Finnish businessmen and government officials are looking for solutions to reverse losses in revenue resulting from Nokia’s decline over the past six years.
Nokia, once the world’s top mobile phone manufacturer, lost its top spot to Apple in 2008 and has been battling to regain company losses ever since. It is evident how heavily reliant the Finnish economy has been on the company with a growing decline in GDP and an increase in the unemployment rate. Executives at some of Finland’s largest corporations say that the country needs to take small measures now, in order to improve the situation rather than waiting which will necessitate more drastic measures in the future. Public debt is rising and companies are urging the government to reduce its public sector by cutting down the number of municipalities, lessening regulations in order to encourage start-ups, and amending the tax code in order to make hiring more favourable for businesses.
Finland’s unemployment rate sits at 7.4%, a 2.2% increase from a low 5.2% in 2008 (in comparison, the unemployment rate in South Africa is over 25%). The country’s population is 5.5 million, catered for by an administration consisting of 320 municipalities. By comparison, Denmark, a neighbouring country with a population of 5.6 million, has 98 municipalities. A contracting GDP is a result of a growing public administration and reduced public revenue.
Nokia shut down production and research facilities in Finland, Canada and Germany, and sold its head office Nokia House in 2012. The result of cost cutting measures such as these has resulted in thousands of job losses in Finland as well as globally. From 2007 to 2012, Finland lost 76,300 jobs as a result of downsizing by companies including Nokia, papermakers and engineering companies in the country. Nokia has lost 38 billion euros in revenue since 2008. In order to regain this loss in economic contribution, Finland would require the establishment of 38 new start-ups, each with annual revenues of at least 100 million euros.
Judging from the advice of experts, it is clear that Finland is not relying on Nokia to regain its decade-old successes. Economists and investors are looking elsewhere for solutions. Perhaps this marks the gradual end of Nokia, which may close its doors, merge or be bought out by another company in the future.