finnish businesses.

Access to skills

Finland scores well on adult literacy and training and student proficiency. Hourly wage costs in Finland are relatively high in the EU context and unemployment is above the OECD average. In 2016, the Competitiveness Pact between the government and the social partners was introduced, which lowered unit labour costs by about 4% in 2017. The social partners have also moved from a system of national-level collective agreements towards a more decentralised system with collective agreements at the sectoral level and local-level bargaining, allowing lower wage growth in sectors with considerable competitive pressure and/or limited productivity gains. Furthermore, the duration of unemployment benefits was reduced by 100 days and requirements for the unemployed to seek a job tightened.

Access to innovation assets

In 2018, several institutions providing support to promote innovation, exports and investment to SMEs were merged into Business Finland. This newly created one-stop shop aims to improve government responsiveness to business needs and facilitate SME networks. It provides support to research and technology development, including for start-ups and SMEs, and addresses SMEs’ difficulties in commercialising innovations by combining direct unconditional funding with guaranteed loans conditional on success.

The full country profile is available at https://doi.org/10.1787/34907e9c-en

References

Business Finland (2018), Efforts of Finnvera, Finpro and Tekes in Promoting Internationally Oriented SMEs, Impact Study, Report 3/2018, https://www.businessfinland.fi/globalassets/julkaisut/efforts_of_finnvera_finpro_tekes.pdf

EC (2019), Country Information - Finland, European Commission, https://ec.europa.eu/digital-single-market/en/country-information-finland

EC (2017), 2017 SBA Fact Sheet Finland, European Commission, https://ec.europa.eu/docsroom/documents/29489/attachments/10/translations/en/renditions/pdf

EC (2017), Finland Adopts the SME Initiative: Easier Access to Funding for Start-ups and Small Businesses, European Commission, https://ec.europa.eu/regional_policy/en/newsroom/news/2017/01/24-01-2017-finland-adopts-the-sme-initiative-easier-access-to-funding-for-start-ups-and-small-businesses

EC (n.d.), Finland - Country Information - Mobility and Transport, European Commission, https://ec.europa.eu/transport/facts-fundings/scoreboard/countries/finland/investments-infrastructure_en

Finnish Council of Regulatory Impact Analysis (2018), Annula Review 2017, https://vnk.fi/documents/10616/7861578/Finnish+Council+of+Regulatory+Impact+Analysis+Annual+Review+2017/5b9b4fd4-aa89-4700-b292-fa11b7d3cc43?version=1.1.

OECD (2017), OECD Reviews of Innovation Policy: Finland 2017, OECD Reviews of Innovation Policy, OECD Publishing, Paris, https://doi.org/10.1787/9789264276369-en.

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