Lack of Poverty in Finland

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HELSINKI, Finland — There is not much to discuss when it comes to poverty in Finland Finland has the second lowest relative poverty rate for children in the world at 5.3 percent, according to UNICEF. In 2012, Finland also had one of Europe’s lowest rates—5.5 percent—of people living below the poverty threshold (with a threshold at 50 percent of the national median income).

Policymakers across the globe want to know: “What’s the secret to Finland’s success?”

The first thing to know is that Finland is a welfare state. The government of a welfare state strives to ensure its citizens are healthy and financially stable. How? A welfare state protects its citizens by providing them with free, or inexpensive, healthcare, large pensions and numerous benefits.

Critics of the welfare state argue that the aid programs give “handouts” to people too readily. They hold that by supporting the impoverished with welfare and healthcare, the state is encouraging them to remain poor.

The majority of Finnish people feel very differently.

In regards to the causes of poverty, sociologists often give three reasons:

  1. Individualistic: The individual is to blame for being poor. His or her poor life decisions led to his or her poverty.
  2. Structural: In society’s social hierarchy, the poor are kept poor by external factors like the inability to find work, make a decent wage or receive an education.
  3. Fatalistic: Anyone can become poor.  All it takes is a severe illness or a period of bad luck, both of which people have little to no control over.

People who support a welfare state tend to disagree with individualistic explanations and favor the structural. Surveys of Finnish people have shown that they generally do not believe poverty results from one’s own behavior. They blame society or fate instead.

Consequently, Finns support welfare programs more than citizens of many other countries. One event in particular of Finland’s past helped to shape this perspective.

Finland went through an economic recession in the early 90s, in which unemployment hit 18 percent. Scores of people who thought they were safe from poverty found themselves slipping into it. As a result, Finns came to view poverty as a much larger threat, and support for “safety-net” government programs grew.

Today, Finns still fear the specter of unemployment. They believe that keeping people working for livable wages is the best way to address poverty. Anti-poverty policies that garner support in the country typically seek to create new jobs and increase employment rates. In the past year, unemployment has increased from 8.15 percent to 9.2 percent, but only about 1.3 percent of people are listed as “inactive” in the job market.

With these percentages, Finland is in a relatively good position globally, but any rise in unemployment is a cause for concern to Finns.

If the Finnish economy slows down, which economist Thomas Piketty has projected to happen, unemployment could skyrocket.

Employed people could even become a minority in the country.

In the event that economic growth slows down, some people have supported reforming Finland’s complicated welfare system in order to prevent the unemployed from falling into poverty. The reformation would incorporate a basic income. In this system, the government provides everyone with a minimum income, but stops providing pensions and unemployment benefits. It is still a welfare state type program—just a more efficient one, proponents of the basic income argue.

While these concerns do exist, Finland is still generally doing well. Experts laud its educational system. The Fragile States Index lists Finland as the world’s most stable country. The relatively new Social Progress Index has placed Finland in its top ten countries.

While the poverty rate is low, the Helsinki Times recently reported that “the majority of immigrant households live in poverty” in Finland. Thus, only certain groups of people—Finns or the people most similar to Finns—fully enjoy the generous welfare programs designed to prevent poverty.

Ryan Yanke

Sources: Oxford Dictionaries, Trading Economics, International Labour Organization, Statistics Finland, Inequality Watch, Daily Sabah, Star Tribune, Social Progress Index, Helsinki Times 1, Helsinki Times 2, “Perceptions of the Causes of Poverty in Finland” by Mikko Niemalä, Acta Sociologica
Photo: Esfconet

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About Author

Ryan Yanke

Ryan is from Waunakee, Wisconsin, and studies English literature at the University of Wisconsin-Madison. He came to The Borgen Project to write for a cause he cared about.

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