Finland is about to have a right-wing government that is looking to control public expenses. Petteri Orpo's (NCP) upcoming government wants to curb public debt, and that means cutting back on several social benefits.
With plans to reduce income taxation by half a billion euros, the new administration will seek savings by cutting benefits and raising the lowest value-added tax rates, excluding food.
Here are eight things that, according to the government programme, will impact people's everyday lives. The government programme is a four-year plan of action, meaning changes will not happen all at once.
1. The housing allowance will be reduced
The housing benefit will no longer be paid for owner-occupied housing, and recipients can have no more than 10,000 euros in assets.
Finland spends more than 2.6 billion euros on housing allowance costs annually.
Up until now, assets have not affected the amount of housing allowance granted, except for those living on social assistance.
The smallest housing allowances and housing allowances for pensioners will not be cut. Alongside the general housing allowance for students, a co-living option that promotes shared housing and is financially attractive will be developed.
2. Earnings-related unemployment benefits will be staggered
Currently, individuals can receive income-related unemployment allowance for a period of 300-400 days. Graduated scaling would mean that the benefit would be higher initially and decrease over time.
In 2021, the costs of earnings-related unemployment benefits amounted to 2.5 billion euros.
Earnings-related unemployment benefits will be graduated in a way that after eight weeks of unemployment, the benefit level will decrease to 80 percent of the original support. After 34 weeks, the benefit will drop to 75 percent.
Finland will also abandon its system of job alternation leave (vuorotteluvapaa), saving the state some 20 million euros.
3. Income taxes will be reduced by half a billion, while the lowest VAT rates will increase
The government said its goal is to ensure that purchasing power does not decrease. Proposed tax cuts will be implemented by increasing child and earned income deductions.
The National Coalition Party, which is set to become the leading party in the government, promised one billion euros in tax cuts ahead of the parliamentary elections. During the government negotiations, a direct tax reduction of 405 million euros was agreed upon. Additionally, a new 50-euro child deduction and an expansion of the household deduction will be introduced. The combined impact of these measures is slightly over 100 million euros.
At the same time, the lowest value-added tax rates will be increased, with the exception of food. This is likely to raise the prices of movie tickets, concerts and books. The value-added tax on sports services and hotels would also increase by four percentage points.
4. Private healthcare to dismantle queues
Conditions typically worsen the longer one has to wait to see a doctor. During the pandemic waiting times increased, particularly in fields such as abdominal and neurosurgery. Queues also grew for cataract surgeries.
The government wants to use more private healthcare services to reduce waiting times.
The government programme wants to curb healthcare costs by 1.4 billion euros by 2027 and three billion euros by the year 2031.
Savings will be achieved, for example, by increasing the use of digital services, including remote appointments.
5. More biofuels, but drivers will be compensated
Finland aims to be carbon neutral by 2035, which involves reducing the use of fossil fuels and increasing the use of biofuels.
As biofuels are more expensive than fossil fuels, the increased use of biofuels will lead to higher prices at the pump. To compensate for this, the government says it intends to reduce gasoline taxes.
6. Strong beers in grocery stores
Grocery stores will be allowed to sell beverages with alcohol content of up to eight percent. The government says it will also look into the possibility of introducing wines in stores.
The government wants to liberalise alcohol sales, making online purchases possible. This means that in the future, wineries and craft breweries would be able to sell their products directly to consumers.
Under current Finnish law, stores can sell alcoholic beverages with a strength of no more than 5.5 percent. This limit is now set to increase to eight percent, meaning that stronger beers and ciders will be available on the shelves of grocery stores.
7. Work and sick leave
The government is also planning broad reforms to the labour market support system. Unemployed individuals will undergo a comprehensive initial assessment, after which they will be required to "accept tailored and employment-promoting services."
This means that job seekers receiving unemployment benefits will be obliged to participate in services aimed at improving employment and integration into society.
Efforts will be made to quickly engage jobless under-30s as clients of employment services.
Regarding sick leave, employees would bear the cost of the first day off work, meaning they would not receive wages for that day. However, this does not apply to longer periods of sick leave.
The deductible for travel expenses will gradually increase to 900 euros.
8. A single application for general support
The government is reforming Finland's basic social security system. The aim is to establish a single "general support" that includes a basic component for living expenses, a housing component for housing costs as well as a discretionary component to ensure last-resort security.
The minimum levels of unemployment benefit, basic daily allowance, sickness allowance, Kela rehabilitation allowance and parental allowances will be harmonised.
The general support would decrease as earned income increases, making it easier for people to predict their net income and improve the incentive to work, according to the government.
The transition to the unified support system will be carried out gradually, with a single application model planned midway through the government's term in office.
To alleviate labour shortages, efforts will be made to make accepting low-wage jobs more attractive, according to the programme.
