Finland Dismantles the Remains of the Welfare State
Raising the retirement age to 70, abolishing the home care allowance, reducing the number of health and social service regions—these are the measures officials propose to tackle Finland’s debt spiral.
According to officials at the Ministry of Finance, all expenditure and taxes must be reviewed during the next parliamentary term. This also entails cutting back on public services and benefits.
The North Observer would prefer to avoid harsh rhetoric when assessing the misanthropic plan set out in the recently published document described below—a plan addressed to the Finnish government that will be formed following the parliamentary elections on April 18, 2027. Yet, doing so proves impossible.
The authors of the reform plan have set themselves a single goal: to reduce the unhealthy national debt and budget deficit of a state that was once a European model—a situation resulting from the destructive socioeconomic policies of Finland’s most right-wing postwar government, led by Petteri Orpo, the second most unpopular prime minister in the country’s history.
The title of the most unpopular prime minister in Finland since 1919 belongs to the current president, Alexander Stubb (prime minister in 2014–2015). An independent observer is led to the logical conclusion that this once-successful country is being led simultaneously by two failures—a pairing unparalleled in Finland’s nearly 110-year history.
Prime Minister Petteri Orpo’s public approval ratings rank among the lowest in historical comparisons, and his popularity has remained exceptionally low. In a 2026 opinion poll conducted by Verian for Helsingin Sanomat, as many as 59% of Finns rated Orpo’s performance as poor, while only about a fifth considered it good.
Public approval of the government led by Orpo—with over half of respondents deeming it a failure—has been the second-lowest in the history of such measurements.
The government led by Alexander Stubb (National Coalition Party) during the 2014–2015 term received an even harsher assessment from the public. The results of the actions taken by these two politicians—the most destructive in the country’s history—are evident: there has been no economic growth for nearly 20 years, and unemployment is hitting record highs within the European Union (the rate was 10.5% in July 2026, compared to 6.1% for the EU as a whole)—an EU that has frowned upon the high and rising national debt, which exceeded 90% of GDP in the second quarter of this year.
The country faces daunting challenges, and resolving them is no simple task—even for Finnish politicians who genuinely care about their citizens rather than just their own personal gain.
These challenges include the rapid aging of a Finnish population that is failing to reproduce itself while living in a troubled country (birth rate of 1.25 per woman in 2024); the resulting labor shortages and high labor costs; a moribund bureaucracy that drains the lifeblood of society; poor public administration; the government’s lack of will and ability to implement structural reforms; a dysfunctional economic model; and a sharp, unjustified increase in military spending.
The authors of the public spending cut plan described below offer no strategic vision for the situation or for structural reforms; instead, their approach resembles that of vivisectors preparing to slice open the body of the Finnish nation with gleaming metal instruments just to see if it is still alive.
The inhumanity of their scheme—which centers on cutting all forms of social services, with a particular focus on education, healthcare, and social welfare—is staggering. Their proposal essentially boils down to a question of what can be carved away from the nation’s still-living body.
Given the low healthy life expectancy for both men and women in Finland, the proposal to raise the retirement age from the current level of nearly 65 to 70 years appears particularly inhumane.
According to the latest Eurostat statistics, healthy life expectancy at birth in Finland is approximately 57.1 years for men and 55.9 years for women.
Finland ranks at the bottom end of the European Union in these statistics, with figures clearly below the EU average (62.8 years for men and 63.3 years for women). Finland is also one of the few countries where healthy life expectancy is higher for men than for women.
Although Finns are perceived to experience a decline in health at a relatively early age, overall life expectancy in Finland is at a record high:
- Overall life expectancy for men: 79.6 years (healthy for approximately 72% of their lives)
- Overall life expectancy for women: 84.8 years (healthy for approximately 66% of their lives)
This means that, on average, Finns spend the final 22–29 years of their lives living with chronic illnesses or functional limitations that affect their daily lives in some way.
For society, this means that vehicles will be operated by elderly people with trembling hands and looming heart attacks or strokes, thereby increasing the number of traffic accident victims. Aging doctors nearing the onset of dementia will prescribe incorrect medications that harm patients. Readers can add to this list as they see fit.
The authors of the government’s action plan have not overlooked the idea of replacing real Finns with artificial intelligence—and, at the same time, with highly educated migrants. These migrants will fill jobs that ethnic Finns will be unable to secure due to poor academic performance (as highlighted by PISA 2025). In 2000, only 7.0% of Finnish schoolchildren lacked satisfactory reading skills; by 2025, that figure had risen to 25.8%—one in four (Yle, in Finnish).
Thus fades the glory of the world. Thus fades the once-exemplary Finnish welfare state, now consigned to the graveyard. Will ordinary Finnish citizens—who certainly deserve a better fate—want to follow the path where politicians are doggedly leading them?
A Plan to Halt the Cycle of Rising Debt
Officials from the Ministry of Finance have released their customary policy statement for the upcoming parliamentary term. The goal is to halt the cycle of rising debt, reverse the debt-to-GDP ratio, and thereby safeguard the foundations of the welfare state.
The officials firmly uphold the “debt brake” agreed upon by the political parties in February, insisting there must be no deviation from it. Public finances need to be strengthened by €8–11 billion by the end of the next parliamentary term. In their view, the necessary fiscal adjustment should be achieved primarily through spending cuts and tax increases, though structural reforms that support growth are also required.
“The adjustments are substantial, but according to our analysis, they are achievable,” stated Juha Majanen, permanent secretary at the Ministry of Finance, at the briefing regarding the policy statement.
Economic officials emphasize that no category of expenditure or taxation should be excluded from review, and that the adjustment measures must be implemented in a front-loaded manner right at the start of the next government’s term.
“All expenditures and revenues must be on the table; nothing should be ruled out at this stage,” Majanen said.
Here are the civil servants’ stern recommendations for next spring’s government formation talks.
Public Services Must Be Cut Back
The next government must determine which public functions, services, and benefits to cut in order to safeguard the core tasks of the welfare state and essential services for the future. Service delivery methods also need to be overhauled.
Healthcare, social security, and education represent the state’s largest expenditure items; consequently, they also offer the greatest potential for savings.
Civil servants estimate that changes to the range of social and health services and the service delivery network could strengthen public finances by hundreds of millions of euros.
“Service range” refers to the specific treatments and examinations funded by public resources.
Reduce the Number of Municipalities and Wellbeing Services Counties; Overhaul State Administration
The number of municipalities needs to be reduced—for instance, through changes to their responsibilities or by offering merger incentives. Civil servants estimate this could yield savings of €220 million. They also want municipalities to increasingly organize services through cooperation in the future. If these measures fail to revitalize municipalities, the alternative is to transfer their responsibilities to wellbeing services counties or the central government.
Officials propose significantly reducing the number of wellbeing services counties, or alternatively, increasing cooperation between them and centralizing their functions.
This could entail concentrating specialized medical care in specific locations or streamlining the hospital network. Officials also propose a model in which the central government would assume full responsibility for organizing health services for citizens.
Furthermore, the funding model for wellbeing services counties needs reform, as it has led to funding imbalances across regions. At the same time, the rise in social and healthcare costs should be slowed down—or, ideally, reversed.
In the future, ministries should focus on core strategic tasks, while their other functions would be transferred to government agencies. Officials would consolidate government agencies, their operations, and support services.
This is projected to generate permanent savings of €100 million in the long term. The transition would leverage the wave of retirements expected in the public sector.
Strengthening Economic Growth
Officials advise that assessments of economic security and critical dependencies should be integrated into all decision-making.
They propose drafting a long-term strategy for the energy sector and legislating the reservation of transmission grid capacity for economically vital projects. This is driven by the rapid expansion of data center construction in Finland. Investment permitting processes should also be expedited.
Officials believe state funding should be directed toward subsidies that foster growth and renewal. Inefficient business and tax subsidies could be cut by hundreds of millions of euros.
State-held listed shares could be sold for €2–3 billion, with the proceeds channeled into unlisted growth companies.
“This would strongly involve the private sector, as they would have their own capital at stake. That provides security for the state,” says Majanen.
Skilled labor is also essential for growth, so Finland needs to increase the number of young people with higher education degrees. However, officials propose that Finns pursuing a second degree at the same level should pay tuition fees in the future. This would strengthen the funding base for higher education institutions. Meanwhile, a vocational qualification should better equip individuals with the skills needed for employment.
Civil servants propose raising the retirement age and abolishing the home care allowance. The minimum old-age retirement age could be raised, for instance, by increasing the age limit by six months for each successive birth cohort until the minimum age reaches 70.
“We should focus on areas where reforms haven’t been made for a while—such as extending working careers or boosting employment among parents of young children,” says Olli Kärkkäinen, director of strategy and research at the Ministry of Finance.
According to Ministry of Finance officials, the debt brake cannot be compromised.
Raising the retirement age would generate an estimated 50,000 to 120,000 additional employed persons. Abolishing or significantly shortening the home care allowance period would add approximately 10,000 employed persons to the workforce.
According to the officials, Finland needs more high-skilled immigration, so the process should be facilitated through various measures.
Fully Leveraging Artificial Intelligence
Public administration must be able to deliver services more efficiently and rapidly than before. To fully harness the potential of artificial intelligence, investments in a shared AI platform, an operational and management model spanning the entire administration, and legislative reform are required.
According to civil servants, AI could be widely utilized in high-volume processes such as taxation, benefits processing, and social and health services.
“For citizens, this could mean faster decisions and smoother services. For employees, it means fewer routine tasks and more time for expert work and analytical thinking,” says Jarkko Levasma, ICT director at the Ministry of Finance, speaking at a briefing.
The shift toward AI could strengthen public finances by billions of euros, but estimates are too uncertain to rely on them when calculating the fiscal adjustment needs for the next electoral term.
Managing Risks
Civil servants aim for a society where vital functions are safeguarded under all conditions and which recovers quickly from disruptions.
This can be achieved by clarifying the roles and structures regarding preparedness and security among various actors. Clear operating models should also be established for national coordination. Cybersecurity would improve through the concentration of resources and the pooling of funding. Finland will not meet its EU climate obligations through national measures alone; therefore, the shortfall should be covered by acquiring carbon sink or emission units from other EU countries.
This, however, could prove costly. Finland’s difficulties stem largely from the poor state of carbon sinks in the land-use sector.
Officials have outlined effective emission-reduction measures for the next government to adopt: reducing emissions from agriculture and building heating, raising taxes on lightly taxed fossil fuels, and eliminating energy tax subsidies for peat.
Taxes could also be levied on the use of wood for heat production.
Furthermore, the ministry holds the view that halting biodiversity loss should be enshrined in law, with specific measures defined to achieve that goal.
Source: Yle (in Finnish)
