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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-2023-1/2863 Updated – measures in Finland

Temporary electricity allowance for low income households

Sähkötuki

Country Finland , applies nationwide
Time period Temporary, 01 January 2023 – 31 December 2023
Context War in Ukraine
Type Other initiatives or policies
Category Responses to inflation
– Support for energy bills
Author Amanda Kinnunen and Elina Härmä (Oxford Research)
Measure added 13 September 2022 (updated 11 July 2023)

Background information

Russia's invasion of Ukraine has affected Europe's energy supply and energy prices. The government of Finland stated in the most recent negotiations for budget amendments that it is unlikely that prices will return to their pre-war levels in the near future. Thus, the government introduced a measure to assist citizens with the high energy prices. In addition to the reduction in the value added tax on energy , the measure introduces a four-month temporary electricity allowance.

Content of measure

The government of Finland announced a plan to introduce a four-month temporary allowance for citizens to help pay their energy costs. The details of the measure are still to be determined and the government has not elaborated on how the measure will work in practice. Preliminary models suggests that the allowance will be paid for electricity bills exceeding either €300 or €500 and up to a maximum of either €1,300 or €1,500.

The electricity allowance is aimed at people who do not pay enough tax to qualify for a household energy tax deduction . The government earmarked €300 million for the allowance and the tax deduction each. People who receive subsistence benefit (toimeentulotuki) are not eligible for the allowance.

The allowance would be available from January to April, 2023 and will be paid out by the Social Insurance Institution of Finland (Kela).

Updates

The following updates to this measure have been made after it came into effect.

25 January 2023

The agreed upon details of the measure stipulated, that the allowance would be paid for 60% of electricity bills exceeding €400. This does not include electricity transmission costs. The maximum amount of the allowance is €660/month, which means an electricity bill of a minimum of €1,500/month. The minimum amount paid out in allowance is €5/month.

The allowance is paid for electricity consumption during 1. January and 30 April 2023, but can be applied for until the end of 2023.

Use of measure

Over 100,000 citizens are expected to be eligible for the allowance.

Target groups

Workers Businesses Citizens
Does not apply to workers Does not apply to businesses People on low incomes

Actors and funding

Actors Funding
National government
National funds

Social partners

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

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

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

  • Unknown
  • Main level of involvement: N/A

Involvement

The measure is not in social partners' domain.

Views and reactions

The leader of the Central Organisation of Finnish Trade Unions (SAK) underlines that it is important that there is a political response to the record high electricity bills. He states that support should be targeted to low-income earners and those hardest hit by the price hike. The Finnish Confederation of Industries (EK) commented on the government’s budget stating that they understand the spending increases in exceptional circumstances. However, they remain critical to the increasing fiscal debt.

Sources

  • 01 September 2022: Government's energymeasures praised, debt causes worry (Hallituksen sähkötoimille kiitosta, velkaantuminen arveluttaa) (www.mtvuutiset.fi)
  • 02 September 2022: This is how the new energy allowances will work (Näin uudet sähkötuet toimisivat) (www.hs.fi)
  • 02 March 2023: The amount and payment of the electricity allowance (2023) KELA (www.kela.fi)

Citation

Eurofound (2022), Temporary electricity allowance for low income households, measure FI-2023-1/2863 (measures in Finland), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/FI-2023-1_2863.html

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