Welfare Finland – Gone with the EU

TEAM, International Conference 24.3.2007 Wil, Schwitzerland

Thank you very much for inviting me to this conference in Wil. I have to apologize that I cannot stay until Sunday, but I have to be in Helsinki early on Sunday.

We are living very interesting times. Tomorrow, on the 25th of March there will be a lot of celebrations of the 50th anniversary of the Treaty of Rome, which was the foundation of European integration.

At the same time there is a growing amount of people that say no the European Union. According to the opinion polls 71 % of the Finnish people oppose the EU.

The population of Finland is now 5,2 million around 8,7 % of the EU. We do not have much to say in EU, even if our politicians say that Finland is in the hard core.

Our unemployment rate is still high, its 7,3 %. For young people less than 25 years it is 17.8 %

(Fig.1, Eurostat, jan. 07).
We have a labour force of 2.575.000.

Finland is paying to EU 930,8 million Euro during 2006 – 2007. During the 13 years we have been members of EU we have paid a total of 2,55 milliard Euro. The depression from the 90’s has not improved as fast and on all the sectors where it should do. We still have enormous problems with elderly care, children’s day care, the seriously disabled and public health services (a shortage of doctors and nurses). Some of these problems could have been helped with the money we have paid to EU.

Finland is now richer than ever

Last year’s economic growth in Finland was the best over the last ten years. The growth of GDP was 5,5 %. The average growth is 3 % in the euro-zone. (Fig. 2. Statistical Central Office, HBL 2.3.07). The main reason to this growth is that the export grew 11 %. A very ironic fact is that the forest- and paper industry that really shows a big growth, nearly 20 %, has just in the end of last year closed down two big mills in Finland. One mill is in Voikkaa and the other one in Kuusankoski. These areas are in the eastern part of Finland where the unemployment has been high and is getting even higher now. There are no other jobs for people in these areas.

At the same time the Finnish households have bigger loans than ever. The households are taking year after year bigger loans and they show now a deficit of 5,4 milliard Euro. A great deal of the loans are for housing and now, when the European Central Bank, ECB is increasing the interest rate, which they did already once this year, people are struggling. The banks in Finland are expecting an increase of the interest rates still two or three times this year. The situation is going to be very serious for a lot of families.

The poverty in Finland

Last Sunday we had the parliamentarian election. Unfortunately there was hardly any public debate on EU and only 67,8 % of Finns voted. Centre Party is still the biggest party, Matti Vanhanen is starting the Governmental discussions and most probably we are getting a right wing Government. Maybe Antti Pesonen will tell you more about the election tomorrow.

The big parties promised less taxes and more money for the students, elderly care, child day care and health services. Everyone can understand that this is not possible.

Before the election campaign started the director general of the economic department at Ministry of Finance Jukka Pekkarinen warned the politicians not to let the economical growth bluff them. He said that the labour force in Finland is decreasing very fast, in fact fastest in EU, because of the ageing.

(Fig 3. EU:n talouspoliittisen komitean ikääntymistyöryhmä).
In 2008 the need of the labour force is decreasing very rapidly And the critical period is going to be during these coming four years. The structural changes have to be done very fast.

Income disparity has grown during the last years in Finland

Vappu Taipale, general director of the National Research and Development Center for Welfare and Health (STAKES) is very worried about the poverty in Finland. It does not seem to be enough that a country has a good economy. The real problems are still there, we have the long term unemployment, single parents, parents with more then three children, mentally ill people. These categories seem to be very stable and nothing is done for them, says Vappu Taipale.

(Fig. 4. Social assistance and poverty, Stakes and Statistical Centre)
(Poverty in %, poverty under 18 years,
red = persons who get social assistance,
blue= children in families that get the social assistance)

The poverty in Finland has increased. We have now 600.000 people below the risk-of-poverty threshold, which is 12 % of the population; in EU25 the per cent is 16 % and a total of 72 million people.
Who are the ones that live at risk-of-poverty in Finland? They are:

  1. single parent households 27 %
  2. families with three or more children 26 %
  3. one-person households + 65 years 24 % and
  4. one-person households under 35 years 41 %

(Fig. 5. Pasi Moisio/Yhteiskuntapolitiikka 71/2006:6, Stakes)
During the period from 1990 to 2004 all the other figures have increased, but not the one-person household over 65 years.

(Fig. 6. Eurostat, At-risk-of-poverty rate after social transfers)
Here one can see that at-risk-of-poverty has increased in Finland with 4 % from the year 1996.

This so called welfare Finland has long bread queues all around the country. The church and different organisations distribute food for free to people. In these queues one can find also working people. Working poor has also grown in Finland. Working poor are often women that are working part time or/and even full time but have very low salary. Some of the people have two or three jobs, which means that they do not have any time for their families.

The social expenditure has grown year after year. In 1995 34.644 million Euro and 2005 it was 42.001 million Euro.
(Fig. 7. OSF Statistical Summary 4/2007)

Financing of this social expenditure comes mainly from the local authorities and state, total of 45 %. The local authorities pay now 19,2 % as they paid in 1995 16, 7 % and the state paid 29,3 % as they pay now 24,8 %. There has also been an increase on the amount that the employers pay; it is now 38,5 % as it was 33,7 % in 1995.
(Fig. 8. OSF Statistical Summary 4/2007)

Lisbon Strategy and the ‘Paras’ Project/Framework Act in Finland

The Lisbon Strategy that adopted in 2000 by European Council is an action and development plan for the EU. It aims to “make Europe, by 2010, the most competitive and most dynamic knowledge – based economy in the world”. Wonderful words!

The Lisbon strategy is heavily based on the economic concepts.

The Deputy Managing Director of The Association of Finnish Local and Regional Authorities, Mr. Kari-Pekka Mäki-Lohiluoma said in one of his speeches during the Finnish EU presidency, that “the European competitiveness comparisons have proven that the Nordic countries have succeeded in carrying out structural reforms without giving up their high quality welfare services.” He also said that the Lisbon Strategy has been put in practise the best in countries in which administration is decentralised.

I do not agree with him at all. The situation in Finland looks serious in many areas.

A project to restructure local government and services is in progress in Finland. The Council of State launched the project titled ‘Paras’ Project in spring 2005. (The word ‘paras’ means `best´ in Finnish, and is shortening of service and structural changes). A proposal for the Framework Act was forged in June 2006 and it came in force in February this year and expires at the end of 2012.

The aim is to:

  • improve the productivity of operations of local governments
  • restrain the growth of local government expenses
  • ensure that municipal welfare services remain of good quality and are available for all Finns
  • maintain municipal democracy close to municipal citizen

Finland has been a country with a good reputation of its social security work. Finland has now 416 municipalities; only 54 of them have 20.000 inhabitants, and only 19 that have over 40.000 inhabitants. It says in the Framework Act that health services are to be taking care of in areas that have a population of at least 20.000.

I would say that this Framework Act means that all services that are now close to people, such as

  • health services
  • schools
  • child day care
  • elderly care

are not possible after 2012.

We have already seen a lot of action towards this so far. Last year over 300 schools were closed. This has been a trend already for some years and we cannot see an end to it. The schools are getting bigger and bigger and the teachers are having more pupils in their classes.

Another example is merging from the health centres. Some of the health centres in the capital areas of Finland are not open 24 hours a day. This means that one has to fall ill only during the daytime, not before 8.00 a.m. and not after 4.00 p.m.

As this Framework Act requires a population ground of 20.000 for the health centres we can count that in future Finland we will have only a few health centres. As you know Finland is very sparsely populated country, with long distances. Now all the people have to move to the centres (Fig. 9. map), which in fact has been introduced in this Framework Act. The Government has put forward to the 15 regions to make their plans to merging municipalities.

This also means privatising of the services. Already now the municipalities buy some of services from private sector. Merging of the municipalities and working in bigger units, also means reducing the democratic rights of the citizens.

Privatising the services means that fewer people are making the decisions. One of the aims of the Framework Act is also to increase the productivity. In Finnish this means less labour force, more unemployed people and bigger profits for the private companies.

There is also a great fear that once the social services are privatised, there is no way to have employees on the municipal sectors if needed.

The Lisbon strategy says that the decisions are to be taken to the local level. But already this Framework Act in Finland shows that the decisions have been made by our Government and the local municipalities, and the local councils have had very little to say. This privatisation is narrowing the democracy and people don’t have anything to say. The social services are moving further away from the people.

More than 60 % of the population in Finland would like that the local authorities take care of the social services. People are even ready to pay more tax if they are sure that they can get the services.

There is no guarantee that the private sector gives a better value or has a better productivity of labour in the social service field. In fact researches show that in the private health service the productivity of labour and the value added has been declining all the time since 1975.
(Fig. 10. Olli Savela, Kuntapuntari 2/2006).

Lea Launokari
production manager, activist, Alternative to EU Information Centre, chair person
Kaksosmäki 24, 02400 Kirkkonummi, Finland
+358-9-298 1588 home, +358-50-5522330 mbl. Job
e-mail: lea.launokari(a)nettilinja.fi