Speech by President of the Republic Martti Ahtisaari at a meeting of the Council of SAK (the Central Organisation of Finnish Trade Unions) celebrating the 90th anniversary of the organisation in Kiljava on 24.5.1997

FINLAND IN THE MIDST OF EUROPEAN TRANSFORMATION - THE NATION'S STRENGTHS AND THE CHALLENGES IT FACES

It gives me great pleasure to be able to attend these festivities celebrating the 90^th anniversary of SAK, the Central Organisation of Finnish Trade Unions. It is impossible to conceive of our prosperous Finnish society without the strong contributions that trade unions and other popular movements have made to its creation and development. That will continue to be the case.

Finland has been built up into a prosperous society through hard work. The trade union movement has guaranteed that the results of that work have been distributed more fairly to those who have done it throughout our society.

I have just come back from Africa, in many parts of which development is only beginning. For many African countries Finland represents a degree of prosperity and justice that is only a remote dream for them. I was proud to be able to outline my country's achievements to my African friends, without at all glossing over our problems. That vast continent is Europe's close neighbour. We cannot be indifferent to what happens there. We are gradually moving towards a global era. We cannot be isolated in it. Only through cooperation can we deal with the problems that confront us on both the national and the international level.

Finland's strength has not lain one-sidedly in the accumulation of great economic capital or natural riches. Our true strength is in our own culture, in its tradition of equality and in our abilities. In the last century, it was the power of education that enabled us to break through and take our place among the nations. That created the prerequisites for the organisation of political movements and trade unions around the turn of the century.

The general strike in1905 was a turning point for our nation: the Finns formed a united front to pursue their interests. That united front held also in 1939 and 1944. It is still holding today, at a major turning point for Europe.

It is from those factors - education, ability, cooperation and a sense of common responsibility - that our nation's true strengths have been formed. Those same factors will be the foundation for the road on which we can successfully make the transition to the new century.

Europe is once again in a state of historic ferment. Fortunately, the development is mainly peaceful. Military force is no longer used to subjugate the weaker, as in the past, but increasingly to safeguard and maintain peace. Now we can divert more resources to strengthening economic and social wellbeing.

Global factors form the background of the transition that Europe is undergoing today: economic and currency areas spanning different continents as well as global capital markets - and for that matter global skill markets - are emerging. Since the Cold War we have been able to end the political, military and economic division of Europe and create a new European system of cooperation. The importance of the summit meeting between the Russian and United States presidents in Helsinki last March lay in the fact that cooperation in Europe got back onto a stable course. Finland and the whole of Europe have benefited from that.

From our country's perspective, the end of division and our accession to the European Union have undeniably been positive, historic events. In the same conjunction we have been able to strengthen our real independence and international status. We have a place at the tables where the decisions that determine the future of Europe and of our own country are made. That has not always been correctly understood. There are still those who seemingly would wish a return to competition between nation-states. I hope, nevertheless, that there will be a growing discourse in Finland on the economic, political and security ramifications that the ongoing European transition will have for us. We have good reason to view the future with confidence.

For my own part, I wish to emphasise the significance of the ongoing economic transformation. In every corner of Europe, efforts are being made to re-shape economies so as to increase the prosperity of citizens. This is inescapable, because we shall have to effect a substantial improvement in Europe's position in the global development. It has been said that the world's best 20^th-century products are made in many of the countries of the European Union. The question is, however, what we will be able to offer the integrating world market in the soon-to-begin 21^st century.

Alongside Asia and North America, Europe is a central economic and political actor in the world. A strong and enlarging European Union is creating economic and with it political stability in our continent. Development in Russia is still on economically uncertain ground. Also in this sense, the stability that the European Union has achieved is absolutely essential. An EU of that kind is a good partner for Russia. We must make every effort to ensure that this development is not disturbed.

Finland and the other member states of the European Union are drawing close to an important decision: the implementation of the third stage of economic and monetary union and the adoption of a common currency. Combined in EMU are all of the basic goals of integration: an economic development that creates prosperity, political cooperation that promotes security and stability, and strengthening the global status of Europe.

We must, however, bear in mind at all times that the development of Europe is precisely the development of its citizens' welfare and the results must also be visible on the level of the citizen. The most painful problem at the moment is unemployment. That is why solving it is such a special challenge for European cooperation.

It is my firm belief that the adoption of a common currency will serve the interests of Finland and the Finns.

Adopting a common currency is part of the development of the European single market and through that will contribute to increasing prosperity. Artificial obstacles and thresholds in the way of commercial activities will disappear when the costs and uncertainties associated with separate currencies are eliminated.

EMU is furthermore a means of increasing general monetary stability and lessening the significance of speculation. That has become more important in an era of free capital movement.

We can also ask what size of economic area is still capable of effectively defending its currency. If the currencies of even countries as big as Great Britain and Italy have become the targets of speculation, will a smaller country have to compromise unduly on its other goals in order to defend its currency? That being the case, belonging to a stable currency area is a more secure option in the economic sense.

Besides that, the significance of a currency unit as a component of our identity has changed. As the importance of physical cash declines relative to the electronic kind, the significance of our own currency unit as a national symbol is also waning. Money is no longer the markka in one's pocket, but rather a line on a computer printout of a bank statement. The value of a monetary system is instrumental, not intrinsic.

The global economy is entering a stage in which it will be an area where three influential currencies mainly dominate. Better that the European currency that exists alongside the Dollar and the Yen is also ours rather than it being under the control of only one European state. In the era of a single currency, no individual country in Europe will be able to use the strength of its money to boss the others.

To ensure that EMU does not become merely a monetary union, it is important that the member states of the European Union develop their cooperation in the sphere of economic policy as well. Cyclical fluctuations belong to the nature of an economy. Thus it lies in our common European interest that we deal effectively with any economic downturns that we may have to face in the future and keep the foundation of our economy healthy. We must search for collective and national measures to ensure that economic swings are as gentle as possible.

Our experience in the early years of this decade taught us a bitter lesson: how costly high interest rates and sudden swings in exchange rates can be for export industries, the domestic market, small companies and ordinary households.

In recent times we have finally been able to enjoy low interest rates and a stable economy. That has of course been very largely due to the success with which our public finances have been restored to health, but just as much also to long-term incomes settlements. The positive development of interest rates has likewise been supported by the assumption in money markets that Finland will join EMU without delay. Thus we have been benefiting from economic and monetary union even before it comes into being.

I have personally assessed those questions very largely from the perspective of how various measures contribute to job creation. The adoption of a common currency will mean a major change in the ground rules in society, also in the labour market. Inflationary pricing by companies, in the timber market or in the labour market will lead directly to difficulty in selling our output and therefore to job losses.

A genuine commitment to low inflation on the part of all actors will be of decisive importance in using the common currency. Clearly, that commitment will be measured by the yardstick of actual deeds on the part of companies, in decisions by the public authorities and in the labour market. In that sense, the debate that you have now begun on the subject of the next incomes settlement is being closely followed and is important.

How successful the decision on EMU is from the Finnish viewpoint will depend in part on whether the central players are aware that the rules of the game are changing, whether they are able to prepare themselves for the new rules.

As regards preparation for the common currency, we have nothing to be ashamed of in the light of international comparisons. In only a very short time an extensive and broadly-ranging debate on the anticipated impacts of EMU has gotten under way in Finland. Both experts and ordinary citizens and political decision-makers are taking part.

From the perspective of preparing for the future, it is important that the labour-market organisations were able to outline their jointly-agreed EMU ground rules in their recent statement of position. The ability of the labour market to seek a shared conception of even difficult matters is in my view indisputably one of our Finnish strengths - a national success factor.

The great strength of the Finns has been an ability to rally the nation's forces for collective decision making at important moments. That is why I consider it important that the greatest possible degree of acceptance - in both the political sense and more broadly - is sought for the decision on economic and monetary union. Factors that will make this easier to achieve are the Government's stated willingness to discuss the matter with the opposition, the trail-blazing measures that have been taken in the labour market and constructive participation by other interest organisations in preparatory work.

Doubters, critics and opponents also have an important task to perform in the ongoing discussion. They ensure that not a single important stance or perspective is ignored. Good politics grow out of a good debate.

We need people's abilities more and more.

In order for Finland to be able to offer work to all who want it and to be in a position to cope credibly with future cyclical swings, we need both to take care of the traditional strengths of our economic sector and to create new supporting pillars.

In many respects, basing our economy on forests and metal has created our prosperity. There is still plenty of potential in those sectors. Forests will remain our natural strength; after all, they are a renewable natural resource in the processing of which there is still much to be achieved. Why should we export sawn timber and then re-import it as furniture at several times the price? Our know-how in metal products is strong and also in this sector networking expertise and cooperation within companies offers new vistas.

Alongside our forest and metal products sectors we must develop enterprises connected with the information society into the third pillar of our economy. Our prospects for success in that are exceptionally favourable.

Prospects for job creation in the services sectors are good. Indeed, the growth segment complementing the three supporting pillars of our economy is to be found in services as well as in the so-called third sector of the economy. Export prospects in the services sectors are likewise promising.

Creating new jobs will remain the biggest challenge that economic and social policies will have to respond to in the next few years. The question that we must answer is how we can prevent exclusion and use the full Finnish know-how potential, which includes those of our brothers and sisters who are still jobless today.

I see three Finnish strengths that provide a response to that challenge: know-how, cooperation and a sense of common responsibility. We need know-how on the part of every worker. We need a capacity for cooperation at workplaces, in companies and in the labour market as a whole. We need a willingness to shoulder collective responsibility on the part of every decision-maker and every person in employment.

Our skills and abilities are based on well-functioning, lifelong and broadly-based education. In a good society, education is the inalienable right of all.

We still have a lot to do in the promotion of cooperation within working life. What cooperation is all about in the final analysis is knowing how to avail of workers' abilities by providing channels through which they can exercise influence.

The settlements reached in the labour market can also point the direction in this respect. Negotiating collective agreements on a basis of mutual trust, and with provision for separate contracts at local level, can continue to be one of our strengths. In this respect, the union and the employers' federation in the metal industry have done exemplary work, which is certainly already now one of the factors powering growth in that sector. The agreements reached in the metal sector are an outstanding example of how the flexibility that companies need can be combined with security for workers in a way that benefits everybody.

An irreversible division between those in employment and those without jobs has not happened in Finland. The labour market has operated in a way that has enabled every other unemployed person to find work within a year. The latest statistics reveal that growth in long-term unemployment was brought to a halt some time ago and that now a downward trend has begun. Much of the credit for that is due to the active labour policy that has been adopted in Finland. Credit is also due to Minister of Labour Liisa Jaakonsaari, who has shown determination in a very difficult situation and a strong personal engagement with finding a solution to Finland's unemployment problem.

Within their organisations and, for example, through their initiative in cooperative ventures, unemployed people in various parts of the country have worked commendably to combat joblessness.

Voluntary efforts to create employment must continue. I, too, am committed to that. However, there are no simple or easy solutions.

The solidarity of those who are in jobs led to the incomes settlement now in force. For that the labour-market parties deserve the acknowledgement of the whole of society. The settlement has been an important factor in safeguarding economic growth.

The incomes settlement is in its own right one of the key factors in economic growth. This year for the first time, we shall come close to the five per cent growth rate set as a goal by the Matti Pekkanen working group and which is a prerequisite for achieving our objective of halving unemployment. It is also important that the development of employment is improving.

We are on a road that leads to results. Now it is important that the efforts of the drivers do not flag half way through the journey. I hope the labour-market parties will continue along this road of shared responsibility. It is the road that will lead the Finns into employment. By following that road the labour-market organisations will gain the firm support of citizens.

This year we are celebrating the 80^th anniversary of our national independence. In common with other major historic turning points, the attainment of national independence always calls for pioneers with the courage to view the future with a fresh mind, without becoming frozen in rigid patterns.

In summer 1917 Chairman Oskari Tokoi of the then SAJ, the Congress of Trade Unions in Finland, was one such pioneer. He was the first representative of a workers' party to have risen to the rank of prime minister, even if in the grand duchy of those days his office was still designated as "Vice-Chairman of the Economic Department of the Senate". He demonstrated his fresh-minded thinking when, as one of the first influential political figures, he advocated full independence for Finland in a major policy speech in Parliament:

"Our goals go a lot further than that. The people of Finland and the Parliament of Finland intend to achieve the independence and freedom of Finland, an independence of the kind that corresponds to the merit of the Finnish people among the nations; that corresponds to the status that we as a people of culture must have."

Only half a year later, the Finnish declaration of independence could be made..

Now, 80 years after our country became independent and 90 years after the foundation of SAK, we are again at a historic turning point. In many ways we are in transition to a completely new era. As we prepare for that transition, we can learn from the social climate that existed in the days of SAK's birth: we must be prepared to make radical reforms and we must boldly put our trust in the power of voluntary civic activities. Now, too, our strength factors are our know-how, our capacity for cooperation and our sense of shared responsibility.

We are now more integrally involved in European and global development in every sphere of life. Yet our goal has not changed: a Finland where it is good to live and work.