Matias Mäkynen, a deputy chairperson of the Social Democrats, spoke during a question-time debate in the Parliament House in Helsinki on 2 May 2024. Mäkynen stated to Helsingin Sanomat last week that the government proposal to rationalise the social security simpler is commendable in principle but not without some serious risks. (Heikki Saukkomaa – Lehtikuva)

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MEMBERS of Finnish opposition parties are supportive, with some reservations, of the goals of the social security reform outlined to Helsingin Sanomat last Wednesday by Minister of Social Security Sanni Grahn-Laasonen (NCP).

The newspaper wrote that a parliamentary task force has found an agreement on the first phase of the reform: combining the basic unemployment allowance and labour market subsidy into a universal benefit.

The cross-parliamentary consensus ends there, though.

Grahn-Laasonen on Wednesday stated that in subsequent phases of the reform process also other basic benefits, along with the housing allowance and income assistance, should be incorporated into the universal benefit.

Matias Mäkynen, a deputy chairperson of the Social Democrats, stated to Helsingin Sanomat that incorporating the housing allowance and income assistance into the universal benefit would be such a major change that the government should adopt a more patient approach to the reform.

“Rushing it comes with big risks,” he said.

He estimated that it would be difficult to incorporate such a high number of benefits into a single benefit without either undermining the livelihood of social security recipients or increasing social security expenditure.

Both the National Coalition and Christian Democratic Party have adopted the long-term goal of creating a universal benefit in the vein of Universal Credit, the combination of six social security benefits in the UK. Its introduction, though, has resulted in a drop in benefits for people in the most vulnerable position, contributing to child poverty and homelessness, according to Helsingin Sanomat.

The outcome could be the same in Finland, warned Li Andersson, the chairperson of the Left Alliance.

“Avoiding an outcome like that sounds very difficult especially when you account for the fact that this government has shown no willingness whatsoever to increase resources in the social security system, quite the opposite,” she said to Helsingin Sanomat.

“I have zero per cent of trust in the current government as the one carrying out this reform.”

The ruling parties are also mulling over setting a maximum eligibility period for the universal benefit, a possibility that would distinguish it from the unlimited labour market subsidy. People who exhaust the benefit would have to rely on income assistance, a possibility that drew criticism from the Greens, Left Alliance and Social Democrats.

“Income assistance is the most passivating form of support. We should do whatever we can to make sure people don’t end up there,” stressed Sofia Virta, the chairperson of the Green League.

Mäkynen, in turn, argued that people who end up living on income assistance due to prolonged unemployment rarely do so because working is not financially advantageous but because they have significant challenges finding employment. “People don’t end up there because they’re lazy or averse to working, but the reasons are much more complicated than what you can tackle with income assistance.”

Also Annika Saarikko, the chairperson of the Centre, identified the eligibility period as a central open question.

“That the government has yet to specify whether the benefit will be permanent or temporary isn’t a minor detail. A large group of people receive the labour market subsidy,” she commented to Helsingin Sanomat.

Saarikko added that although the labour market subsidy was not designed as a permanent source of income, the solution is not to make the universal temporary and turn income assistance into a permanent source of income.

“The approach also can’t be that you simply can’t dump people into poverty,” she remarked.

The objective of creating better incentives for work drew support from Saarikko, Virta and Harry Harkimo, the chairperson of Movement Now. Virta told Helsingin Sanomat that it would be “great” if a single application could provide people with all the security they need in their life.

“The model that you create can’t be one that increases poverty, though,” she said. “It should be created very craftily so that the incentives in the system genuinely improve and steer the system in a direction where people in all circumstances have an incentive to work. That’s the only way to reduce costs without increasing poverty.”

Harkimo pointed out that the government has simultaneously take action to ensure jobs are available. “You can’t force people to work if there are no jobs,” he summed up.

Andersson also questioned whether the government is genuinely interested in increasing work incentives, pointing to a track record of decisions that “so far have increased bureaucracy and incentive traps”.

The Social Insurance Institution of Finland (Kela) has estimated that the government decision to remove the exemption that has allowed unemployment benefit recipients to earn 300 euros a month without affecting their benefits has reduced the incentive to accept low-paid, short-term job offers.

It is important that all parliamentary parties are part of the reform process also going forward, underscored Mäkynen. “Otherwise there’s a risk that you do away with some benefits and the next government will reinstitute them. In terms of social security issues, it’s important to make sure the direction is the same across electoral terms.”

Aleksi Teivainen – HT

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