Finland's Finance Ministry Proposes Benefit Cuts and Raising Retirement Age to 70

Finland's Ministry of Finance has presented a reform plan that would scale back state services and benefits and gradually raise the retirement age to 70. The ministry says public debt growth must be stopped and the debt-to-GDP ratio brought down. In its assessment, this would preserve the foundations of the welfare state.

What the proposals include

The measures are intended to improve the state budget balance by 8–11 billion euros. They combine spending cuts, tax increases and structural reforms designed to stimulate economic growth. Most of the steps are proposed for the start of the next government's term.

According to the ministry, the next government will have to decide which state functions, services and benefits can be dropped. The greatest savings potential is seen in health care, social security and education, as these are among the largest items of public spending.

Sources of savings

The ministry suggests reviewing the list of publicly funded social and medical services, as well as the network of institutions providing them, which could save hundreds of millions of euros a year. This includes deciding which types of treatment and examinations the state will pay for.

Several hundred million euros more could come from cutting inefficient subsidies and tax breaks for companies. The ministry estimates that a further 2–3 billion euros could be raised by selling state-held shares in listed companies and reinvesting the proceeds in growing businesses.

Labour market and education

The proposals also include introducing a fee for a second higher-education degree for Finnish citizens and raising the retirement age to 70. Finnish officials estimate that the latter measure would increase the number of people in work by 50,000 to 120,000. Roughly 10,000 more people would enter the labour market if the home care allowance for children were abolished or its payment period shortened.