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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure FI-2022-32/2291 – measures in Finland

Increase in social benefits to mitigate effects of increased cost of living

Sosiaalietuuksien korotus vastaten elinkustannusten kasvuun

Country Finland , applies nationwide
Time period Temporary, 01 August 2022 – 31 December 2022
Context War in Ukraine
Type Legislations or other statutory regulations
Category Responses to inflation
– Increasing income in general
Author Amanda Kinnunen (Oxford Research) and Eurofound
Measure added 16 May 2022 (updated 20 June 2022)

Background information

To mitigate the increasing living costs for those most in need of support in society, the government is proposing an additional index-based adjustment resulting in an increase in social benefits in 2022.

The legal framework underlying the social benefits are the National Pension Act 568/2007 [Kansaneläkelaki], the Pension Index Act 456/2001 [Laki kansaneläkeindeksistä], the Unemployment Security Act 1290/2002 [Työttömyysturvalaki] and the Health Insurance Act 1224/2004 [Sairausvakuutuslaki]. These laws set the framework for the benefits index adjustments.

Content of measure

As part of the government’s seconds supplementary budget of 2022, the government is proposing an additional index increase in social benefits which is meant to mitigate the effects of increasing living costs for those in society most in need of support.

The increase covers social benefits that are tied to the national pension index, which covers most social benefits in Finland, including national pensions. In addition, the unemployment benefits will also be corrected to inflation. Student grants are also proposed to be increased, see case see related case . In practice this entails a 3.5% increase in each benefit.

General housing benefits, housing benefits for pensioners, and endowments for medicine expenses are not included in the measure.

Based on a preliminary estimate, the increase in benefits adds up to €120 million in government spending as well as reduces tax income by €60 million.

Use of measure

The measure has large coverage nationally, as 80% of the population receive some kind of social benefit. As each social benefit covered by the measure is increased by 3.5%, those receiving a combination of different benefits will see a bigger impact on their financial situation. In 2020, there were a total of 609,800 recipients of guaranteed pension. Basic social assistance benefits [perustoimeentulotuki] added up to 282,800 recipients, sickness allowance was paid out to 329,000 recipients and 411,800 persons received unemployment benefits.

Target groups

Workers Businesses Citizens
Unemployed
Disabled workers
Does not apply to businesses People on social benefits

Actors and funding

Actors Funding
National government
Social insurance
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Informed Informed
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Unknown

Involvement

There has been no consultation round for the measure.

Views and reactions

The Central Organisation of Finnish Trade Unions SAK has complimented the government on the measure that they consider to be well targeted to those most in need in the light of rising living costs. The Confederation of Finnish Industries has not issued a press release regarding the governments' fiscal plans.

Sources

  • 09 September 2021: 80% of Finns receive allowances from the Social Insurance Institution of Finland - and there is nothing wrong with that. These are the endowments Finns receive. (Suomalaisista 80 prosenttia saa Kelasta tukea, eikä siinä ole mitään väärää, sanoo professori – Näitä tukia suomalaisille maksetaan) (www.hs.fi)
  • 05 April 2022: These eight things you should know about the governments new fiscal decisions (Nämä kahdeksan asiaa sinun kannattaa tietää hallituksen tuoreista talouspäätöksistä) (yle.fi)
  • 12 May 2022: The government proposes an additional index increase to social endowments in 2022 (Hallitus esittää sosiaaliturvaetuuksiin ylimääräistä indeksikorotusta vuodelle 2022) (valtioneuvosto.fi)

Citation

Eurofound (2022), Increase in social benefits to mitigate effects of increased cost of living, measure FI-2022-32/2291 (measures in Finland), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/FI-2022-32_2291.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.