Finland Occupational and Wage Structure

Finland Country Studies index

Finland - Occupational and Wage Structure

Occupational and wage structure

Finland's export-dependent economy continuously adapted to the world market; in doing so, it changed Finnish society as well. The prolonged worldwide boom, beginning in the late 1940s and lasting until the first oil crisis in 1973, was a challenge that Finland met and from which it emerged with a highly sophisticated and diversified economy, including a new occupational structure. Some sectors kept a fairly constant share of the work force. Transportation and construction, for example, each accounted for between 7 and 8 percent in both 1950 and 1985, and manufacturing's share rose only from 22 to 24 percent; however, both the commercial and the service sectors more than doubled their share of the work force, accounting, respectively, for 21 and 28 percent in 1985. The greatest change was the decline of the economically active population employed in agriculture and forestry, from approximately 50 percent in 1950 to 10 percent in 1985. The exodus from farms and forests provided the manpower needed for the growth of other sectors.

Studies of Finnish mobility patterns since World War II have confirmed the significance of this exodus. Sociologists have found that people with a farming background were present in other occupations to a considerably greater extent in Finland than in other West European countries. Finnish data for the early 1980s showed that 30 to 40 percent of those in occupations not requiring much education were the children of farmers, as were about 25 percent in upper-level occupations, a rate two to three times that of France and noticeably higher than that even of neighboring Sweden. Finland also differed from the other Nordic countries in that the generational transition from the rural occupations to white-collar positions was more likely to be direct, bypassing manual occupations.

The most important factor determining social mobility in Finland was education. Children who attained a higher level of education than their parents were often able to rise in the hierarchy of occupations. A tripling or quadrupling in any one generation of the numbers receiving schooling beyond the required minimum reflected the needs of a developing economy for skilled employees. Obtaining advanced training or education was easier for some than for others, however, and the children of whitecollar employees still were more likely to become white-collar employees themselves than were the children of farmers and bluecollar workers. In addition, children of white-collar professionals were more likely than not to remain in that class.

The economic transformation also altered income structure. A noticeable shift was the reduction in wage differentials. The increased wealth produced by an advanced economy was distributed to wage earners via the system of broad income agreements that evolved in the postwar era. Organized sectors of the economy received wage hikes even greater than the economy's growth rate. As a result, blue-collar workers' income came, in time, to match more closely the pay of lowerlevel white-collar employees, and the income of the upper middle class declined in relation to that of other groups.

The wage structure of the 1980s contrasted sharply with that of 1900. At the turn of the century, the pay of a senior government official was many times greater than that of an industrial worker, and households headed by professionals customarily employed servants. By the 1980s, the household of a university-educated professional had an average income not quite twice that of a manual worker in the farming or forestry sector. According to the Central Statistical Office of Finland, if the average household income is measured at 100 in 1984, that of a professional household is 169; of a salaried employee, 118; of a construction worker, 112; and of an ordinary service sector employee, 104. Among households with incomes below the average are those of farm and forestry workers, with an average income measured at 92; those receiving unemployment benefits at 73; and those retired at 44.

Despite a more even distribution of income, Finnish government statistics showed that a considerable portion of taxable income was earned by small segments of the population. In 1985 the top 10 percent of taxpayers earned 26.9 percent of taxable income, and the top 20 percent earned 43.7 percent of income. The bottom 10 percent of taxpayers earned only 0.5 percent of taxable income; the bottom 20 percent, only 3 percent. These figures had remained stable since at least the late 1970s, and they were unlikely to change greatly by the early 1990s, as Finnish taxes remained relatively modest compared with those of other West European countries. Although Finland's income distribution was the most unequal of the five Nordic countries, it did not differ greatly from its neighbors. Sweden, for example, had the most equal distribution, with the top 20 percent earning 38.1 percent of taxable income, and the bottom 20 percent, 5.3 percent.

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