Draft budget of the Ministry of Economic Affairs and Employment 2020: A socially, economically and ecologically sustainable growth policy

The draft budget of the Ministry of Economic Affairs and Employment (MEAE) for 2020 prioritises a growth policy that will promote sustainable economic growth. This growth will be built on a socially, economically and ecologically sustainable foundation.

“Our draft budget invests in good employment, skills and innovation, and in a low-carbon future,” explain Minister of Employment Timo Harakka and Minister of Economic Affairs Katri Kulmuni, with reference to the first draft budget of the Government term.

The MEAE is proposing total appropriations of EUR 2,728 million, exceeding the current budget by more than EUR 227 million. EUR 73 million of this increase will take the form of additional investment in sustainable growth under the new Government Programme.

Overall expenditure will also increase due to higher emissions trading compensation costs arising from a change in the price of emission rights (EUR 45 million), non-recurrent revenue from auctioning of emission rights to be credited to the EU Innovation Fund (EUR 46 million), technical growth in value-added tax costs (EUR 21 million), and the termination of a non-recurrent saving made in the 2019 budget for public employment and business services (EUR 50 million).

Seeking a 75 per cent employment rate

The MEAE is proposing a budget of more than EUR 297 million for public employment and business services, including an increase of EUR 17 million for pay subsidies. The Government Programme includes an increase in business and third sector pay subsidies. A further EUR 2 million will be allocated to developing the digital pay subsidy services of Employment and Economic Development Offices, with 20 person-years added to pay subsidy disbursement staffing at Centres for Economic Development, Transport and the Environment.

“A wide range of measures and effective co-operation will be required to achieve the 75 per cent employment target set out in the Government Programme. The Ministerial Working Group on Promoting Employment began working in July, and the task forces of social partners that it has appointed may already propose new measures to the Government budget session due in September,” Minister Harakka explains.

Resources will be ensured for Employment and Economic Development Offices. An additional allocation of EUR 5 million will be made for promoting the youth guarantee and for periodic interviews in 2020. The total additional allocation for these functions under the new Government Programme will be EUR 33 million over the period from 2020 to 2023.

“We have a highly competent employment and economic affairs administration that should be properly funded. Achieving a higher employment target will require a more personal service, and we must ensure an adequate standard of services,” Minister Harakka continues.

The MEAE draft budget also includes a development fund of EUR 10 million to promote employment in accordance with the Government Programme. The additional funds will be allocated to such areas as enhancing vocational guidance and career counselling.

Additional investment in innovation financing

The MEAE is seeking to underwrite the Business Finland innovation financing centre for grants totalling more than EUR 332.5 million and loans amounting to nearly EUR 147 million in 2020. The new Government Programme envisages an increase of EUR 39.5 million in underwriting of grants.

“We have fallen behind competing national economies in innovation investment, so the Government is investing in higher innovation funding. Part of the increase will be processed as Government investment in the future, subject to ongoing detailed preparation,” Minister Kulmuni explains.

”It is essential to the achievement of the Government’s employment target that the conditions for entrepreneurial activities are favourable and stable. With innovations we can reform our industrial structure and promote growth and internationalisation of businesses,” says Minister of Economic Affairs Kulmuni.

An allocation of more than EUR 97 million is proposed to cover the operating costs of Business Finland, including an additional investment of EUR 13.5 million for an international growth programme set out in the Government Programme. The additional funds would mainly be used to strengthen exports and globalisation efforts, including measures to attract international talent.

International growth programme

Preparation of the international growth programme set out in the Government Programme has begun. The MEAE draft budget for 2020 includes an additional investment of EUR 24 million in this programme.

EUR 13.5 million of the additional appropriation will be allocated to strengthening the globalisation resources of Business Finland and EUR 6.5 million in underwriting for Business Finland grants will be earmarked for boosting globalisation by businesses.

As part of additional funding for international growth, a programme will be launched to boost the growth of small and medium-sized businesses, with a proposal to set aside funds for underwriting grants of EUR 4 million in 2020. The programme will seek to support small and medium-sized businesses particularly in South and West Finland, where fewer subsidies have been available than in East and North Finland due to scarce European Union funding.

The Talent Hub operating model will be placed on a permanent footing with additional funding of EUR 3 million. The model enables single window access to information for businesses and international specialists. Opportunities made available by additional funding will include seed financing grants to cities and corporations to support recruitment of international talent and campaigns to improve the attractiveness of working in Finland.

Another MEAE proposal would provide an additional EUR 2.8 million in resources for Employment and Economic Development Offices in 2020. EUR 1 million of this increase would be used for streamlining work permit procedures by engaging an additional 20 staff members, and EUR 1.8 million would finance implementation of an international recruitment scheme.

Targeting a fossil-free affluent society

Decisions already taken will terminate the use of coal for energy generating by no later than May 2029. Particularly through the energy subsidy scheme, the MEAE will accelerate the decommissioning of coal-fired facilities, and is accordingly proposing to underwrite energy subsidies of EUR 110 million in 2020. In line with the Government Programme, this package includes an increase of EUR 30 million to be allocated in support of investment in alternatives to coal.

A programme will be launched to promote the circular economy with a view to accelerating progress towards a low-carbon future. An additional budget allocation of EUR 1 million is proposed for implementing this programme in 2020.

Immigration and immigrant integration

The MEAE is proposing a general increase of EUR 3 million to streamline immigrant integration and work permit procedures in 2020. The additional funds would especially boost the resources of Employment and Economic Development Offices for identifying the skills of immigrants, and the role of municipal centres of expertise and organisations in integrating immigrants.

In line with the Government Programme, the refugee quota will be increased to 850 people in 2020. An additional appropriation of EUR 165,000 for immigrant integration training and EUR 520,000 to compensate municipalities for integrating immigrants will accordingly be earmarked in the MEAE budget for 2020.

Preparations have been launched in accordance with the Government Programme with a view to reassigning the administration of work-related immigration from the Ministry of the Interior to the Ministry of Economic Affairs and Employment.

Additional funding for implementing competition and consumer policy

Competition and consumer policy will be strengthened in accordance with the Government Programme, with the MEAE accordingly proposing an increase of EUR 1.5 million in the resources of the Finnish Competition and Consumer Authority in 2020. The MEAE proposal also includes an additional appropriation of EUR 650,000 to the Finnish Competition and Consumer Authority for implementing the new CPC Regulation (EU) No 2017/2394. This instrument broadens the scope of cross-border enforcement operations, with the associated extended powers of the Consumer Ombudsman to tackle infringements of consumer protection provisions by traders and effective regulatory control requiring additional resources for the said Authority.

A general increase of EUR 500,000 in State aid to the Consumers’ Union of Finland is proposed for use in improving consumer information. This increase would bring the total annual aid granted to this organisation up to EUR 1.3 million.

Preparation of future investment continues

The MEAE draft budget excludes future investments under the new Government Programme that are currently under preparation. The MEAE submitted its own proposals to the Ministry of Finance at the beginning of August.

The MEAE proposal is based on budget appropriations prepared when drafting the new Government Programme.

General Government Fiscal Plan for 2021–2023

The General Government Fiscal Plan for the Government term was prepared in parallel with the 2020 draft budget. The MEAE has proposed total appropriations of nearly EUR 2,691 million for 2021, EUR 2,541.5 million for 2022, and approximately EUR 2,554 million for 2023.

Permanent increases under the new Government Programme amount to nearly EUR 109 million for 2021, more than EUR 111 million for 2022, and EUR 118.5 million for 2023.

The principal budgetary increases under the Government Programme for the period from 2020 to 2023 (over a total of four years) are:

• EUR 168 million (grant underwriting) in grant authorisations to Business Finland
• EUR 112 million for the international growth programme
• EUR 90 million in energy subsidies (grant underwriting)
• EUR 67 million for Employment and Economic Development Offices
• EUR 66 million for public employment and business services

Inquiries:

Ville Kopra, Special Adviser to the Minister of Employment, MEAE, tel. +358 40 8261 358
Kari Jääskeläinen, Special Adviser to the Minister of Economic Affairs, MEAE, tel. +358 44 058 1030
Jari Gustafsson, Permanent Secretary, MEAE, tel. +358 29 504 7400
Mika Niemelä, Director of Finance, MEAE, tel. +358 29 506 2135