Profile Johnny Åkerholm

Finland needs rethinking

and bigger risk-bearing capacity

With almost a lifelong experience of economy issues - as head of department at Bank of Finland, Undersecretary at the Ministry of Finance, Secretary-General of European Bank for Reconstruction and Development in London as well as CEO at Nordic Investment Bank – it is no exaggeration to say that Johnny Åkerholm knows what he is talking about when he analyses the Finnish economy and predicts the development after one year in the throes of a pandemic.

Text: Anna Sand • Picture: Anna Sand

The pandemic has, like for everyone else, affected also Johnny Åkerholm’s life the past year. Since he retired in 2012, he usually splits his time between his home in the capital city, the apartment in Vaasa and the commissions of trust he has here as well as the summer cottage in the Petsmo archipelago in Mustasaari. Furthermore – during normal circumstances – he also likes to travel regularly. – We have spent most part of the past year in Ostrobothnia, due to understandable reasons, Åkerholm tells us.

He describes the pandemic as ”an unexpected disturbance”. – It has affected industries normally quite unresponsive to disturbances, which has been unique in itself. The most important lesson is that we never can control and plan everything and that we need to be prepared also for improbabilities, both businesswise and economically, Åkerholm says. But. The problems we have in Finland and that are the reason behind the financial numbers we now see, were there already before, and for them the pandemic cannot be blamed.

Johnny Åkerholm, born in Mustasaari, splits his time between Helsinki, Vaasa and the summer cottage in Petsmo. For the future and solving the structural problems Finland has today he suggests education and research, innovators and entrepreneurs with bigger private risk-bearing capacity.

– Finland’s problems are structural and depend mainly on two factors: on one hand we nowadays have a very unfavourable population structure. It puts high pressure on the public sector and that is a phenomenon that will continue for a long time still. On the other hand our productivity growth is way too low. Many countries have had and have problems with this, but we might be one of the countries worst off. Finland has clearly failed at this, Åkerholm states.

The problems will hence remain after the pandemic. – We can definitely expect a period with higher growth numbers afterwards, but there is a risk that these numbers are misinterpreted. A growth peak due to the fact that people want to start traveling again and use the money they have saved after staying at home for a year, unfortunately does not solve the country’s structural problems, Åkerholm further explains. bad at turning them into sellable products and services. High added values are the key to a higher productivity and therefore we must bring about investments that create this additional value.

In Sweden they have according to Åkerholm been much better at catching their innovations, while we often have chosen to stick to the old. – In Finland the public sector has chosen to support the creation of specific work places instead of supporting research and development. It is a dangerous road when dealing with the tax payers’ money, Åkerholm says. Finland also has considerably less venture capital and considerably less rich people than our western neighbour, and we have in addition created a system where it is possible to be very passive – you do not even have to try to succeed.

The pandemic itself will lead to structural changes in the society – the digitalization pace is one example. These changes bring both threats and possibilities. – Now we have to make the most of the opportunities. We should bring about a quicker and bigger rethinking. The one who manages to benefit from the changes that are brewing and that will become reality will succeed, Åkerholm says.

– Efforts on different solutions for development activity would be wise, he continues. The trend is clear: the industry production’s relative importance goes down – instead more and more services outside the direct goods production are developed. The traditional production industries will in the future function just as much as service companies.

Catching trends and tendencies is in other words vital, no matter what the industry is. – You have to have a precise timing – it can go wrong for the early bird, as well as for those who are late for the party.

Åkerholm feels that the same goes for the transport industry. – The need for transports will henceforth increase in step with the standard of living. The transport forms will however most probably go through changes – partially because of the climate problematic, partially as a result of changes in the demand and production structure.

The pressure to develop and increasingly exploit climate-friendly modes of transport are increasing. New products and services create new transport needs as the same time as the digitalization eliminates some of the transports. – The postal service is a typical example of changed structures; the transport of letters and newspapers is decreasing, while the e-commerce increases the transport of packages.

The need for transports will henceforth increase in step with the standard of living.

How long the growth peak will last depends according to him on how the inflation pressure is kept in charge. – Today many believe that we after such a long time without an inflation are immune to it, but this is not the case. The world powers’ policies have been very expansive and can be described as nothing less than a war economy, which creates an inflation pressure within different sectors. Inflation and the higher interests that come with it would mean big problems for all those in debt – states, companies and households alike. I hope that this scenario does not become real, Åkerholm adds.

How then to correct our structural problems? What is the solution? – Unfortunately there is no magic button to push, Åkerholm smiles. One important thing would be to encourage the immigration of competence and expertise, at the same time as we stop our own ”brainiacs” from leaving. – This is no easy task – the language is difficult, the salaries are low, the taxes high and many have an inaccurate and bleak picture of our country and our climate. It is not impossible, but measures are needed in order for it to work, he deems.

Our big Achilles heel is still the productivity, which today rises too slowly to finance a Nordic welfare state. – We have good innovations in Finland, but we are