Queues for free food keep getting longer throughout Finland.

The income differential between the richest and poorest income groups has widened. A new release by Statistics Finland shows that the gap between rich and poor is continuing to widen as it has throughout most of this decade.

“The median disposable income of the lowest-income decile diminished by 0.4 per cent while that of the highest-income decile grew by 3.4 per cent,” says Riitta Harala of Statistics Finland in the release. “Relative to the whole population, the development in the income of certain low-income groups, such as students and single carers, has been very weak throughout the 2000s.”

In 2007 the lowest income group made 3.9 per cent of total income, down from 4 per cent in 2006. The highest earners took home 23.9 per cent of total income, up from 23.3 per cent the previous year.

As recently as 1987 Finland was much more egalitarian. In that year the lowest earners claimed 4.8 per cent of national income while the richest took home only 17.6 per cent. The average disposable income differential between the lowest and highest income groups was the equivalent of 20,306 euros in 1987. Twenty years later that differential had more than doubled to 49,890 euros.

The socio-economic group with the lowest income were students. They earned 9,200 euros in 2007, down about 4 per cent from 2006. The next lowest groups were the unemployed and pensioners. The income of retired persons grew only 0.6 per cent in 2007.

“The income level of the households of self-employed persons was just over 26,000 euros and the development in their income was the most favourable among all socio-economic groups in 2007,” continued Harala. “Upper-level salaried employees were the socio-economic group with the highest income level of 30,000 euros.”

The income of families with children developed poorly. “The development in the income of two-carer families with children has halted at the level of 2005, at around 22,500 euros,” Harala explains. “The income of single carers has been falling continuously since 2004. In 2007 it amounted to 15,400 euros. By contrast, the development in the income of couples without children has for a long time now been better than in other population groups.”

Although income disparity has widened more quickly in Finland than any other OECD country, the nation still remains more egalitarian than most. “By international comparison, income inequality in Finland is still lower than the average in Europe or among OECD countries,” says Harala. She cites Sweden and Norway as having lower income inequality but the Baltics and Great Britain has having larger disparities.

It is also conceivable that the gap narrowed in 2008. The decline in asset prices last year undoubtedly hurt capital gains, which are more likely to be claimed by the highest income groups. During the last recession the highest earners saw their income fall 4 per cent while the lowest income group largely saw their disposable income unchanged.

DAVID J. CORD - HT
Lehtikuva - Jussi Nukari