The role of trade unions on a flexible labour market

Labour market flexibility is the much touted recipe for reducing unemployment, the major problem of the Finnish economy today. In spite of a fairly wide agreement on the need for reforms in this direction little is done. Even minor reform proposals tend to end up in insurmountable disputes. The reason seems to be a deeply rooted fear in trade unions of loosing the foothold if the present system is allowed to change even 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 the basis of modern economic theory I explain why trade unions continue to be important, albeit in a different form than presently. I argue that actively adapting to these changes should prove much more beneficial in the long than stubbornly trying to defend institutions which have outlasted their time.