A newly unveiled report would overhaul the Finnish social security system by replacing several benefits with an account with 20,000 euros in unconditional money, reports Helsingin Sanomat. (Jussi Nukari – Lehtikuva)


AN ACCOUNT with 20,000 euros in unconditional money and a monthly withdrawal limit of 650 euros is proposed as a remedy to the bureaucratic problems associated with social security in Finland, reports Helsingin Sanomat.

The proposal is set forth in a report published on Friday.

The account would become available to people as of the age of 18 once they have completed at least 25 study credits in a degree programme or earned a minimum of 15,000 euros in a year and moved out of their guardians’ house. The information required for activating the account would be received automatically from income, student and population registers, meaning the process would involve no manual labour or consideration.

“Once you’re granted the right to use the universal account, there’d be no means testing linked to its use, such as monitoring how university studies are progressing,” the author of the report, Jussi Pyykkönen, stated to Helsingin Sanomat.

He believes the system would nonetheless encourage young people to complete their studies quickly.

“With the universal account, it’d be possible to withdraw a bit more in unconditional student aid. The account would not be enough for five years under any circumstances if the maximum amount was always withdrawn. If you wanted to maintain a certain income level, the system would encourage you to graduate faster in order not to draw the account empty during your studies.”

Once the account has been drawn empty, the holder would be moved under the purview of so-called participation income. The income would be conditional on each recipient adhering to their personal participation plan, which details measures that improve their likelihood of finding employment in the long term.

The two forms of social security would replace the labour market subsidy, basic unemployment allowance, student financial aid and the income limits of students in what would be a thorough overhaul of the social security system.

Its objective is to tackle problems identified by a parliamentary committee appointed by the government a little over a year ago to draft a reform the social security system: complexity, the difficulty of combining earned income and social security, as well as benefits and services, and challenges related to housing and last-resort benefits.

Helsingin Sanomat was the first news outlet to write about the proposal.

The universal account set forth in the proposal is a simplified version of an idea floated in 2013 by Elina Valtonen (NCP), formerly Lepomäki, as CEO of Libera, a think tank based in Helsinki.

The report containing the proposal is part of a project analysing the future of industry, automation and the economy. The social security-related dimension of the project is headed by Heikki Hiilamo, a professor of social policy at the University of Helsinki.

In Finland, the report highlights, structural unemployment has stagnated at a high level and the existing social security system is incapable of responding to challenges arising from changes in economic structures.

“Technology makes the introduction of models such as this more feasible today,” Hiilamo told Helsingin Sanomat.

“Underlying the fundamental idea is that a large share of income transfers are about evening out income between different stages of life. At some point in life you get more income transfers than you pay for, and at another you pay for more than you get.”

A number of other countries, he pointed out, have recognised and addressed the complex nature of the existing income transfer systems. The United Kingdom has introduced a system known as universal credit to replace six separate income-related benefits for working-age people in low-income households.

Aleksi Teivainen – HT