Companies do not appear to have sought to benefit from high inflation by increasing their prices and boosting profits.
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Manufacturing industries, in particular, are suffering from supply chain problems and rising costs. The results of a business survey show that the majority of companies believe they can replace the lost volume of exports to Russia with new markets.
The financial position of households and businesses has on average remained good through the crisis, with the exception of the service industries directly impacted by COVID-19. Support measures have weakened the public finances.
Most Finnish companies have suffered a drop in turnover as a result of the corona crisis. Service industries are hard pressed. Cost adjustments and funding arrangements have saved jobs.
The method by which agreement is reached on wages in the Member States participating in EMU has a particular significance for employment and growth. Optimal wage formation defines the development of competitiveness.
The number of low-productivity firms in Finland is large, but average productivity is being raised by a small pack of frontrunners. Even in such frontier firms, productivity growth is mostly torpid.
Unprofitable firms occupy economic resources and slow down productivity growth.
The few ‘superstars’ of high productivity and profitability stand out in the large mass of firms. A one-size-fits-all economic policy is unsuitable in an environment of considerable heterogeneity in productivity and profitability.
Among the set of new firms there are those known as ’gazelles’, firms that rapidly increase their employment. This small group of high-growth firms generates a disproportionate share of new jobs.
One reason behind the shortage of new jobs is the lack of new firms, which create the largest number of jobs. The frozen labour market will slow restructuring of the economy and weakens the outlook for growth.