MP Talk gives members of parliament the opportunity to share their views on Finnish society with an international audience. The opinions expressed in this column are the author’s own and do not necessarily reflect the view of the Helsinki Times.
Finland has all the potential to become a modern service and innovation-based economy attracting talent from all over the world. We need to transform our labour market and recruiting culture, we need English as the official language and we need to modernize our social security model. Today, I will concentrate on the latter.
Combining different forms of part-time work, self-employment, entrepreneurship and studies has become the new normal. In the future, life-long learning and specialization through skills acquired from work and different aspects of life will become even more crucial. Imagine there was a social security system that could support people facing these challenges – at all stages of the lifecycle! Well, luckily there is. It’s called the Life Account.
In the future, the government could provide all people living in Finland with a Life Account once they are 18 or older. The Life Account would contain initial capital that could be used subject to a monthly limit, which would cover living costs if income from work and other forms of employment were not sufficient. The account would be funded through work and voluntary payments. It would also incentivize saving as it allows people to defer taxation.
The Life Account is a loan-based social security system, in which records are kept of the charges paid and benefits received over one’s lifetime. Benefits are debited to one’s own account. If the balance is not sufficient to cover the cost, the government will lend the remaining amount. If the account balance is positive at the end of the account lifecycle, the account holder will keep the amount. Any negative balance will be written off.
The Life Account would make entrepreneurship and self-employment more attractive by providing social security in all situations. It wouldn’t even be necessary to establish a firm in order to employ oneself, as the Life Account would incorporate a “y-tunnus” (VAT identification number) in itself.
On the social security side, the Life Account functions just like basic income. It doesn’t stop there though. With the balance saved onto the account, the account holder is able to employ and contract other people, buy services, as well as invest and acquire voluntary insurance. All this before taxes. This would bring power back to the people and, therefore, the economy, while also reducing the public sector deficit.
Contracting another person would be easy for households or small businesses. With the Life Account, you only transfer the agreed sum to the service-provider’s Life Account: The statutory employer contributions will be debited automatically and taxes will be paid once the receiver withdraws money from his or her account. These features will also help to reduce bureaucracy and the tax wedge. Voilà – Finland is all set for the sharing and service economy of tomorrow!
Elina Lepomäki represents The National Coalition Party in the Finnish Parliament. She has previously served as a research director for the think tank Libera, and has over 10 years of experience in expert and management positions in the financial sector. Lepomäki is a Master of Science in Technology and Master of Economic Sciences, and has lived in four different countries. She is also a partner in several small startups and a chairman of the Board of Directors of Libera.