Finland's government policies widen gap between poor and wealthy
A study by Finland's Labore institute finds that government cuts to social support have increased poverty more than expected, while tax decisions have boosted incomes of the wealthiest. Nearly 99,000 more people have fallen into low-income status.
A new study by the Finnish research institute Labore shows that decisions made by Prime Minister Petteri Orpo's government have increased poverty in the country more than initially expected. At the same time, tax policy changes have brought additional income to wealthier residents.
According to the study, the average income of the poorest 5% of the population fell by 828 euros per year, roughly 7% of this group's total income. Meanwhile, the average income of the wealthiest 5% rose by 2,137 euros per year, or nearly 2%.
Overall, the number of low-income people increased by almost 99,000 as a result of government decisions. People are classified as low-income if their earnings fall below 60% of the national median income.
Milla Nyyssölä, lead researcher at Labore, noted that not only is the number of people falling below the poverty line growing, but the financial situation of those who already had low incomes is also worsening.
Poverty rising among the employed
The study shows that cuts to social support have hit low-income working people particularly hard, as many of them receive social benefits in addition to their wages. Nyyssölä pointed out that benefit cuts deepen poverty not only among those outside the labor market but among employed people as well, since social payments supplement the income of many workers.
Government decisions have also increased the number of children living in low-income households by about 26,000. Currently, 18.4% of children live in low-income households, up 2.6 percentage points from before the legislative changes.
The government cut spending on unemployment benefits, study grants and housing subsidies by a total of about 1.8 billion euros. At the same time, spending on basic subsistence support rose by hundreds of millions of euros, as more low-income people shifted to this form of assistance.
By cutting social support, the government aimed to save budget funds and strengthen incentives to seek employment. However, economic growth has remained weak for a long time, while unemployment has continued to rise.
