DENMARK

8. Worker Rights

a. Right of Association

Workers in Denmark have the right to associate freely, and all (except those in essential services and civil servants) have the right to strike.

Danish wage earners belong to unions.

More than 80 percent of

Greenland and the Faroe Islands, autonomous entities within the Danish Realm, provide the same level of worker rights, including full freedom of association, as does Denmark proper.

b. Right to Organize and Bargain Collectively

Workers and employers acknowledge each other's right to organize. Collective bargaining is widespread. Salaries, benefits, and working conditions are agreed on in biennial negotiations between employers and unions. Those agreements as a general rule are also used by the unorganized part of the labor market.

Labor relations in Greenland and the Faroe Islands are conducted in the same manner as in Denmark.

C. Prohibition of Forced or Compulsory Labor

Forced or compulsory labor is prohibited and does not exist in the Danish realm.

d. Minimum Age for Employment of Children

The minimum age for fulltime employment is 15 years. Children under 15 years may perform light work, for example delivery services, not exceeding two hours daily. The law, which is observed in practice, describes in detail limitations applicable to work which may be performed by those under 18 years of age.

e. Acceptable Conditions of Work

By international standards, Danish law sets high minimum standards for conditions of work, including safety and health. A Labor Inspection Service ensures compliance with work environment legislation. There is no legislated minimum wage, but the lowest hourly wage set in any national labor negotiation is roughly equal to US$11.00. By law Danes are guaranteed five weeks of vacation per year. As of September 1990, the workweek was reduced to 37 hours. In connection with the introduction of the EC single market, Denmark had a clause inserted in the agreement allowing any country to have higher standards for conditions of work than the minimum requirements laid down by the EC.

Similar conditions of work are found in Greenland and the Faroe Islands, except that their workweek remains at 40 hours and that there is no publicly-supported unemployment insurance available. Unemployment benefits in both places are either contained in the labor contract agreements and/or form part of the general social security system. Sick pay and maternity pay, as in Denmark, fall under the social security system.

DENMARK

f. Rights in Sectors with U.S. Investment

Worker right conditions are equally applied in all goods and service producing sectors in Denmark.

(D)-Suppressed to avoid disclosing data of individual companies

(*)-Under $500,000

Source: U.S. Department of Commerce, Survey of Current Business August 1990, Vol. 70, No. 8, Table 13

FINLAND

Key Economic Indicators

(Billions of Finnmarks (Fmk) Unless otherwise Noted)

1/ 3-month Helibor-rate. Helibor (Helsinki interbank offered

rate) is Finland's commercial banking reference rate.

Finland has experienced solid economic growth for more than a decade, but growth cooled substantially in 1990 after an unsustainably strong, private consumption and investment surge in 1988-89. In terms of nominal per capita GNP, Finland ranks second in the OECD, just behind Switzerland. Adjusted for purchasing power however, Finland drops to tenth place. The country's only major natural resource, forests, provided the original basis for industrial development and is still the most important sector. Other manufacturing fields, principally metal engineering (including shipbuilding), complement the forestry sector as the main engines of economic growth. Industry has increasingly expanded into high technology fields, especially electronics, which add value and give a competitive edge to the engineering and forestry industries. Finland is a world leader in such products as cellular telephones and papermaking machinery. As a negative by-product of growth in the 1980s, the public and private service sectors which feature little competition grew more rapidly than export-oriented manufacturing, and now account for 60 percent of total GDP. Finland provides an extensive system of social services for its citizens, including unemployment benefits, education, health care, etc. Personal income taxes are correspondingly high, but still lag behind Swedish and Danish levels.

Although the government plays a significant role in this mixed economy, 80 percent of manufacturing capacity and 90 percent of banking services are privately owned. Seventy percent of the service sector is in private hands. Finnish industrial policy has two aims: facilitating industrial structural adjustment in response to market forces; and improving Finnish external competitiveness through investment in human resources. It generally eschews industrial targeting or production subsidization. An important exception is the agricultural sector, which receives substantial support aimed at retarding urban migration and maintenance of self-sufficiency in food production. On the industry side, the government is still divided over fiscal measures to support the reorganization of the country's troubled shipbuilding sector which saw a major and costly bankruptcy at the end of 1989.

During recent years Finnish economic policy has been aimed at reducing overheated domestic demand, with national budgets being drafted to have at least a neutral effect on the economy. Real government spending in 1990 increased only 2.0 percent, with a cash surplus used to reduce the government's net debt. At the local level, however, deficit public sector spending has acted to stimulate economic activity, offsetting whatever drag the national budget has exerted.

Finnish business has an ostensibly light tax burden which compensates for the extremely heavy load of employers' social security contributions. In addition to favorable depreciation rules, such provisions as the operation allowance, tax-deferred investment reserves, and R&D allowance reduce the effective corporate tax rate to a small percent of operating income. Tax policy is also used to achieve regional

development objectives such as promoting investment in remote locations and discouraging development in Helsinki.

FINLAND

The Finnish monetary authority, the Bank of Finland, elected to adopt a fixed exchange rate regime in 1986, concomitantly with extensive deregulation of domestic money markets and relaxation of capital controls. The result is an open economy where interest rate policy is used to support the exchange rate policy, i.e., monetary policy has only limited use as an economic policy tool to achieve short term objectives. Monetary policymakers expect that domestic prices will eventually conform to the constraint of a fixed exchange rate, which has led to a loss of export competitiveness, which in turn is having the desired result of forcing slower growth and a hoped-for rebalancing of the economy. To dampen domestic economic activity and to finance a growing current account deficit, the Bank of Finland has supported a positive interest rate differential with world money markets, resorting to increases in commercial bank cash reserve requirements and open market interventions to keep domestic money markets tight. High Finnish interest rates have attracted capital from abroad, making financing of the current account deficit easy.

2. Exchange Rate Policies

The value of the Finnish mark is determined by a trade weighted basket of foreign currencies. The Finnmark may fluctuate within a range of 6.5 percentage points. The Parliament's Bank Supervisors must act to allow the Finnmark to move outside this band. The Bank of Finland pursues a fixed exchange rate policy to provide a stable Finnmark environment as a reference point for what has been an inflation/devaluation driven economy. Strong capital flows have caused the Finnmark to appreciate against the U.S. dollar, a favorable development for U.S. exporters and tourism interests, but unfavorable for Finnish exporters and tourism industry. The relaxation of foreign exchange regulations has eliminated most currency controls. If there is a successful conclusion to negotiations over an European Economic Space (EES) between the EC and EFTA, Finland will likely abandon the few remaining capital and currency controls, except where taxation monitoring requires them.

The Finnish government has pursued a policy termed "controlled structural adjustment" aimed at facilitating industrial reorganization and increasing efficiency. These market-oriented reforms include partial privatization of state-owned industries, labor market and tax structure measures, and termination of price controls.

The main challenges facing policymakers in late 1990 are connected with the accelerating reorientation away from the Soviet Union as a major trading partner and towards integration with the European Community in the EES context. An additional factor will be the pressures on regional and agricultural policies should the GATT Uruguay Round yield a breakthrough in commitments to lower farm subsidies, an eventuality the Finns are prepared for, but which will engender significant domestic debate.