Image: Yle

After intensive talks between the heads of the six government parties, the government finally approved a package of structural reforms late on Thursday evening. The package aims to eliminate the sustainability gap in the state budget estimated at 8-10 billion euros.

In the press conference that followed the talks, Prime Minister Jyrki Katainen of the National Coalition Party noted that the passed measures aimed at no less than taking care of the whole sustainability deficit, and that if these measures were not enough, the government would introduce new ones.

Katainen said the task proved challenging, and noted that the reforms may carry some heavy consequences.

“Changes and reforms can be painful,” Katainen said at the press conference.

According to Social Democrat Finance Minister Jutta Urpilainen, the reforms show that Finns are committed to maintaining a welfare state.

“The most important thread running through this paper is increasing employment in Finland,” Urpilainen commented.

Cuts to family benefits

The reforms passed by the government contain measures with far-reaching implications to families. For example, in cases where one of the parents is at home due to maternity, paternity, parent or care-leave, children will only have the right to part-time day-care.

Home care subsidy will be shared equally between parents. If one of the parents does not take the allocated leave, the family will lose the benefit.

Longer compulsory education will be imposed. The period for student financial aid will be shortened, while savings thereby incurred will be used to slightly raise the amount of the aid.

The conditions for job alternation leave will be tightened, and the average age of retirement is to be raised by 1.5 years up to an age of 62.4 years.

Two billion euros savings from municipalities

The reform package spells out municipal savings of two billion euros. Half of this sum will come from dissolving tasks and responsibilities allocated to municipalities. According to Finance Ministry calculations, the municipal workforce could shed up to 20,000 employees through quitting certain tasks.

Tax hikes and increased productivity are among measures hoped to bring the other billion euros.

The multichannel funding of social and health care is to be dismantled. Preparation work for this will be carried out jointly by parliamentary representatives, financiers and organizations, with a deadline for a report on the matter set for early 2015.

Bitter pills to swallow

Government parties struggled to reach agreement, having to swallow policies abhorrent to many among respective party ranks.

Especially contentious was the introduction of metropolitan administration for municipalities in the capital area, as well as forced municipal mergers - which the government reserved the right to carry out.

The Social Democrats have been a vocal critic of such forced mergers. However, SDP Finance Minister Jutta Urpilainen had to yield to group and economic pressures, and admitted that municipal reform had to be 'stepped up a gear'.

With reforms to home care subsidy, the agreement proved perhaps most taxing to the Christian Democrats, whose deliberation dragged the talks late into the evening.

Many of the structural reforms are still to undergo more preparation, with the finer details to be ironed out by November.

The Prime Minister will bring the structural reform package to the parliament during the autumn.