Editorial | The reform of social security requires marathon fitness from the parties

PThe board of etteri Orpo (kok) plans to combine social benefits in the next few years. The government wants to encourage Finns to work, but also to clarify how to apply for subsidies and balance the public finances.

The government’s goal is one general support, where the amount of support decreases steadily as the income from work increases. In the Prime Minister’s Party in particular, they like to talk about dismantling incentive traps. Incentive traps refer to situations where social security does not encourage work.

The first step of the major reform is to combine the labor market support and the basic allowance for the unemployed into one universal support. This phase is scheduled to enter into force two years from now in 2026, when there is still a year left until the parliamentary elections. Later, general support is to be expanded to also include housing support and income support.

Now, an unemployed person receives basic daily allowance if his work history meets the conditions for granting earnings-related unemployment insurance, but he does not receive money from the unemployment fund. An unemployed person receives labor market support if he is not entitled to earnings-related unemployment allowance or basic allowance. Labor market support and basic daily allowance are each approximately 800 euros per month. Basic daily allowance can be received for 300–500 days, but the duration of labor market support is not limited in current regulations.

The major restructuring of social security is preceded by government cuts in social benefits. At the beginning of April, the protective part of unemployment insurance and child increases were removed. In addition, the general housing allowance was reduced. For example, the Finnish Institute of Health and Welfare THL has calculated that the social security savings of the government program hit the unemployed and students relatively the strongest.

Sthe social security reform is being prepared by the social security committee, whose work will continue until March 2027. The committee includes members of parliament from all parties and a wide range of social security experts. The government’s proposal on combining labor market support and basic daily allowance is on the horizon for spring 2025, so the parliament could deal with the matter in autumn 2025.

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Clarification of the system is absolutely necessary.

Combining the two supports for the unemployed into a general support is just the beginning. After that, the government wants to combine other basic security benefits as well as housing allowance and income support into the general allowance. Bringing them together is a major political effort, and it is not believed to happen yet in this government.

Mthe effects of the changes on Finnish society are huge, and calculations on changing several social benefits at the same time have not yet been done extensively. An extensive analysis is needed on which groups the reform targets. For example, under the name of Britain universal credit according to studies, the well-known social security model has specifically weakened the position of the needy, and after it came into effect, for example, poverty in families with children has become more common.

Clarifying and updating the social security system is absolutely necessary in Finland from the point of view of public finances. The work of the parliamentary committee has progressed in a controlled manner by examining the whole.

Some politicians fear that the most difficult part of the reform, i.e. the reform of income support, will be postponed until the next government term. Renewing the entire conditions of social security is, however, a very ambitious goal, and good laws can only be achieved through a thorough investigation and experimentation of changes that affect each other.

The editorials are HS’s positions on a current topic. The articles are prepared by HS’s editorial department, and they reflect the magazine principle line.