Finnish entrepreneurs call for better incentives to grow businesses

A recent survey conducted by the Federation of Finnish Enterprises reveals that a significant majority of entrepreneurs believe there are insufficient incentives in Finland to expand their businesses. The Yrittäjägallup survey shows that 70% of respondents feel the current business environment lacks the necessary support to foster growth, with only 14% expressing satisfaction with the existing incentives.

Urgent Need for Enhanced Growth Incentives

“The message is clear: we have a lot of work to do to provide more incentives for entrepreneurs to grow their businesses,” said Petri Salminen, Chairman of the Federation of Finnish Enterprises. “Encouraging business growth is crucial because expanding companies create jobs and invest in the economy. It’s important to remember that Finland’s economic growth stems from the growth of Finnish businesses.”

Salminen emphasized that no single solution can ignite business growth. Instead, a comprehensive approach is needed across various areas to make Finland an attractive platform for investment and business expansion. This includes enhancing the attractiveness of entrepreneurial risk-taking, ownership, investment, and employment.

Declining Growth Ambition Among SMEs

The SME Barometer indicates a clear and ongoing decline in the number of growth-oriented small and medium-sized enterprises (SMEs). Currently, just over one-third of SMEs are pursuing growth, down from approximately half in 2016. The Yrittäjägallup survey conducted in April highlights a particularly strong demand for increased growth incentives in the industrial sector (79%) and among companies employing 5-9 people (79%).

Conversely, the construction sector (21%) and entrepreneurs in the Helsinki metropolitan area (21%) are the most satisfied with the current growth incentives.

Strategies to Strengthen Growth Incentives

Entrepreneurs identified several key measures to bolster business growth incentives. The most popular suggestions include simplifying labor laws to facilitate hiring (57%), increasing the appreciation of entrepreneurship (57%), expanding local agreements (50%), improving the quality of the workforce (31%), and adjusting corporate taxation (30%).

Other frequently mentioned factors include the availability of labor (29%), business financing (29%), dividend taxation (28%), acceptance of failure (27%), and easing the process of starting anew (21%).

Among companies with over ten employees, there is a particular emphasis on regulatory changes to make hiring easier (73%) and on local agreements (65%).

“The survey shows that the government is on the right track by making it easier to hire workers, for instance, by simplifying fixed-term employment contracts and personal grounds for dismissal, as well as introducing an unpaid first sick day,” said Salminen. “Increasing local agreements is also a significant incentive for growth, especially for employers. The government is taking the right steps, although the right to negotiate different agreements will still need to be addressed by future administrations.”

Valuing Entrepreneurship

The appreciation of entrepreneurship is a consistently important growth incentive across all entrepreneurial groups, including solo entrepreneurs and female entrepreneurs.

“Increasing the appreciation of entrepreneurship is a task for all of us. While there has been significant improvement, there is still room for growth.”

Taxation as a Growth Catalyst

In the industrial sector, dividend and corporate taxation, labor availability, and financing are highlighted as critical growth incentives. Dividend taxation is significantly more important for male entrepreneurs (35%) compared to female entrepreneurs (17%).

“Taxation also plays a crucial role in growth. Corporate taxation needs to be competitive, and dividend taxation should encourage entrepreneurship and risk-taking. The significance of these factors increases with the size of the company, as larger companies typically have greater profitability and dividend distribution capacity,” noted Salminen.

Regionally, financing issues are more pronounced in Eastern Finland, while dividend taxation is a key concern in the Helsinki metropolitan area. Younger entrepreneurs place greater emphasis on the acceptance of failure (40%) and the ease of starting anew (35%) compared to their older counterparts.

For a detailed look at the survey results, click here.

Survey Details

The survey, commissioned by the Federation of Finnish Enterprises and conducted by Verianilla, included responses from 1,076 representatives of SMEs between April 3 and April 15, 2024. The margin of error for the survey results is ±3.1 percentage points.

HT