Which Are The Job Creating Organisations In Finland?

The Bank of Finland’s Bulletin page is a bookmarked page for me. They have very informative monthly reports and articles analysing the data they have. One of their recent articles from June 2016 was Job creation in firms – does Finland lack gazelles? by Juuso Vanhala and Matti Virén.

One of the key points they make is that a small number of firms create a significant portion of new jobs in Finland while in a large portion of firms, job creation remains limited or the number of jobs is actually decreasing. They do the analysis by focusing mainly on changes in employment over three-year periods since it gives a much clearer picture of the length of employment cycles.

But there is a catch to the number of new firms starting and employing people.

Their insight is that each year certain number of new firms start up, and around an equal number close down.

A large proportion of all new jobs are created by a very limited group of companies.

The share of startups in the total number of firms in Finland is among the lowest in international comparisons: in many countries, startups account for about 15–25% of all firms, compared with less than 10% in Finland.


Number of startups and exiting firms

Startups employ less than before

Percentage growth rate of number of employees

The key point they make is

A small group of gazelles creates a large share of jobs

Gazelles are described as businesses with annual growth over 20%. So these Gazelles are 6% of all companies, but create over 50% of all new jobs. The remaining new jobs seem to be created by a larger group of firms that grow at a slower pace. These Gazelles exist in all industries and sectors, not just high-tech industries.

Not surprisingly the article concludes that the share of firms that have downsized by a lot has increased in times of recession, first in 2009 and thereafter to a notable degree during 2012–2014. And the downsizing had led to reduced net employment.

Also since 2009, one in every 3 Gazelles seem to also have the number of employed decline by more than 50%.

A really informative article. You should really read the whole article and go through the references they have as well.

I Get Excited and Depressed When I Read Stories Of Automation & Robots

I just read this article in The Guardian, titled “Robot factories could threaten jobs of millions of garment workers”

This is neither the first nor the last article to be published on this topic.

Also according to the article,the International Labor Organisation (ILO) has a report stating that up to 90% of workers in south-east Asia could face unemployment due to automation. So this is just one field. Now think about how automation will have repetitive jobs eliminated in all the different fields not just in developing countries but also in the developed world! It will be an unemployment nightmare because it is far difficult for people to update their skill sets in a short period of time to apply for new opportunities.

A simple Google Search with the words “Automation Job Loss” gives 1.3 million results. This already shows the volume of articles in this area.

Screen Shot 2016-07-17 at 00.58.42

Sewbots are unlikely to appear in factories in Asia, the report says, but will be installed in destination markets like Europe and the US. It is such a big threat that the ILO urges Asean countries to start planning to diversify to “avoid considerable setbacks in development”.

I get excited when I read about automation because new tech is awesome and I get depressed because the transition for people to acquire new skills and be part of the workforce will be an increasingly difficult job.

Obviously this is not just a technology issue but a societal issue. So, factories will be coming back to the developed countries from these emerging markets but they don’t enhance employment opportunities in the developed markets in any significant way either.

Adidas announced a factory in Germany that will begin manufacturing shoes using robots in 2017. The “Speedfactory” will employ just 160 people: one robotic production line will make soles, the other production line the upper part of shoes. With an additional factory planned for the US, it is a scheme Adidas describe as a “gamechanger”.

Currently an Adidas shoe takes 18 months to produce from idea to shelf. The aim is to reduce this to five hours, with customers able to customise their order in stores.

There is a significant amount of experts who are pushing now to create some sort of “Basic Income” to counter this phenomenon. The idea of a “Basic Income” is that the state will providea minimum amount of money needed to survive to all it’s citizens so that it could provide financial security for people and at the same time help unleash their creative juices, get them to take more risks and be more entrepreneurial in their pursuits.

There is question and answer about how to tackle this automation in this specific context.

For the millions of people who stitch clothes and shoes for a living and who look set to be hardest hit by automation, could robots be an opportunity for fairer work?

“In a best case scenario, robots take on board the most repetitive, mundane and non-cognitive tasks of apparel manufacturing,” explains Chang. “Robots would also assume more of the dangerous and dirty tasks, like mixing of chemicals which can be hazardous to human workers. Ultimately, human workers would be able to perform more satisfying and rewarding, as well as higher-paid, jobs in the sector like programming robots for better production and design.”

I think this is more hope talking rather than reality. Because the transition to automation and building such factories will be lot quicker than making structural changes in the economy or for people to update their skills.

So, this again brings me to emphasise the importance of Frugal Innovations and creating quality, accessible, sustainable and affordable solutions.

So, as the quote goes “If not us, who? If not now, when?”

Businesses and innovators in both public and private sector need to learn to create such solutions because people and organisations with lesser financial resources will demand such solutions.

Discrepancy Regarding Available Jobs (Be It ICT Or Others) And Available Workforce

Just was going through this EU Thematic Fiche (background document) – DIGITAL SINGLE MARKET: DIGITAL SKILLS AND JOBS

This report was shared by a colleague on Facebook and I wanted to get my 2 cents out there.

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Looking at Figure 1 and Figure 3, Finland has clearly highest per capita in having digital skills and at the same time also the highest share of them in the ICT industry. It is also the highest share in EU! If ICT professionals are also one of the most needed employees in EU but there is still huge unemployment in Finland and taken together with the economical situation of Finland, sadly something is really wrong.

The articles and reports I read on the discrepancy regarding available jobs (be it ICT or others) and available workforce is that there is no skills match and especially in startups, it seems they would rather have someone with the readily available skills rather than train them on the job.

5 Stages Of Grief – Finnish (European) Economy in 2016 & The Need For Frugal Solutions

I started out helping Finnish businesses in India 5 years ago. Two years into it, I realized that when customers in developing countries like India are asking for an IKEA type  solution, most Finnish businesses are instead giving them an Artek. At the same time, I noticed that the European economic crisis began to manifest in a way where more Finnish families and businesses are having lesser purchasing power. This made me realize that pretty soon they will need high tech, new tech, low cost, sustainable ( =Frugal) solutions.

Source: http://www.findikaattori.fi/en/3

This, I believe, is not just Finnish issue but a Nordic and Europe wide issue leading me to imagine the 5 stages of grief that the Finnish (European) business will go through before they create frugal solutions.

Stage 1 – Denial

The businesses attempt to shut themselves from seeing what’s actually happening or create an alternate reality that they would like to have. “Wait long enough” and then things will go back to as they were! They seem to try to convince themselves that the situation is just temporary or that the crisis won’t affect them or their industry. “We shall start seeing our traditional markets grow anytime now and since we make the best possible solution, the buyers in developing countries need to get around to our viewpoint and see the quality and value of our offering and just not haggle about the price!”

The 2016 Economic Report of the President from the White House with this particular figure illustrates what’s on my mind:

I also see that most businesses have begun to move to the next 4 stages.

Stage 2 – Anger

At this stage, businesses will start to be angry. The economists, politicians, the consumers, the system- all letting them down. Are the Chinese flooding the market and driving down prices? Are we to blame ourselves for not planning properly and not seeing this looming economic crisis?

Stage 3 – Rationalizing

Businesses will reach out to banks and other lenders to renegotiate payment terms. Reach out to others in the same tough spot and try to rationalize that this is not something that is uniquely affecting their particular business. Or maybe the next big deal is right around the corner but when the negotiations start to stretch out and combined with stages 1 and 2, it leads to the next stage.

Stage 4 – Despair

What if the credit lines don’t get extended. Maybe the big deal they thought was happening  doesn’t happen and they come back asking for a ridiculously lower price or that they don’t want to purchase that item any more or they found another better offer. There will be a lot of uncertainty leading to despair and making businesses question if what they are offering is the right product fit and market fit anymore!

Stage 5 – Acceptance

A business person is an entrepreneur at heart. A smart one would quickly go through or even be able to skip some of those grief stages to accept the reality of the situation. This will help them make peace with the situation and begin to develop a strategy to deal with it.

I would say that businesses will start to integrate a different product line comprising of frugal solutions that will help them stabilize and get them on to the road to profits. They will realize that solutions that are of good quality but at the same time that are also affordable and sustainable will be a real win-win. This will bring into fore a more user focused design process or a change in their business model and value chain. These successful businesses will figure out that Frugal solutions can be produced using high tech/new tech, low cost approach.

 These frugal solutions can be arrived at by using principles and processes of circular economy, shared economy, open innovation, inclusive/social innovation, DIY/Maker movement and co-creation.

We at The Nordic Frugal Innovation Society (http://tnfis.org) are working with both public and private sector to show that slow growth, deleveraging, environmental constraints, ageing societies in Finland and other developed economies on one hand and emerging world markets on the other will push businesses to create frugal solutions.

 Our 2 day innovation and thought leadership event called InnoFrugal (www.innofrugal.com) is where attendees can listen, learn, interact and network on co-creating affordable & sustainable solutions with new technologies to standout from their competitors in their traditional (developed) markets as well as newer (emerging) markets.

I welcome you to join us in this co-creation journey at the 2nd edition ofInnoFrugal during April 25-26, 2016 at Heureka-The Finnish Science Centre.