The dysfunctional regional job markets

In the beginning of my career I worked at a microelectronics center of a research institute in Helsinki area, Finland. Most of the personnel at the unit were from technology, but we also had an elderly ex-firefighter as a custodian. Even though he was in good shape, that was not good enough for work as a full-time firefighter anymore. He did various chores at the building, but his actual duty was: when the fire/chemical alarm rang, he run to a closet where he would dress into a polished clean industrial breathing set, and entered the cleanroom to find the cause of the alarm. Usually, it was just a false alarm he could check, or a small leak he could fix.

The couple of emergencies a year this man could fix saved much more money than his salary was. If the firefighters would have entered the cleanroom, save done there anything, both the cleanroom and the equipment there would have required thorough and expensive clean-up taking many months’ time.

The work of a firefighter is an example of a job requiring strength and endurance, not feasible for the elderly people anymore. It is still a waste of money and ability to put people to retirement already on their fifties — they could do other jobs for decades to come. But what would these other jobs be?

Ex-firefighters in their 50’s looking for a new job face an uphill battle. Having a working spouse makes relocating difficult. For the traditional school custodian jobs there probably are also younger applicants. The probability of the firefighter landing on a new job is low if the applicants are chosen to each job individually without heeding the externalities. Should the social impact of recruitment be taken account of and the jobs be tailored to the abilities of the job-seekers? According to a Työpiste magazine article (Finnish Institute of Occupational Health, 21.5.2019), a practical nurse in Southern Finland was trained to be a secretary at her workplace in contract apprenticeship with the support of a retirement fund — I wonder if that job was ever opened for public recruitment.

A historical perspective on social security

Discussing the pre-modern social security brings usually into mind the poorhouses and child auctions. Other forms of social help existed, but in a form not easily recognizable to modern people. Widows sook new spouses, as did my great-grandfather and his new spouse: a working widower needed a wife to take care of the house and the children, a widow needed someone to provide for her and her children. When a factory laborer died at work, of illness or at war, the widow might be arranged a suitable job at the factory to provide for their children.  The commander of the garrison in Kuhmo, Finland, during the Interim Peace 1940‒41, sent a hand-picked young conscript with an army horse to work on the farm of a war widow alone in the ruins with her children: their subsequent marriage was a happy result of the plan (Paavo Susitaival, Korpivaruskunta, WSOY, 1954).

The upbringing of the orphaned J.R.R. Tolkien as well as of his future wife Edith Bratt was paid by a rich widow as recommended by the priest acting as his guardian. A poor Finnish orphan child of early 19th century was lucky to get to the Finlayson school at Tampere. The help trickling down from the rich did not reach nor help everyone in need, but when it did, it could be way better than nothing and sometimes also well-targeted. The 19th century politics were far from ideal, but there may have been something there for us today to use to improve current social security systems.

Unemployment benefits help those in need, but the best long-term help to an unemployed would be a new job — with reasonable salary, of course. Social security can’t completely replace that. For the public finances, each unemployed landing in a new job is an improvement, even if the salary wouldn’t match the unemployment benefits.

Want of professionals in remote areas

Remote areas suffer from population depletion, unemployment, and want of specialist professionals. According to a statistical analysis (Osmo Soininvaara, blog 17.12.2018), 75 % of graduated 25‒34 years old in Finland live in the five most populous sub-regional units (Helsinki area, Tampere, Turku, Oulu, and Jyväskylä), of which the share of Helsinki is growing. As most of the 25 % left is taken by other sub-regions with universities, how many academic graduates are left to the smaller cities and countryside? It would occur to me that the dearth of specialist professionals to replace the retiring ones is going to wreak havoc in Finnish area hospital and health center network — with greater effect than any government policy, such as a social and health care reform, would have.

Even if young physicians, firefighters, police officers, teachers, or engineers would themselves be interested in moving to remote areas, the problem is in getting employment for their spouses. That job should be found and agreed before signing the other’s job, lest the spouse be in danger of long unemployment.  A small municipality might not have a job opening for an engineer for decades (before either of the current two engineers retire). Thus, we are here talking of a very short timeframe available to find the job for the spouse, in range of a couple of months. I’d call this as a requirement of liquidity of the job market. This is a very strict requirement for the job market of more and more specialized professionals.

Couples are thus left with bad choices: have one in odd gigs or even unemployed in a growing city or the other unemployed in the remote area. They usually resort to selecting either as the home and either of them commuting to work. Specialist professionals commuting from a growing city to remote counties might not be very much attached to their jobs: if a new job closer to home is available, they’ll be ready to leave the old job on short notice. I did myself commute to such a job 70 km from home, which severely restricted my ability to take part in the daily chores at home (such as taking a child to daycare in the morning or picking her up in the evening). At my employer there, most of the blue-collars were locals, but most of the white-collars commuted from nearby towns or the city like me, leading to high turnover of white-collars.

The demand for professionals is high, and thus the prospering exporting enterprises of Upper Savonia region — having trouble recruiting academic professionals — have founded R&D and sales units in the University cities of Helsinki, Tampere, and Oulu, far from their base. Herzogenaurach (Bavaria, Germany), the hometown of the sports equipment and clothing giants Adidas and Puma, was not able to attract the R&D top professionals (such as designers, brand specialists, and specialists of digital technologies) to move there (Helsingin Sanomat, 29.9.2014).

Cities and municipalities often work to prevent segregation of town parts, but is there nothing to be done to segregation between regions, even countries? What can be done to the flyover country?

Another source of problems to remote areas is the division of job market with regards to gender. A new manufacturing unit or investment brings new jobs most often to male-dominated professions, but few jobs to their spouses. A manufacturing unit does not draw the young ladies with academic education from their university town to the countryside (Talouselämä, 3.7.2019). More equal distribution of sexes to various professions would, also for this reason, be beneficial to the society as a whole — it’s just been very difficult indeed to find ways to amend this division.

The equine hospital in Kiuruvesi, Upper Savo, has not found applicants to leading positions of experienced veterinaries (Kiuruvesi-lehti, 20.5.2020). Maybe they should turn the search around: look for a veterinarian whose spouse’s skills and knowledge would be needed in a local enterprise or at the municipal offices. One should look to employ two people, not one, as two-career families are a norm. Vets are also a special case because even though livestock health is vitally important to food safety and public health (screening of zoonosis such as salmonella or swine flu), they are in high demand in cities for small animal practice for pets, which is a lighter and better paid job (The New York Times, 6.2.2007).

This policy would, however, require coordination between private and public employers, and hand-picking people to the jobs. This is not possible through open and appealable applicant screening processes. For the public sector, this might even be illegal.

One of the solutions proposed has been work that doesn’t need to be restricted to a single location (Tytti Määttä, Kaleva, 10.9.2019). The spouse in countryside could then work remotely from home, even if his/her office would be in  a city. In some jobs, this is possible, but usually only part-week. Many jobs require presence (e.g. that of nurses, shopkeepers, firefighters, etc.). Remote work also prevents one from having all those non-organized small meetings and discussions with one’s colleagues. The employer might also question a remote worker’s attachment to work: if one isn’t at the workplace, how much he/she is committed to the job? The employee may also fear being out of sight leading to being out of mind: is his/her career going to advance as well as of those present, or is he/she the first to go in case of layoffs? It may also be easier to change your existing work to remote working from countryside, than to find a new remote job if you happen to lose one.

One solution which keeps smaller communities afloat is a tradition of special industry in the community, e.g. a paper mill or optical manufacturing. This may work well for generations, but relying on one field of industry or one employer comes with risks, discussed by Paul Krugman (The New York Times, 30.12.2017). The luck may run out one day: flat screens may replace the CRT manufacturing, chemical film industry may be replaced by digital cameras, or people switch newspapers or magazines in paper form to reading them from tablet computers. When the support column in form of a local paper mill or CRT factory closes, the community is in economic and social ruin.

Another problem in the remote areas is housing. As there are few quality rental homes available, one usually needs to invest to a home, usually buying or building a house. If one needs to relocate, the home may not be saleable, or one loses much (or even most) of the investment by selling with lower price than the building cost. The countryside factories of old had a solution: company-owned residences. The factory would always need a manager, engineers, and factory physician, even if the people would change. Municipal doctors had their official residences, so did the priests. This was, of course, way simpler in the society of one-career families. Have the local communities lost something as a byproduct?

The dysfunctional labor market

The shrinking working-age population causes shortages of labor in both industries and social services. As a solution, the working career should be extended, but aging people losing jobs face difficulties landing in new jobs on the open job market. A more coordinated labor market would bring complex issues e.g. in wage formation. What would be an acceptable salary? Is one required to move for new employment elsewhere or take a job requiring long or difficult commute? Without a market, balance of supply and demand, the acceptable price is difficult to decide. The former salary of the employee in question can’t be a rigid baseline.

This brings us to the issue of job market in general (Touko Aalto, Talouselämä, 30.11.2019). At least in Europe, only a minority of us work in fields and geographic areas where: 1) there is enough open jobs and applicants to have a liquid market where the balance of supply and demand could be found; 2) the salaries are negotiated between the employee and the employer. In Europe, most of the union-negotiated salaries especially in blue-collar jobs are pretty rigid, the employer can in some cases (such as Finland) pay extra to get or keep a more valuable employee. The other major group where there is no open market of salaries is in public sector. Some professions, such as MDs are in such a short supply that even the public sector gets itself to negotiate personally, but this is not usual. Thus, for most of us, there is actually no real job market, just jobs.

Our job market is intrinsically somewhat inefficient. If, for a generalist job, there are a hundred applicants applying for a hundred jobs, each applicant should write several dozen applications and each employer evaluate dozens of them before recruitment is completed. This takes weeks or months, with a depressing effect on applicants, and employers trying to find shortcuts to screen/drop applicants without reading all the applications. Not to mention that the applicants are recommended to phone the employers: how many phone calls the employers actually want to take per recruitment?

Some kind of artificial intelligence application might help to match the employees with the employers. For top management, this is traditionally done by professional headhunters. Some internet-based services try to do this for others, too, to some extent: LinkedIn for the white-collared people mostly in business and technology, can be seen as an example. MeetFrank is a new application but seems to be targeted to software business. AI applications should be built with care, however, not to have hidden or even unintentional biases. Algorithms could help solve the two-career-family problem by considering the needs  of several employers and the skills and needs of both spouses.

Another part of society facing problems with two-career-families are those professions requiring moving aboard for several years: diplomats, university post-docs, and enterprise expats (Helsingin Sanomat 21.9.2019). The employers would like to hire all these as individuals, not considering the spouse’s career. In the academic world, graduated doctors should move to another university for their post-doc gig. How to arrange for the career of the spouse in such a case (TEK-lehti 2/2012, pp. 42‒45)? Quite often, the spouse stays home with the children in the new university town, often at a maternity leave for the beginning. This may have a negative effect on gender career equality.

Mitigating the individualism?

The Finnish public sector requires certain language skills, often both Finnish and Swedish, from its employees, along with other requirements. The Director General of Finnish Customs Hannu Mäkinen discussed the effect of these and other requirements to the employment rate of immigrants and disabled people in Helsingin Sanomat (19.10.2019). The Finnish education sector, social and health care, and police would all need employees able to speak the immigrants’ languages — couldn’t they employ immigrants for that?

Also the foreign students in Finnish universities and institutions have trouble finding job after graduation, undermining the benefits to the society. From personal experience, finding e.g. automation engineers of Finnish background able to communicate in Russian is more than difficult. One should, thus, look for a student of automation engineering of Russian background but studying in Finland, to work for a Finnish company. A service to bring together the employers in need and the employees with suitable background is needed.

Our current labor market is extremely individualistic. Each job seeker should be regarded as a distinct person and no one should be discriminated or favored in unduly fashion. Same is true for university admissions. Changing these standards brings, of course, the risk of traditional corruption, nepotism, or selection on political basis. In the case of specialist professionals where an actual liquid job market does not exist in smaller than metropolis-sized cities, the remote areas need some tools to use. A professional with a family cannot be handled as just a single person. There are also other issues of poorly working or nonexistent job market, such as people hard to get employment due to social or health based reasons. One should also note the small and remote ethnic communities such as Sámi homeland or Greenland which do not have the population to create an academic job market.

Current trends are also creating ill will of people in remote areas against the education provided by universities. The education only takes the young bright minds — especially women — but does not provide professionals that the local services need. This may have an effect to the political polarization developing between the remote areas and growing university cities. Concentration of young women in university cities and young men in the declining countryside may also make mating difficult and affect the decline of birth rate, as Karla Tempas pointed out (Talouselämä, 3.7.2019).


My French sister told me about a solution one of her friends found: she had returned to her remote hometown, and looked around to find out there is a need of nurses. Thus, she enrolled to adult education and has now a lifetime job. Could this solution help other people and employers, too: look on the people who already have settled to a town with their families and train them to the jobs that are specifically needed, e.g. as teachers, police officers, nurses, maybe also MDs? This would require targeted enrollment of students.

Maybe our current life model of graduating young and then settling to a career is not a solution to all the needs of our society. This, however, is where loan-based student support and tuition payments push people to. Adult education would, then, need more economical support than today (The Economist, 14.7.2017), also for the family life of the student. The remote areas don’t have the universities and institutions needed so studying would require a lot of travel and being absent from the family life and child care.

Arranging vocational education in the villages of the countryside is difficult, too. The young are few, and education can’t simply be divided to different municipalities or villages (e.g. teaching the young in this village as barbers and those of that other village as electricians). Thus, vocational schools require a wide student base and, thus, the young to move out of their homes in faraway villages early, living the weeks in school dormitories. The relocation and long commute add to the strain of studying, causing some to drop out and become socially excluded. As a result, even the employment rate of the men in the countryside is lower than that of women, notwithstanding the lack of labor. The young people in danger of becoming socially excluded would need more support. Fitting vocational education to local needs and bringing it to small communities as courses and on-the-job training might bring some help, as demonstrated in Northern Savo in Finland (Savon Sanomat 23.9.2019).

The employers should modify their recruitment habits to the existence of two-career families and the lack of professional labor. If the employer in question does not have use for the skills of the spouse itself, it would be wise to cooperate with other local employers to bring the whole family to the municipality. Sometimes, then, the professionals are laid off due to the financial troubles of the employer. In those times, the local employers should act to keep the trained professional there. If the person moves away to a new job elsewhere — with his/her family — it is improbable that these hard-won professionals would ever return. With a job market lacking liquidity, the employers need to be able to hire for future needs, too; not just for the present.

Similar solutions would also be needed to help young professionals (in family-founding age) running a cycle of temporary employment. These short gigs, especially those of women, are often pointed out as a probable cause of the decreasing birth rate. Temporary employment is often caused by the need to recruit a temporary worker to fill in during parental leaves. As the public services are big employers, they could also provide permanent employment for deputies, too. This would require flexibility on job arrangements: the employer should be able to move a teacher from school to another, a nurse from hospital to another, within a specified area. The employee would get job security in return.

Labeling opposition to immigration as racism is an oversimplification

The rise of populist anti-immigrant parties during the refugee crisis of the 2010’s does look like European islamophobia or racism towards Arabs and Africans. This is the image that the media conveys, and the anti-immigrant or right-wing populist parties like to promote. For instance, both the Finns Party (Finland) [1] and the Slovakian government [2] said they would prefer Syrian Christian over Muslim refugees. The history of European immigration and refugees does not support racism as the explanation of anti-immigrantism.

Let’s take a closer look at a local, Finnish example: after the Russian revolution of 1917 and the East Karelian uprising of 1921‒22, thousands of Karelians fled to Finland. They were ethnically Finns, spoke a Finnish dialect and shared our oral tradition of Kalevala, and were Christians as well (Greek Orthodox, a church which existed also within Finland). The result was still violent, and the perpetrators were not from the far right: the local Social Democrats hated the Karelians as strikebreakers [3]. The Karelians sought employment and income, as the social security system of the Finland of the 1920’s would not support anyone for long. The Karelians were fleeing Bolshevik Communists and would not join the labor unions.

East Carelian refugees in Hyrynsalmi, Finland. Photo: Karjalan Sivistysseura ry.

Things were not better elsewhere in Europe. In 1939, having lost the civil war, thousands of Spanish left-wing Republicans fled mass murders and other atrocities north to France. These refugees were not welcome in France, even if they were Europeans of Catholic culture, speaking another Latin language.

“The French authorities had never prepared for such an influx, but even when the scale of the human disaster was apparent, they were very slow and reluctant to move. This was not entirely surprising since the cost of looking after so many refugees rose to seven million francs a day. The right-wing press constantly attacked Daladier’s government for having allowed in so many left-wingers and Candide complained about feeding them. The French authorities encouraged refugees to return to Spain and surrender themselves to the nationalists. Only those with relations in France and who were prepared to sign a form that they would never ask for state aid were allowed out of the camps. The alternatives, apart from returning to Spain, were re-emigration to the New World or any other country that would accept them; or to ‘volunteer’ to the French Foreign Legion or the labour battalions, which were being used for improving fortifications and other projects …”

Antony Beevor on his book about the Spanish Civil War [4]

If the Spanish refugees were not welcome in France, it comes as no surprise that the Jews fleeing the Nazi Germany were not welcome anywhere, either. The Evian conference in July 1938 tried to solve the question of Jewish refugees, but only the Dominican Republic and Costa Rica agreed to any meaningful quotas [5]. This was an important propaganda victory for Nazi Germany — pretty much like that of today’s Russia from the inability of the EU to agree on distributing the Middle-Eastern refugees. Even USA refused to let in the 907 German refugee Jews of MS St. Louis [6]. The U.S. Secretary of State Cordell Hull was very much responsible of this, but it did not prevent him from later becoming a Nobel Peace Laureate for his role in forming the United Nations.

MS St. Louis Captain Gustav Schröder negotiates landing permits for the passengers with Belgian officials in the Port of Antwerpen.

Finns often compare the current refugees to their 410 thousand (or 12 % of population) of WW2-era refugees, or internally displaced people, from Karelia (the so-called ”evacuees”); two of my grandparents were among them. Even though the Finns of today commonly refer to the Greek Orthodox religion of these refugees, most of them were actually Lutheran, just like most Finns. These refugees also represented the entire political spectrum. People could be cold or hostile toward them, but sometimes also very supportive (farmland and housing was allocated to them from local landowners). It is said that on the railyard of Lahti in southern Finland, the local businessmen walked along the stopping refugee trains and asked the refugee entrepreneurs within to step out and settle in Lahti. The numbers of refugees in the post-war Europe were staggering: for instance, 12 million ethnic Germans expelled from Eastern Europe settled in the razed-to-ground, occupied Germany.

Anti-immigrantism is not, however, just a European or Western phenomenon. South Africa is the wealthiest country in Sub-Saharan Africa, with a clear contrast to its neighbors (except for Namibia and Botswana). There is thus a lot of inter-African immigration, but the shared African identity does not grant solidarity to the immigrants. The people in Soweto have attacked the local immigrants. The local young men think that the immigrants steal their jobs and women, told prof. Kopano Ratele from University of South Africa [7]. The ruling (Hindu) BJP party in India threatens the (Muslim) Bangladeshi immigrants, and Pakistan seeks to evict hundreds of thousands of Afghans [8].

Singapore is a city of immigrants. The ruling party does its utmost to prevent the forming of ghettos and religious quarreling, by means which are not possible in the Liberal West. For instance, the public housing has quotas for different ethno-religious groups [9], and the media and the political system are heavily controlled to suppress conflicts.

Local labor, immigrants, and competition for jobs

With all its banners for international solidarity among people, the relationship of the Socialist movement (both Social Democrat and Communist branches) to immigration is problematic. The leadership of socialist Eastern Bloc countries would not tolerate external influences — brought in by immigrants — to disrupt the official truths. Even people of the same ethnic group and language were not welcome, not even in the East Germany (DDR), which suffered from severe outflux of emigrants (brain drain). In the 1960’s, Poland’s Communist leader Władysław Gomułka desired to expel the remaining ethnic Germans and offered them to DDR’s premier Walter Ulbricht. Erwin Weit, the interpreter of Gomulka, told in his memoirs that Ulbricht suggested that the Poles ”just shoot them” [10]. The remaining Germans in Poland were thus transported to West Germany. A descendant of one of them was my coworker at the VTT Technical Research Centre in Finland.

Who remembers the ”Polish plumber”, the scourge that threatened employment in Western Europe in the 2000’s when several Eastern European countries joined the EU? The Poles are predominantly Catholic fellow Europeans. Estonian bus drivers working in Helsinki, Finland, told a newspaper that locals swear at them daily and openly tell them to go back behind the sea (Estonians being ethnically, linguistically and culturally very close to Finns) [11]. Christian Kern, the Social Democrat premier of Austria, wanted to set limits for the use of Eastern European labor and the jobs to be first offered to locals [12]. The social democrat prime ministers of Denmark and Sweden have also moved to curb immigration. [13]

Many of those who voted for Brexit were elderly Britons, angered by Eastern European immigrants spending time with their compatriots, speaking their native languages. The vote was aimed against European internal immigrants, even if the public banner was against refugees and immigrants from Africa and Middle East. Racially-motivated hate crimes have multiplied since the referendum: the targets are most often Eastern Europeans, such as a Romanian researcher at the Queen Mary University [14]. Amber Rudd, the Minister of the Interior of the UK, published (and then withdrew) a policy to prevent immigrants from getting the jobs that locals could do. She called for the employers to publish the proportion of international staff that they employ. She also pledged to boost the proportion of British doctors working in the NHS (thus curbing the proportion of immigrant doctors) [15]. She seems to fail to realize the historical connotations of these actions: the Nazi Germany also began by removing the Jews from high-profile jobs, such as medicine.

Conflicts over the right to drive a bus may lead us to the real source of anti-immigrantism. In Finland, bus drivers have held strikes against part-timers, often students, working in their field (2004). A full-time bus driver has protected employment, and the doubled Sunday salary is seen as their right. With part-timers sharing the workload, the bus companies can give the full-timers the full-day shifts on workdays and use part-timers for the odd shifts in the nighttime and on weekends. Thus, the full-timers fight for their perceived rightful [extra] share. Similar conflicts have been kindled between the traditional taxi drivers and Uber drivers in many areas. This brings us to a wider problem in Western European societies: short-time gigs for the temporarily unemployed are poorly available. The labor market is too rigid.

Citizenship rent

Branco Milanovic’s ”elephant graph” rose to international attention in 2016. The graph presents the growth rate of the fractile average income weighted by population in years 1988–2008. One can distinguish the poorest people, ”the hanging tail”; the middle class of developing countries, ”the high-growing back”; and the high-pointing trunk, the uppermost global class. At the 80–90 % fractiles, the trunk drops perceptibly, to almost zero growth [16]. The graph supported existing viewpoints: many saw the lower middle class in their country as having lost their status due to globalization.

Global growth incidence curve, 1988–1008 (Lakner and Milanovic, World Bank, 2013, p. 31 [16]).
One should note that the fractiles are rather large, even the 99 % fractile consists of 76 million people, almost as much as the population of Germany (83 million).

The truth is not that simple, however. In Finland, for instance, the long-term unemployed reach the upper part of the ”trunk” with their unemployment and housing welfare benefits alone. According to Olli Kärkkäinen, an economist of the Nordea Bank, the Finnish income levels have risen in all fractiles, and — with the exception of the lowest fractile — with higher relative growth than the global average [17]. This was achieved in a period that covered the deepest economic depression of the Finnish history (1991–1993).

Milanovic also discusses the effect of citizenship. The country of birth explains 97 % of the global income distribution. The unemployed Finn finding himself in the 9th global income fractile also points in this direction. Since the country of birth is so important for one’s future income, Milanovic coined the term ”citizenship rent” [18]. People tend to be quite jealous of this rent, not wanting to share (and dilute) it with immigrants, even if they share the same ethnic group, religion, or language. Actually, people are jealous of their rent against any group of people they can somehow shut out.

A positive exception may be found in Finland, one generation back: the ‘return’ of Ingrians (Finnish people who had migrated to then-uninhabited now St. Petersburg area in the 17th century or before) took place largely without any hostile response. The Ingrian immigrants were, in principle, Finnish-speaking people, but most of them had lost their language skills because their grandparents had been forcibly relocated and dispersed all over the Soviet Union in Stalin’s era. The timing of the return of the Ingrians (like that of the arrival of the Somali refugees) was the worst possible in the economic sense, the great economic depression of 1991‒1993.

Why were the Ingrians at least mildly welcome, with little show of anti-immigrantism? The right of return was granted by a grand decision of the President of Finland, but the fact that anyone knowing a bit of history knew Finland owed something to the people forcibly returned to Soviet Union after WWII (the war had engulfed their home area and they were transported to the safety of inner Finland with many young men joining the Finnish army) probably had more effect. The small fraction of right-wing populists and Neo-Nazis somehow did not notice. On the other hand, there were few possibilities for the returning Ingrians to gain employment, as their language skills were less than adequate, and their Soviet education did not earn them professional jobs, either. They thus offered little competition to the locals in the job market.

The eternal and still unexpected change

The stress induced by the changing world brings stress to the society, resulting in irrational reactions such as anti-immigrantism. Automation replaces simple or repetitive human work, and the historically continuous disappearance of the market for outdated products (such as gas lamps, cathode ray tubes, photographic film, typewriters, encyclopedias…) closes down industries, throwing large numbers of uneducated, elderly, and blue-collar workers to unemployment — especially in the cases of remote locations. The new jobs emerge for young people with up-to-date skills, in new professions, and in larger towns. When Siemens was starting new gas turbine manufacture in Charlotte, NC, the 10,000 job seekers could not fill the 800 open positions due to the mismatch of skills. Like many other modern production units, the factory required robotics programmers rather than welders and metalworkers [19]. The long population decline due to the brain drain cripples the left-behind areas. The stay-behind people also tend to have more social and health problems, as these correlate with the lower education.

 As the more aspiring young people move to cities for their education and stay there, they tend to be open to change and therefore liberal; stay-behinds in the countryside and small towns tend to be more conservative. This results in gradual polarization of the political geography, which is clearly visible in the maps showing the geographic distribution of votes to different parties in basically any Western country. As a further consequence, people tend to shy away from areas with nonpreferred political majorities — deepening the political divide, as people mostly interact with people with largely similar political views. The city people often refer to the conservatism of the countryside as a barrier to moving there.

The medieval European cities — the real cities, with defensive walls, commerce, and self-governance — understood the dire need of net migration. Within the walls, high population density combined with poor hygiene and a lack of real medicine resulted in very high mortality. Compared to the serfs of the surrounding countryside, even the poorest city residents were at least free. The medieval cities had laws that protected the migrants, such as fugitive serfs from the countryside. The Baltic German nobleman Johann von Üxküll was angry enough to have his men kidnap his fugitive serf back from the city of Tallinn and had him hanged as a warning to the others. Even though the poor fugitive as an individual was of little importance to Tallinn, kidnapping and killing him was a grave offense against the status and honor of the mighty Hanseatic city. The city council thus had the nobleman arrested when he visited the city, brought him to justice and sentenced him to death for murder; he was executed the same day to demonstrate the limits of the noble powers [20].

A newly arrived fugitive naturally had no status in a city and had little means to provide for themselves: the guilds protected the high status of the merchants or the master craftsmen. The vacancies for masters were limited, and even rising to the status of a journeyman took years of apprenticeship. A new economic refugee from the countryside thus threatened the status of no one, except of beggars.

The industrialization of the early 19th century changed all this. Manufacturing machinery made goods cheaper and provided better-paid jobs for the landless farm hands of the countryside; by modern standards, the pay was still miserably poor. The master artisans lost their status and business, resulting in widespread economic depression in the areas that were formerly wealthy due to their artisanal production. As an example, the consumption of meat (food of high value) in German Rhineland collapsed in the first half of the 19th century [21]. For the surplus population of the countryside, however, even a miserable factory job was a step for the better. The 1840’s were particularly bad in Western Europe, resulting in the Revolutions of 1848 and the Communist Manifesto of Carl Marx and Friedrich Engels.

Angry Luddites breaking industrial machines in early 19th century.

The general growth of the economy, the organization of labor movement, and the developing social conscience of the upper class resulted in improving living standards. The status of the blue-collar laborer rose, and the factory worker of 1920’s did not look so poor any more, at least in his/her Sunday suit on a holiday. Compared to a landless farm hand of the time, he was well off: had some own money, often a rented room for his own family — not just a bench in the kitchen to sleep on.  For hundreds of years the preceding generations had not foreseen any development for the better [22].

Aging societies and the dead end of politics

A clear difference between the politics of the 19th century and the modern times is in the age distribution of the population. The people over 40 years old comprised less than a quarter of the population of Finland in 1848. Today, they comprise more than half, and the over 50-year-olds make up a half of the electorate. This development has affected both the Finnish pension populism and the result of the Brexit referendum of 2016. Aging creates problems to public finances in Finland: the age-related expenses rise more quickly than the government is able to raise taxes and cut other expenses, such as education and childcare [23]. Child poverty is now more common in Europe than poverty of the elderly [24]. Italy has had one of the highest rates of growth of exports in the whole of Europe during the last decade; Italy’s public finances are still a mess. Their long-term low birth rate could be pointed out as a possible cause.

The changes in economy and the age distribution of the population have resulted in the current difficult political situation of several European countries. The expenses due to aging must be paid with resources taken away from other needs, while at the same time our economies suffered a lengthy stagnation as a result in the financial crisis of 2008 and the following Euro crisis. As a result, the voters are losing confidence in politics and politicians. New politicians have emerged, offering easy, simple, and catchy answers to the problems the society faces — just as in the 1930’s. Democracy hasn’t actually been put to test with an electorate with a majority of elderly retirees. Originally, the electorate consisted of the working-age population, with few old people around.

As another reaction to the techno-economic changes, those who have been left behind have increasingly begun to hate any kind of change: environmental issues, coming-out of the minorities, equality, immigrants, or liberalism — leben und leben lassen — in general. This leaves the progressive parties alone to defend necessary, but sometimes unpopular, politics such as curbing the greenhouse gas emissions or protecting fisheries. Violent homophobia is possibly the most bizarre reaction, as the small minority in question neither violently threatens the majority nor causes loss of jobs or competition in the labor market.

Many of those who voted for Trump are white men of low education in well-paid and protected jobs. For them, any improvement in the status of women or minorities would lower their own relative status. Arlie Russell Hochschild noted that her subjects ”felt like they were waiting in a long line to reach the top of a hill where the American dream was waiting for them. But the line’s uphill progress had slowed, even stopped. And immigrants, black people and other ‘outsiders’ seemed to be cutting the line” [25]. The hard fact that the age of the coal and coal mining is closing, and a job trained West Virginian miner earning $ 90,000 a year will never find an equally paid job is understandably difficult to accept. A police officer in the same town has a start salary of a third of that [26].

The Socialist liturgy of the international solidarity of labor has proved to have little meaning: a quota for a few refugees and some little development aid to the poor developing countries has sufficed. The labor movement supports the high-paying industrial jobs of the export industry, but they would like to cut down cheap imports and competition. One’s own exports are not seen as the cheap predatory kind.

The most steadfast supporters of the far-right AfD in Germany have been the Russian immigrants — against other immigrants [27]. This mirrors the Russian foreign policy: using the anti-immigrant parties to break the EU internally in the time of the refugee crisis. An extreme example of this was the claimed rape of a Russian woman in Germany by refugees. The news was widely distributed by Russians, even as the German police found out that it never happened [28].

Western societies are now facing grave problems. The changes of the world, automation, globalization, refugee crises, and aging population, together create a political deadlock. Small margins dictate extreme voting results: 51.9 % voted for Brexit, causing constitutional-level changes to the British society. Votes for Hillary Clinton exceeded those given to Donald Trump by almost 2 percent points, but 80,000 votes in three swing states made Trump the President of the United States with only 46.1 % of the votes.

A multi-party system with coalition governments and supermajority requirements protects many countries from the extreme changes sometimes induced by a two-party system. A political crisis can still destabilize such a country: Fidesz won over Hungary in 2010 with 52.3 % of the votes, resulting in the control of more than two thirds of the Parliament — enough to make single-handed constitutional changes. The PiS won the Polish elections of 2015 with only a 37.6 % share of the votes, but it resulted in a majority of 51 % in the Parliament.

Fiscal stimulus and job market policy

To solve the dead end of politics, I do not see an alternative to finding economic growth and new jobs for the losers of globalization, too. A difficult question, however, is whether the former coal miners and paper-mill workers should still be entitled to better salaries than the others living in the same area. How to create a job market that creates jobs for those in need? How to revitalize the declining areas? How to get the left-behind accept the relative rise of those who have traditionally had lower status?

Traditional financial stimulus creates demand for construction, directly helping only construction workers (traditionally, most of the population was eligible) and the construction supply industry. The full production capacity of the construction industry is often reached, resulting in overheating of the business. As other labor fields, construction requires today skills and experience, not just ability to carry masonry up the ladder. The Government financial support to R&D, on the other hand, flows to professionals already concentrated in developed population centers (preferably with an all-round or technological university).

The left-behind areas suffering from brain drain would need any migration to revitalize the economy, bringing both specialist workforce and customers to local businesses. The great dilemma here is that the left-behind are often staunchly opposing immigration. In-country migration of ethnically and linguistically similar people would be acceptable — in some countries the matching religion or sect is also a requirement. The newcomers should also be of suitable, not too high, nor too low, social status. These people just are not available. If one goes to the ethnically most homogenous areas of the USA, they tend to be the most backward areas with heavy social problems with drugs and unemployment. The most diverse areas are generally the most economically active and have the highest standard of living. [29]

The Nordic model with its free and available basic, vocational, and university education levels the playing field for the young people with different starting points, compared to the Anglo-American youth for whom education is expensive. As a result, the Anglo-American discussion about education policy has a very different frame and has relatively little to offer in the context of the Finnish problems. Investing in education is a double-edged sword: it helps the young to attain good professions and stimulates economic growth; on the other hand, the aspiring young move to colleges and universities in developed areas, and generally they stay there — the brain drain thus increasing the regional contrasts.

Even the massive German support to the former East Germany after the reunification has been incapable of stopping the brain drain of the East. Investments in upgrading or building manufacturing units in Eastern Germany has not stopped the flow of lawyers, engineers, and other professionals to the corporate headquarters and R&D centers in the West. This is not only a problem of the East, however. Herzogenaurach (Bavaria), the hometown of the sports equipment and clothing giants Adidas and Puma, is unable to attract the top designers, brand specialists, and specialists of digital technologies to move there [29]. National financial stimulus does not work very well in the era of globalization and common market. The Meyer Turku shipyard, or the companies Kone (lifts and escalators), Nokia (telecommunications networks), Ponsse (forestry machinery), or Planmeca (dentist machinery) cannot be supported by stimulating the local Finnish economy.

Politicians like to support existing jobs, also in the declining areas. This proves problematic, however. An example is the mobile-phone charger manufacturer Salcomp’s factory in Kemijärvi, Northern Finland. The local municipality supported building new factory space by 4.6 M€ in 1996 [31]. The financial support may have extended the operational life of the factory, but it was nevertheless closed in 2004 and all the local personnel were laid off.  Spread over the extension of the lifetime of the factory (about 7 years), the support amounted to about 1100 € per laborer per year. One can compare this to the municipal income tax. Juankoski, in Eastern Finland, tried to keep the local Stromsdal paper mill running with public support, but it went bankrupt anyhow. Attracting new employers to areas that are losing their old ones is difficult:

”… few companies indeed are genuinely interested in relocating their manufacturing just for availability of labor, but these decisions are influenced by other issues regarding profitability, such as logistic location, availability of raw materials, manufacturing space, and leisure time activities.”

Ismo Pohjantammi, University of Helsinki, 2008 [32]

Influencing the decisions of individual companies is, however, the policy adopted by both Trump and Michael Pence ($700 per year per person for Carrier, Indiana [33]) as well as the British prime minister Theresa May (Nissan UK, [34]). These special arrangements are naturally only available to a small selection of companies that are big enough or have good enough relationships with the political decision makers. These arrangements are an easy way to good publicity and local support to populist politicians. They, however, also distort the competitive market, are very prone to corruption, and still have a negligible effect on the national-level total employment.


Note that several of the source articles or books are in Finnish. Machine translation does not work very well, I am afraid, as Finnish is not in the same language family as English.

  1. Aishi Zhidan, ”Timo Soinin kirjoitukset pakolaisuudesta hämmentävät kristillisiä avustusjärjestöjä”, Helsingin Sanomat, 6.9.2015.
  2. Paula Tapiola, ”Slovakia on luvannut ottaa vastaan 200 Syyrian pakolaista — mutta vain kristittyjä”, YLE, 20.8.2015.
  3. Kimmo Hiltula, ”Suomeen tuli kymmeniä tuhansia pakolaisia 1920-luvulla — sopeutuminen oli vaivalloista silloinkin”, YLE, 6.2.2016.
  4. Antony Beevor, ”The Battle for Spain: The Spanish Civil War 1936–1939″, Weidenfeld & Nicolson, London, 2006, p. 412.
  5. ”Évian Conference”, Wikipedia.
  6. ”MS St. Louis”, Wikipedia.
  7. Minna Pye, ”Rasistisessa väkivallassa purkautuu nuorten miesten osattomuus — voisiko Suomi oppia mitään Etelä-Afrikan kokemuksista?”, YLE, 21.9.2016.
  8. ”Poor countries need to allow more immigration, too”, The Economist, 24.12.2016.
  9. ”Public housing in Singapore”, Wikipedia,
  10. Erwin Weit, ”Itäryhmän sisärenkaassa”, 1971.
  11. Ruut Tolonen, ”Virolaiset siirtotyöläiset kertovat: ’Ilkeitä kommentteja kuulee melkein joka päivä'”, Helsingin Sanomat, 18.12.2014.
  12. Raisa Pöllänen, ”Itävallan liittokansleri: Itä-Eurooppa siirtää työttömyytensä Itävaltaan”, YLE, 12.1.2017.
  13. “Tanskan SDP lähettäisi turvapaikanhakijat leireille odottamaan”,
  14. Annamari Sipilä, ”Professori Leo Dunkel patistaa yliopistoja panostamaan huippuihin — yliopistojen pitää suosia elitismiä, tieteessä ei riitä keskinkertaisuus”, Helsingin Sanomat, 3.10.2016.
  15. Alan Travis ja Sally Weale, ”Amber Rudd announces crackdown on overseas students and work visas”, The Guardian, 4.10.2016.
  16. Christoph Lakner ja Branko Milanovic, ”Global Income Distribution From the Fall of the Berlin Wall to the Great Recession”, Maailmanpankki, joulukuu 2013.
  17. Olli Kärkkäinen, ”Norsu paljastaa: suomalaiset ovat globalisaation voittajia”, Finanssimaailma-blogi, Nordea, 5.8.2016.
  18. Branko Milanovic, ”Trends in global income inequality and their political implications”, Biennial Conference of the Swiss Network for International Studies (SNIS), 28-29.1.2016, ETHZ, Zürich.
  19. Jeff Selingo, ”Here’s Why Filling Manufacturing Jobs Won’t Be As Easy as Trump Claims”, LinkedIn Pulse, 21.11.2016.
  20. Antti Sarasmo, ”Toompea oli oma maailmansa”, The Baltic Guide, 29.1.2015.
  21. Christoper Clark, ”Iron Kingdom: The Rise and Downfall of Prussia, 1600-1947”.
  22. Roope Mokka, ”Entä jos lamasta toivutaan vasta 2050-luvulla?”, YLE, 28.2.2017.
  23. Teemu Muhonen, ”Menetetyn vuosikymmenen saldo: valtionvelka tuplaantui — työttömyys ei selitä”, Taloussanomat, 26.8.2016.
  24. Ulpu Iivari, ”Onko sosiaalidemokratian aika ohi?”, Kanava 7/2016.
  25. Amanda Taub, ”Behind 2016’s Turmoil, a Crisis of White Identity”, The New York Times, 1.11.2016.
  26. Laura Saarikoski, ”HS:n kirjeenvaihtaja asui viikon amerikkalaisessa pikkukylässä — siellä Donald Trump edustaa toivoa”, Helsingin Sanomat, 30.10.2016.
  27. Dan Ekholm, ”Vaalijulisteetkin venäjäksi — maahanmuuton vastustajat vetoavat Berliinin venäläisiin”, YLE, 16.9.2016.
  28. Dan Ekholm, ”Analyysi: Venäjän propagandasodan pelinappuloita Saksassa ovat turvapaikanhakijat ja poliisit”, YLE, 4.2.2016.
  29. David Brooks, ”The East Germans of the 21st Century”, The New York Times, 29.1.2018.
  30. Tuula Toivio, ”Adidaksella on täysi työ houkutella suunnittelijoita Saksan syrjäseudulle”, Helsingin Sanomat, 29.9.2014.
  31. YLE Ykkösaamu, 27.9.2016,
  32. Ismo Pohjantammi, ”Äkilliseen rakennemuutokseen reagointiprosessit Voikkaan ja Summan tapauksissa”, Helsingin yliopisto, 2008.
  33. Ben Casselman, ”Why Trump’s Carrier Deal Isn’t The Way To Save U.S. Jobs”, FiveThirtyEight, 5.12.2016.
  34. James Blitz, ”Brexit Briefing: Theresa May’s secret deal with Nissan”, Financial Times, 28.10.2016.