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Mon, 13 Oct, 2014 12:35:06 AM FTimes - Xinhua Report, Oct. 13  A closeup taken on December 31, 2011 in Lille, shows triple "A" letters (AAA). Standard & Poor's has decided to downgrade France's top-notch credit rating but will spare Germany, Belgium, Luxembourg and the Netherlands, an EU government source told AFP on January 13, 2012 . Photo – AFP / Lehtikuva. The decision by Standard & Poor's to lower the Finnish credit rating on Friday has generated a heated debate among Finnish political parties on what Finland should do.
Future of the Nordic country's social safety net and labor market rights is central in the debate. The credit rating agency had taken up among other matters the size of Finland's public sector in cutting its triple-A credit rating one notch to AA-plus.
Leader of the opposition Green Party Ville Niinisto said over the national TV that the conservatives were trying to use the credit rating as "a pretext to dismantle social security."
Meanwhile, Finnish Prime Minister Alexander Stubb described the cutbacks in Finland's social security and healthcare systems carried out since the last parliamentary elections "as a necessary beginning."
Finnish Prime Minister Alexander Stubb addresses a press conference with the German Chancellor at the chancellery in Berlin on September 29, 2014. Photo – AFP / Lehtikuva. Social democratic governmental officials, however, warned against fast changes, with Finance Minister Antti Rinne at an IMF meeting in the United States saying that there was no need to rush to new cutbacks until impact of the measures already adopted has been seen.
Lauri Ihalainen, labor minister and a social democrat, warned against launching a cycle of declining salaries. "We must see to it that domestic demand would not diminish. The confidence of the common people in their economy must somehow be maintained."
He also defended the general applicability of union contracts in Finland. In Finland, union agreements create the minimum salary standard within a branch of industry or service.
Ihalainen said the best way to handle the situation is to proceed "in a credible way with the financial decisions of the structural plan."
Leader of the opposition Center Party Juha Sipila said that the message from the credit rating agency must be taken seriously and decisions cannot be postponed. "Finland needs growth and jobs," he said in his blog, criticizing the government for its slow progress.
chairman of the Greens Ville Niinistö, at a press conference in parliament in Helsinki on 23 June 2014, organized by the Green Party on Monday, and the delegation of the Parliamentary Group joint meeting with the Greens decided to formally participation Alexander Stubb, the Board of Directors. Photo – Lehtikuva. Leader of the True Finns Timo Soini meanwhile called for early elections, of which the original scheduled time is April 2015.
On a Yle radio talk show on Sunday, Prime Minister Stubb admitted the loss of triple A status with one of the agencies was a failure by the government. But he underlined that two other agencies still list Finland as AAA and also S&P says AA+ is stable.
The economic aspects of Finland's relations with Russia had been taken up in the S&P report. Stubb said a new appraisal about Russia must be done. "Russia does not qualify as a strategic companion," he said, however stressing that security in the Baltic area has not impaired.
Stubb is to convene a meeting of the national Economic Council next week. The forum is a co-operative body that comprises the government, key organizations involved in collective bargaining and the Bank of Finland. Opposition parties have been invited too.
Stubb said Finland needs a medium-range plan. "Structural changes already agreed upon will have to be completed, but new solutions must be sought as well."
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