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 a return to the old prices is unlikely to happen in the near future. Thus, the government has introduced a measure package to assist citizens to cope with the high energy prices. In addition to the reduction in the value added tax on energy plans to introduce a four-month temporary electricity allowance.

Content of measure

The government of Finland has announced a plan to introduce a four-month temporary allowance for citizens that have trouble coping with their energy costs. The details of the measure are still to be determined and the government has not yet 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 has earmarked €300 million for the allowance and the tax deduction each. Person that receive subsistence benefit (toimeentulotuki) will not be 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).

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) has 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)