The last couple of years have truly been difficult in Finland. The economy has long been in a depression but the year 2016 is believed to be the first good and bullish year in a long time. Companies’ revenues have decreased but in a marginal sense, the operating profits have improved.
Clear raise in investments and dividends
At the moment the biggest question is the act between investments and dividends. Large Finnish public companies – such as Nokia – pass out big dividends, but also investments are said to have risen with more than EUR 2 billion from the year 2014 (Kauppalehti). Many companies have overcapacity, which means that the distributable retained profit is given as dividends to the shareholders, if there’s no acute need to invest. According to Nordea, all dividends passed out by public companies in Finland increases to nearly EUR 12 billion this current year, which is almost a EUR 1 billion raise from last year.
Not all companies invest in Finland, though. What the companies with the best operating profits all had in common was that they all had invested their money where there was growth – Asia. Only a few companies have been told to have invested in Finland, such as forest product company UPM, and Skaala Group Oy which has specializes in glass products. Although investments create jobs, the unemployment rate in Finland is high and is not fixed with only a couple of investments.
Companies wish to invest more in Finland but is not always possible. The reason it’s not done is mainly in the fact that taking employees and the work itself costs too much to companies in Finland. It is more optimal for a company to invest its money, where they can get the same profit at a smaller cost. For example if the above-mentioned UPM wishes to run its equipment for 7 days instead of 4 for a 40% increase in output, the costs would raise with 100% (Ilta-Sanomat). On the other hand labor unions won’t ease the demands in costs, because they want workers to receive a living wage which would guarantee a basic social security in this northern country. At least we get the dividends, for the fact is that they give a good tax profit. The bigger the dividend, bigger the profit.
What are your thoughts on this topic?
What is your opinion on tax havens?
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