Finland’s welfare state model was for many years regarded – along with those in other Nordic countries – as one of the best performing. It was a frequent reference point for social democratic policies and demands in other parts of Europe. It’s been a year since a right-wing coalition came to power in Finland, setting its sights on dismantling the existing model and proceeding to rapidly implement its program.
After the April 2, 2023 elections, the Petteri Orpo government, based on a consensus of four parties to the right of center, took over the country’s reins from charismatic Prime Minister Sanna Marin and her center-left coalition. The core of the new arrangement is an alliance between the liberal-conservative National Coalition (Kokoomus) and the nationalist Finns Party (Perussuomalaiset). Both parties went to the election under slogans about saving Finland. The former – from the growing national debt and economic crisis, the latter mainly from immigrants. One of the longest coalition negotiations in the country’s history resulted in a program of radical budget cuts and economic reforms designed, according to the new government’s narrative, to improve public finances and revive the Finnish economy.
Shock therapy in the land of deliberation
Until last year, the hallmark of Finnish political life was the search for consensus, deliberation, reliance on knowledge, long negotiations and working out solutions that were expected to last longer than the terms of individual cabinets. It seems that Petteri Orpo has decided to break with these traditions and make changes as broadly, quickly and ignoring criticism as possible. What’s more, part of the government’s program are solutions aimed precisely at this criticism: limiting the right to organize a legal strike of a political or solidarity nature, increasing penalties for unions for organizing a strike deemed illegal, and introducing individual penalties for participating in such a strike. The relevant legislation has already been passed by parliament, but it has not yet been determined when it will come into effect.
Not only is the voice of labor unions and other actors on the social side ignored ( student, student and migrant communities are also protesting), but also the opinions and analyses of experts, which is also something of a novelty in Finland. Numerous reports (including those prepared by state institutions) warning of the negative consequences of the reforms do not result in a change or even a softening of course. “The Ministry of Social Affairs and Health’s assessment of the cumulative effects of social security cuts shows that the poverty risk index will increase, and those with the lowest incomes will become even more impoverished as a result of the cuts. Calculations prepared by the Finnish Institute of Health and Welfare […] indicate that some 94,000 additional people, including 12,000 children, will be at risk of poverty.”
This is an excerpt from a report that the Finnish government submitted to the European Commission at the end of last year. KELA (the Finnish equivalent of Social Security) also reported that, contrary to Orpo’s earlier assurances, the reforms would hit the poorest people. In contrast, according to Soste (an umbrella organization of health and welfare NGOs), an additional 68,000 people, including 16,700 children, will fall below the poverty line by 2024 alone.
We cut benefits for the poor, taxes for the rich
Let the scale of cuts and reforms be evidenced by the fact that there are too many to list and detail them all here. The matter is further complicated by the fact that the government’s program, published after the coalition was formed, was only an introduction, and every few weeks more – to quote the prime minister – “difficult but necessary decisions” are announced. On a general level, the “recovery” of the Finnish economy and state budget is taking place in four areas: funding of public services, the amount and rules for granting social benefits, tax policy and labor market regulation.
In area one, state spending was cut, primarily on health care. From the central government’s point of view, the cuts were easy in that less money was simply given to the relevant local government bodies, and it is they who must face the task of organizing health care with reduced resources. At the same time, standards for the availability and quality of treatment (e.g., the guaranteed start time, the range of reimbursable treatments or the staff-to-patient ratio) – set by regulations and laws – have been loosened. Savings will also extend to the education sector (mainly adult vocational education) and the Grants to NGOs providing free services to help people in various crises.
The impact of cuts in direct social transfers has already affected more than half a million people (about 10 percent of the country’s population), who have been receiving reduced benefits from KELA since April. Among the most important changes are a reduction in the housing allowance (paid when household maintenance consumes a relatively large portion of income) and the elimination of the child supplement to unemployment benefits. In addition, the government is seeking savings by freezing the valorization of some other benefits or changing the rules for granting them. Particularly controversial and increasingly protested by young people are the cuts to student financial support.
There have been two changes in tax policy, the juxtaposition of which, according to many critics, exposes the Orpo government’s true intentions – to shift the cost of living of the state from the top down. Starting next year, the rate of the – by its nature regressive – VAT increases from 24 to 25.5 percent. and the list of food products that are subject to the lower, 14 percent, rate decreases. However, there is one sphere where the government, despite its austerity policy, has decided to reduce its budget revenues, and that is income tax. At the beginning of the year, changes in this regard came into effect, which will benefit the most – what a surprise – the highest earners.
The most momentous changes, however, may be those that are difficult to reduce to simple figures. For several decades, Finland has had a model for regulating the labor market based on sectoral collective bargaining agreements between trade unions and employers’ unions. Regulations at the statutory level are only general in nature, and it is collective bargaining that determines working conditions (including the minimum wage) in specific industries. The Orpo government has set its sights on limiting the role of unions and giving companies more freedom to set work rules and wages. If this plan succeeds and the collective bargaining system is dismantled, there will be a significant weakening of the position of workers, who have relatively few protections at the level of national regulations. An important step in implementing this plan is the aforementioned restriction of the right to strike.
Waves of resistance surged
The right-wing government’s policies are facing significant resistance. In the fall, the SAK trade union federation of more than 800,000 people launched the #PainavaSyy/#SeriousGrounds campaign to protest cuts and changes to the detriment of workers. Since September, there have been widespread strike actions about every month, involving industrial plants, public transportation, ports, educational institutions and some services. Some of them were even attended by more than 100,000 people. The latest iteration of the protest was the suspension of work at cargo ports for several weeks, significantly affecting the fluidity of Finnish imports and exports.
In April, SAK decided to halt strike action to fend off accusations from the government of unwillingness to negotiate and reach an agreement. However, it does not appear that the government itself is ready to make concessions, so it can be assumed that the current pause in strikes is the calm before the storm. Whether this storm will come and whether it will force the government to change course (or parliament to change the government) – time will tell.
**
Michal Kulka-Kowalczyk – graduate of the Institute of Sociology and the Institute of Applied Social Sciences at Warsaw University. He has been living and working in Finland since 2021. A member of the Teollisuusliitto labor union.
