PESTEL analysis of Finland
This is a comprehensive PESTEL analysis of Finland. It shows how different macro factors are interrelated and have impacts on Finland. PESTEL stands for political, economic, social, technological, environmental, and legal.
Political factors affecting Finland
Finland is a Nordic country. It is officially known as the Republic of Finland. It is a representative democracy where the Prime Minister is the most powerful person. Top political parties are National Coalition Party, the Social Democratic Party of Finland (SDP), the Finns, Centre Party, Left Alliance of Finland, the Greens of Finland, the Swedish People’s Party, and Christian Democrats.
The political stability of a country is determined by several factors. For instance, fear affects people on a psychological level, leading them to feel more anxious when they do not know what may happen next. In a country with a low level of fear, citizens can live their lives free from anxiety and stress. When assessing Finland in light of these factors, it can be said that it is a stable country as it is far away from many international challenges.
Finland maintained neutrality over the years concerning several foreign policy issues. However, it will be interesting to see whether it maintains neutrality or mulls otherwise following the crisis in Ukraine. Likewise, it will also be interesting to see if it can increase voter turnout rates for parliamentary elections which is indeed considerably lower than in Sweden, Norway, and Denmark (Bertelsmann Stiftung 2021).
Economic factors affecting Finland
Economic environment is a key part of discussion in this PESTEL analysis of Finland. According to Trading Economics (2022) Finland’s GDP is forecast to trend around $266.00 Billion in 2022. In fact, the country is well-known for its economic stability.
There is no statutory minimum wage in Finland and the salary is set by negotiations between employers and employee representatives at the industry level. However, the average monthly wage is well over 3 thousand Euro before taxes.
Electronics, automobile, chemical, forestry, energy, and metal mining are some of the biggest industries in Finland. Tour operation services, consultancy services, and computer programming are also booming. Finland’s major trading partners Germany, Sweden, the USA, the UK, China, Russia, the Netherlands, and France.
Finland has developed an excellent infrastructure for businesses. Its corporate tax rate is among the lowest in the European Union. Its workforce is remarkably well educated, and the public institutions are highly transparent. However, the overall size of the domestic market is relatively small.
Social factors affecting Finland
Finland is well-known for its high life expectancy, a good education system, and high GDP. The life expectancy of the average citizen is 82 years, and the current population is just over 5.5 million (Worldometer, 2022).
However, fertility rates have been dropping for a long time. This could be addressed with an inflow of migrants. It is worth mentioning that the public attitude towards work-related immigration is usually positive; however, many people have a negative attitude towards asylum-seekers and refugees (Bertelsmann Stiftung 2021).
Personal religious views are widely respected though most people in Finland have secular views. There is also a very good degree of equality between the genders. However, housing crisis is affecting the country as many people cannot afford to buy homes. Likewise, Finland faces a labor shortage as it has an ageing population.
Technological factors affecting Finland
Technological environment is another important part of discussion in this PESTEL analysis of Finland. Finland is a technologically advanced society. It is at the forefront of many technological innovations. The education system has a focus on digital and technology-based teaching and learning. Additionally, Finland has a high level of computer literacy throughout the country.
Finland has done really well in areas such as mobile technology, advanced software, software security, and data analytics. However, it faces tech labour shortages. Digitalisation, artificial intelligence (AI) and data analytics are some of the key areas where thousands of skilled workers are needed today (Higginbotham, 2020).
Environmental factors affecting Finland
Finland is rich in natural resources. It is home to massive forests, a great number of lakes, hills and valleys, snow-capped mountains and trees, stunning Northern Lights, fantastic national parks, architectural monuments, and beautiful little islands.
However, winter is cold, dark, and snowy which is challenging for many locals though it attracts many tourists. Likewise, air and water pollution, noise, and climate change are some of the environmental challenges facing Finland today.
Legal factors affecting Finland
The last component of this PESTEL analysis of Finland is the legal environment. The constitution of Finland ensures freedom of speech, press, and religion. It is in fact, the ultimate source of national law of Finland.
Finland has an independent judicial system. The government is transparent, and the public institutions are very effective. Contractual agreements are very rigorously honoured, and employees are entitled to many benefits.
A country with a high level of rule of law does not have serious crime problems, which leads to less fear among citizens. With a low number of crimes and incidents of violence, people can lead their lives more freely in Finland without having to worry about being harmed.
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Last update: 29 March 2022
Bertelsmann Stiftung (2021) Finland: Key Challenges, available at: https://www.sgi-network.org/2017/Finland/Key_Challenges (accessed 29 March 2022)
Higginbotham, D. (2020) Work in Finland, available at: https://www.prospects.ac.uk/jobs-and-work-experience/working-abroad/work-in-finland (accessed 29 March 2022)
Trading Economics (2022) Finland GDP, available at: https://tradingeconomics.com/finland/gdp (accessed 28 March 2022)
Worldometer (2022) Finland population, available at: https://www.worldometers.info/world-population/finland-population/ (accessed 29 March 2022)
Author: Joe David
Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.