THE ROLE OF TRADE-UNIONS ON A FLEXIBLE LA BOR-MARKET

Labour market flexibility is the much touted recipe for reducing unemp loyment, the major problem of the Finnish economy today. In spite of a fairly wide agreement on the need for reforms in this direction littl e is done. Even minor reform proposals tend to end up in insurmountabl e disputes. The reason seems to be a deeply rooted fear in trade union s of loosing the foothold if the present system is allowed to change e ven marginally. In this paper I outline the major economic changes in the world which call for a revision of the role of trade unions. On th e basis of modern economic theory I explain why trade unions continue to be important, albeit in a different form than presently. I argue th at actively adapting to these changes should prove much more beneficia l in the long than stubbornly trying to defend institutions which have outlasted their time.