Finnish government decisions pushing people further into poverty

The Orpo-Purra Government has continued to cut social welfare under conditions of record unemployment, few job vacancies, and deteriorating service provision for the unemployed.

The Finnish Parliament is currently considering government proposals that will tighten eligibility conditions for unemployment benefit and reduce social assistance. A new means-tested general benefit is also under consideration, with a view to replacing basic unemployment benefits paid by the Social Insurance Institution (Kela).

– Implementing the proposals currently before Parliament would worsen poverty, as they target groups that have already suffered the impact of previous social welfare cuts imposed by the Government, explains SAK Head of Social Affairs Pirjo Väänänen.

The decision to freeze indexation increases in benefits for 2024–2027 will also damage the livelihoods of the poorest claimants.
The new general benefit scheduled for introduction at the beginning of May 2026 will include a means test. This change will tighten eligibility conditions for basic unemployment benefit claimants and employees who lose their jobs after a long working career.

– Some people who are not enrolled in unemployment funds may be ineligible for the general benefit if they become unemployed, Väänänen warns.

Means-tested general benefit will become a source of income security for many older unemployed people for the rest of their working careers.

The Government is also tightening unemployment benefit waiting periods. The current four-tier system that begins with an admonition will become a two-tier system. Failure to seek work or a first administrative misstep will in future be sanctioned by loss of income for seven days. A second such lapse will be sanctioned by an indefinite suspension of unemployment benefit until the claimant has been working or receiving services for six weeks.

The Government bill further indicates that unemployment benefit sanctions would also cause a 20–40 per cent reduction in social assistance. A 20 per cent cut in social assistance means a reduction of about EUR 116 in the income of a single person in the first month alone.

– This effectively imposes a double penalty on the claimant, with the suspension of unemployment benefit followed by a reduction in social assistance.

Besides tightening eligibility conditions for social assistance, the Government will reduce its base component by about two per cent. This measure will reduce the monthly disposable income of single-person households by about EUR 18 and single parents by about EUR 15.

– These cuts are severe when the livelihood of people living on social assistance is already minimal.

Pirjo Väänänen stresses that cuts in social assistance will further worsen the dire financial circumstances of families with children. Even though the Government is excluding basic child components from cuts and proposing that any earned income of children and minor gifts should continue to be disregarded, cuts imposed on an adult inevitably affect the circumstances of their entire family.

– Research has shown that child poverty has long-term and intergenerational negative impacts.

Pirjo Väänänen is particularly concerned about the overall impact of various benefit cuts that target the same individuals. An impact assessment by the Ministry of Social Affairs and Health has drawn similar conclusions.

– There is a danger that tightened rules and sanctions for unemployment benefit claimants will increase the need for a growing number of unemployed people to seek social assistance. The most vulnerable will also be left without adequate last-resort social protection.