The government must take the trade sector into account in its growth policy: investments in innovation policy are needed
In a challenging competitive situation, commerce requires the government to act in order to secure the growth and competitiveness of commerce in the budget session. The government should emphasise increasing productivity in the service sector by investing in innovation policy and encouraging companies to adopt innovations. In addition, regulations that cause costs for companies, such as reporting to the authorities, should be removed.
The VAT increases that will come into effect in September will weaken the purchasing power of Finns and thereby make the operating environment of companies in the commerce sector, particularly speciality and consumer goods shops, even more challenging. Specialty goods shops are in fierce price competition with international online stores. At the same time, Chinese online platforms are gaining market share by taking advantage of the loopholes in EU regulation and shortcomings in supervision.
“In a difficult situation, the government should urgently invest in an innovation policy that encourages companies to adopt new innovations, as this would support the growth of the productivity and competitiveness of companies,” says Kari Luoto, Managing Director of the Finnish Commerce Federation.
It is also important that the interpretation of the criteria for R&D operations identifies the needs of service sectors, such as companies in the commerce sector. Financing granted by Business Finland to companies in the commerce sector must also be secured.
“Under no circumstances should the government make cuts in the financing of innovation activities that Business Finland provides to SMEs. Instead, the financing criteria should be expanded so that part of the financing is directed towards improving the productivity of commerce and services,” Luoto emphasises.
In its report, the Organisation for Economic Co-operation and Development (OECD) has recommended that Finland increases and diversifies the number of companies participating in RDI operations. This requires investments, particularly in innovation activities at the business interface.
Regulation that increases the costs of commerce must be dismantled
The Finnish Commerce Federation is concerned about increasing regulation in the everyday life of commerce companies. Currently, legislation requires companies to report extensively to the authorities, and this causes significant costs for companies.
Under the pressure of competitiveness, commerce should also be able to develop its digitalisation and respond to the challenges of biodiversity, sustainability and climate policy.
The government should therefore actively continue to deregulate and to avoid the administrative burden caused by the new EU regulations for companies.
“The Board of Directors should investigate different ways of implementing the centralised authority reporting channel offered to companies. The starting point should be compliance with the“report only once” principle,” says Luoto.
Decisions must be made with ambition
The government decided to cut the tax credit for household expenses by EUR 100 million in the budget framework session this spring.
“We hope that the government would not target the cut in the tax credit for household expenses on renovations that are already in poor condition. Changes in the operating environment have been putting hardware and interior decoration trade under pressure for several years. Renovation construction, together with the tax credit for household expenses, has previously served as the main driver of the sector in a weak economic cycle,” Luoto says.
In Sweden, the government decided to temporarily increase the tax credit for household expenses to support employment in the industry during a difficult time and to avoid unnecessary bankruptcies.
The Finnish Commerce Federation hopes that the government will also accelerate the preparation of the company restraining order included in the Government Programme. Serious threatening situations in customer service work and crimes against commerce continue to rise. Employers’ and employees’ representatives are widely in favour of the company restraining order.
“Clarifying the interpretations of existing legislation is not a sufficient measure to ease the situation. Commerce needs a robust tool, a company restricting order, to guarantee the safety of both shop employees and customers,” Luoto emphasises.
Further information: Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 (0) 400 688 708, kari.luoto(at)kauppa.fi
