2000, 32 %, of the total workforce in finland had achieved tertiary education, while the eu15 average was 24 %. educated labour force has fostered innovation and increased the innovation absorption capacity. supply of science and technology graduates has helped to maintain the salaries of researchers and engineers in the itc - cluster moderate, in spite of strong demand. strong current account and international diversification of investment portfolios the growth of the ict industry is reflected in the current account, which has been in surplus since 1994. the emergence of large current account surpluses is a marked difference with the past. besides competitive open sector and strong growth of exports, the current account surpluses reflect a rather subdued growth of domestic demand after the crisis of the early 1990s. the corporate sector adopted a more cautious investment policy line by reducing its debt exposure and increasing its buffer stocks. the general government sector has been in surplus for years. as a consequence of international diversification of investors'portfolios, non - residents'holdings of shares in the finnish stock exchange rose to over 70 % of the total market capitalisation in 2000. this greatly reduced the exposure of the finnish economy to the ict asset price bubble at the turn of the century, as the main ownership risks were born by foreign investors. prudent fiscal policy as to economic policies, after the crisis in the early 1990s there was a clear need to adopt policies which would be compatible with the free movement of capital across national borders. broad support has developed for stability oriented fiscal policy as a basis for more long - term stable economic development. in line with this, public finances were consolidated. in recent years fiscal policy has been effectively based on explicit policy rules such as spending limits covering the whole electoral term. as a result of prudent fiscal policies, the general government sector is in surplus. the surplus ratio is on the level of 2 – 3 % and is expected to remain so. established social dialogue established social dialogue has been helpful in the implementation of some reforms. recently a major pension reform was agreed between employees, employers and the government. in the reform, which has already been implemented, two early - retirement schemes were abolished. there will be a longevity coefficient linking pensions to life expectancy, and benefits will be calculated on the basis of the whole lifetime income and not the last working years only, as earlier. this has improved the stability of the financing of the pensions, but challenges still remain. collective wage agreements play a relatively prominent role in shaping the relationship between employee and

erkki liikanen : finland, emu and euro speech by mr erkki liikanen, governor of the bank of finland, at the international bankers'club, luxembourg, 1 december 2006. * * * introduction finland joined the euro area among the first eleven countries in 1999. the emu and the introduction of the euro marked a major step towards deeper integration within the eu, and have affected the finnish economy and economic policies in many respects. in the debate before the euro, it was recognised that the emu and the euro would bring many benefits in terms of economic efficiency, but its impact on economic stability in finland was open to dispute. finland was different from other potential emu countries and the question was : could the single monetary policy be suitable for the finnish economy? in this presentation, i will walk you through this " asymmetry discussion ", which at the time received a great deal of attention in finland, and then discuss the performance of the finnish economy during the eight years we have now been in the emu. doubts before the start of the monetary union : macroeconomic stability before we joined the emu, there was a lively and intensive debate about its pros and cons. economic efficiency, benefits, such as less uncertainty over exchange rates, lower costs of currency exchange, more price comparability and greater competition, as well as more efficient money and other financial markets, were recognised. but opinions were sharply divided as to the impact of the monetary union on economic stability. on one hand, some believed that the emu and the single monetary policy could improve the credibility of monetary policy. in so far as the traditional finnish problem of inflationary pressure and eroding competitiveness was due to insufficient credibility of monetary policy, price stability and competitiveness could be better in emu than before. it was also expected that interest rates would be more stable - and on average lower - in the monetary union than under autonomous monetary policy. on the other hand, much attention was devoted to the so - called asymmetry of the finnish economy. while macroeconomic trends in the core eu countries such as germany, france and the benelux countries usually were broadly similar, economic developments in finland diverged a lot. there were differences in the timing of macroeconomic fluctuations, and the amplitude of fluctuations was greater in finland than elsewhere. as the single monetary policy was to be tuned according to the economic situation of the whole euro area, it was feared that its stance could be