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Ministry of Social Affairs and Health budget proposal for 2017

Ministry of Social Affairs and Health
12.8.2016 13.25
Press release 113

The Ministry of Social Affairs and Health’s 2017 budget proposal for its administrative sector totals about EUR 14.5 billion. This is around EUR 1.4 billion higher than in the current year.

The reasons for the increase include the effects of the Competitiveness Pact, transfer of the payment of basic social assistance to the Social Insurance Institution of Finland (Kela), expenditure associated with asylum seekers that have been granted a residence permit, and the partial transfer of wage subsidy and start-up grant funding from the Ministry of Economic Affairs and Employment to the Ministry of Social Affairs and Health.

The Competitiveness Pact will bring changes to the employer's social security contribution, which will fall. The Pact will also harmonize the employer and employee contributions to unemployment insurance. 

The Ministry of Social Affairs and Health’s budget proposal also supports the equal treatment and employment of young women, as the employer costs arising from family leave will be evened out with a EUR 2,500 lump-sum payment. Support is also given to certain pilot schemes under the key projects: the reform programme for child and family services, the development of home care for older people and the enhancement of informal care in all age groups. Leave arrangements and services for informal and family caregivers will also be developed. A genome centre and national cancer centre will be set up in Finland by the end of 2018. It will be possible to increase the number of employed people under wage subsidy arrangements, because wage subsidy in 2017 and 2018 will be funded partially through unemployment benefit expenditure.

A total of 31.1 per cent of the administrative sector’s appropriations will be used for pension expenditure, 19.7 per cent on unemployment security and 27.7 per cent on family and living cost equalisation. Health insurance accounts for 13.0 per cent of the appropriations.

Competitiveness Pact reduces employer contributions

In accordance with the Competitiveness Pact, the social security contribution of all employers will be reduced by 0.94 percentage points in 2017. This will increase the State financing share by EUR 711 million.  The contribution for medical care coverage for wage and salary earners and for entrepreneurs will be reduced by the same amount in euros, and the contribution for daily allowance coverage in earned income insurance will be raised.

Under the Competitiveness Pact the employer and employee contributions to unemployment insurance will also be harmonized. The consequence of this is that the proceeds from employee contributions to unemployment insurance will rise and the State financing share of the basic daily allowance will fall by EUR 48 million in 2017.

In accordance with the Competitiveness Pact the financing of the basic amount of adult education allowance for wage and salary earners will be covered by proceeds from the Unemployment Insurance Fund. In addition, the maximum period of the adult education allowance will be reduced to 15 months and the basic amount cut by 15 per cent. The State will continue to finance the adult education allowance for entrepreneurs. The changes will be effective from 1 August 2017 and will save EUR 44.1 million in government expenditure on adult education allowances in 2017.

The average pension insurance contribution of employees will be raised and the average pension insurance contribution of employers reduced by 0.20 percentage points from the previous year in 2017 and 2018. In 2019 and 2020 the changes will be 0.40 percentage points.

Genome centre to be established in Finland

The Ministry of Social Affairs and Health proposes EUR 5.8 million for preparations to establish a genome centre, joint biobank activities and a national cancer centre. The aim is that this sum would be used to establish a genome centre and cancer centre in Finland by the end of 2018. The activities of public biobanks will be made more effective at the same time. These measures are aimed at ensuring Finland becomes a leader and internationally desired partner in healthcare, high-level research and global business utilising genome data. The Ministry proposes that a total of EUR 17 million be allocated for all these measures in 2017–2020.

Employment through wage subsidies can be boosted

Changes will be made to the financing of wage subsidies and start-up grants. Wage subsidies and start-up grants would be financed partly from unemployment benefit appropriations. This is an experimental arrangement for 2017–2018.  The EUR 151.1 million financing share corresponding to the basic amount of wage subsidy and start-up grant will be transferred from the Ministry of Economic Affairs and Employment to the Ministry of Social Affairs and Health.

Removal of the expense allowance for those studying independently on unemployment benefit will save about EUR 29 million in government expenditure. Payment of expense allowances during work try-outs for young people without vocational education or training will increase government spending by EUR 7 million. Using the surplus obtained from these changes it will be possible to increase the number of people obtaining wage subsidy.

Furthermore, travel allowance and compensation for moving costs will be combined into a mobility allowance.

Following these changes, approximately EUR 257 million will be available for start-up grants and for financing the basic amount of wage subsidy.

Incentive traps dismantled, lump-sum payment for employers, support for employment of young people and women

To dismantle the incentive traps, young people’s rehabilitation allowance and the rehabilitation allowance for vocational rehabilitation payable to young people will be increased to the level of guarantee pensions, and the upper age limit for rehabilitation allowances will be raised. The proposal will increase government expenditure by EUR 17.4 million.

The Ministry of Social Affairs and Health proposes that employers of female employees receive a lump-sum payment that could be used to balance out the costs associated with family leave incurred by the employer. The lump-sum payment could also support the equal treatment and employment of young women. The expenditure arising from the lump-sum payment will be EUR 60 million in 2017 and EUR 100 million in annual terms. The additional costs will be financed by means of the employer’s health insurance contribution, with no effect on government expenditure.

Position of non-EU employees clarified

The Intra-Corporate Transferees Directive will increase government expenditure in the administrative sector of the Ministry of Social Affairs and Health by an estimated EUR 5.6 million. The Directive concerns the transfer of people employed by multinational companies to the EU from outside the Union. In practice, the Directive means that a transferee with a permit issued by one Member State would have the right to work in two or more Member States. 

The Directive, which harmonizes the entry conditions for seasonal workers and improves their rights within the EU, will increase expenditure by an estimated EUR 4.2 million. The immigration and residence of third country nationals are covered by directives.

Basic social assistance transferred to Kela 

The granting and payment of basic social assistance will be transferred to the Kela at the start of 2017. This will increase Kela’s operating expenses in 2017 by EUR 26.5 million.  The transfer will increase expenditure in the administrative sector of the Ministry of Social Affairs and Health by EUR 478.6 million. The municipalities’ share of the expenditure on basic social assistance will in future be deducted from the central government transfers to local government for basic public services.

The gender neutral Marriage Act will increase statutory government contributions to unemployment security by EUR 0.5 million, but will reduce maintenance allowance by EUR 0.6 million.

Expenditure associated with asylum seekers that have been granted a residence permit will be an estimated EUR 171 million in the Ministry’s administrative sector in 2017.

Decreased reimbursements for medicines 

Savings of EUR 134 million will be achieved from the start of 2017 in the reimbursements for medicines. The State’s share of this will be EUR 60 million.

Reimbursement of the costs of medical care in private healthcare services will continue until the end of 2018 in cases where the services are arranged in municipal premises.

The Ministry of Social Affairs and Health proposes that the earnings limits and reimbursement levels for sickness and rehabilitation allowances be reduced in the highest earnings limits. This would reduce the costs of earned income insurance by an annual EUR 25 million, and by EUR 18 million in 2017. These changes will not affect government expenditure.

The minimum level of assets in the funds set up for the pensions of Kela staff will be reduced. The minimum will be determined on the basis that the assets have to represent a certain percentage of the pension liability. In future the limit would be lower than at present. This will reduce the financing level to correspond to the level set in the public and private sectors. The State’s share of Kela’s operating costs will then fall by EUR 6.5 million. 

Index adjustments not made

Index adjustments in benefits tied to the National Pension Index and the Consumer Price Index will not be made in 2017–2019. The index point of the National Pension Index will also be reduced in 2017. This will affect the national pension, unemployment security, housing allowance and child benefit, among other things. These measures will decrease government expenditure by EUR 63.8 million. The changes will not affect basic social assistance, which will be subject to the normal index adjustment.

Various changes to unemployment security

The Government is seeking savings of EUR 200 million in earnings-related unemployment security. This will be achieved by extending the waiting period for unemployment security, reducing increments in earnings-related unemployment security, discontinuing the long career increment, and shortening the maximum period for the daily allowance for unemployment by one hundred days.

For unemployed job seekers with a Finnish residence permit granted under the Aliens Act it is proposed that rehabilitation support be paid instead of labour market support. This will save an estimated EUR 4.3 million in expenditure on rehabilitation support in 2017.

Key project pilot schemes begin

The Ministry of Social Affairs and Health proposes EUR 56 million for the key projects in wellbeing and health in 2017. This is an increase of EUR 32.5 million on the current year’s figure. The key projects include a reform programme for child and family services, the development of home care for older people, enhancement of informal care in all age groups, service voucher and basic income pilot studies, and assessment of the allocation of residence-based social security. 

The Ministry also proposes EUR 1.5 million for renewal of the healthcare and social services for young people as part of the youth guarantee key project in 2017.

Development of informal and family care, enhancement of emergency care

For the municipalities the Ministry proposes extra financing of EUR 40.7 million for developing informal and family care. Leave arrangements and services for informal and family caregivers will also be developed and the family care allowance will be raised. The Ministry proposes an additional EUR 4.8 million for the statutory government contribution to home-delivered services for older people.

The arrangements for emergency care and specialised medical care will be reformed. In healthcare and social services, the 24-hour emergency service and demanding care will be concentrated in twelve hospitals. In addition, clinical practices and prehospital care will be further developed. The reforms will reduce spending by the municipalities by EUR 75 million compared with 2016. The State’s share of this will be EUR 19.2 million.

Adjustment of staffing levels in services for older people; shelter places increased

The staffing levels in services for older people will be adjusted in service housing with 24-h assistance and in residential homes for older people. A number of specific duties will also be removed from the legislation on services for older people. The reforms will reduce expenditure by the municipalities by a total of EUR 60.2 million, of which EUR 15.3 million is the reduction in central government transfers to local government.

The Ministry of Social Affairs and Health proposes EUR 16.5 million for the establishment of shelter places intended for victims of domestic violence. This is an increase of EUR 5 million from 2016. It is estimated that this will allow 40 new shelter places to be established.

The Ministry also proposes that State financing of the helicopter emergency medical service would be unchanged from 2016, at EUR 29 million.

Support for preparation of reforms of service structure and regional government

The Ministry of Social Affairs and Health proposes a sum of EUR 16.8 million for the preparation of and support for the healthcare and social welfare reform package and reform of regional government. The Ministry also proposes EUR 10 million for the launch of an ICT programme to support the reforms. The programme will renew and combine information systems and will develop information resources that enhance people’s freedom of choice and enable registration of service providers and the making of comparisons.

EUR 15 million will be available in State financing for university-level research in healthcare service units, and EUR 94.1 million in State remuneration for medical and dental training in these units.

Funding department of Finland's Slot Machine Association to come under Ministry of Social Affairs and Health

EUR 186.5 million is proposed by the Ministry of Social Affairs and Health for the operating expenses of the agencies and public bodies of the Ministry’s administrative sector. EUR 8.6 million in savings measures has been taken into account in this figure. The largest savings will be EUR 3.9 million from the loan instrument for strategic research, EUR 3.1 million from sectoral research and EUR 1.6 million from other operating expenditure.

The funding department of Finland's Slot Machine Association will be transferred to operate under the Ministry of Social Affairs and Health from the start of 2017. This will increase the Ministry’s operating expenses by EUR 3.38 million, which corresponds to half the anticipated costs of the funding operations. The extra appropriations will be covered from the gaming company’s proceeds.

An extra EUR 1.2 million is proposed by the Ministry for the Social Security and Unemployment Security Appeal Boards for 2017, due to an increase in amount of matters being handled. For the regional administration authority in occupational health and safety the Ministry of Social Affairs and Health proposes a supplementary appropriation of EUR 50,000 to combat the shadow economy and promote information exchange between public authorities.

Additional information  

Tiina Ullvén-Putkonen, Special Adviser, tel. +358 295 163 106 (general questions) 
Niina Perälä, Special Adviser, tel. +358 295 163 107 (general questions)
Hanna-Maija Kause, Special Adviser, tel. +358 295 163 109 (general questions) 
Eeva Salmenpohja, Special Adviser, tel. +358 295 163 110 (general questions)
Raimo Ikonen, Director-General, tel. +358 295 163 517 (general questions) 
Kirsi Varhila, Director-General, tel. +358 295 163 338 (health and social services)   
Veli-Mikko Niemi, Director-General, tel. +358 295 163 425 (wellbeing and health)
Outi Antila, Director-General, tel. +358 295 163 164 (social insurance matters)
Mikko Staff, Financial Director, tel. +358 295 163 214 (budget) 
Tomas Forsström, Head of Financial Planning, tel. +358 295 163 563 (agencies and public bodies) 
Mikko Nygård, Ministerial Adviser, tel. +358 295 163 291 (social welfare and healthcare, central government transfers to local government)
Marianne Koivunen, Senior Financial Officer, tel. +358 295 163 573 (social insurance) 
Päivi Voutilainen, Director, tel. +358 295 163 403 (family and social welfare matters)
Merja Mustonen, Director, tel. +358 295 163 116 (discretionary government transfers, central government transfers to local government) 
Heikki Palm, Director, tel. +358 295 163 171 (social insurance) 
Minna Liuttu, Ministerial Adviser, tel. +358 295 163 582 (social insurance)
Susanna Grimm-Vikman, Ministerial Adviser, tel. +358 295 163 172 (social insurance)

Related links

Ministry of Finance draft budget 2017

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