Narrowing of Public Responsibility in Finland, 1990-2010

Public responsibility in Finland has narrowed in the last 20 years while the sphere of the private sector has been increased. The economic crisis of the early 1990s was not the cause, but an accelerator of public sector/welfare state retrenchment in Finland. Based on which, it was easy for the advocates of neo-liberal reforms to argue that the changes were a must. The welfare state programmes however, are popular among the Finnish population and therefore large one-time cutbacks have not been possible beyond the immediate aftermath of the economic crisis. This article looks into three different methods through which the Finnish welfare state has been gradually cut since then: (1) by not raising income transfers along with the rising cost of living and wages; (2) by reducing funding of public services; and, on the other side of the coin (3) through regular tax cuts contracting the revenue side. Welfare state retrenchment in Finland has therefore been achieved in a subtle fashion through slow gradual weakening of social programmes on one hand, and through cuts in revenue on the other that have left proportionally more in the hands of the wealthier. These combined movements have resulted in a drastic reversal in the trend in income inequality in Finland.