Finland was poor and secluded for a long time. Its first living-standard survey was carried out in 1830 by the
Finnish Economic Society and showed that the entire rural inland population relied on bark bread. Poverty was a
lifelong fate in Finland’s countryside. In the words of Pekka Haatanen: “From the cradle to begging, boyhood as
a servant, married life as a dependent
lodger or farm labourer, and with increasing age and ailments back to
begging or being a
ruotulainen
. The cycle of life had completed its
dreary round.” The term
ruotulainen
refers to
the old Finnish system of poor relief &in which groups of houses were required to take care of one (or more) old,
infirm, or otherwise needy person or orphan.
Taking care of the poor was originally the responsibility of the church. The parishes collected money for poor
relief with alms boxes in the form of wooden pauper statues (often representing veterans) attached to the walls
of churches and bell towers. Responsibility for taking care of the poor was assigned to the municipalities in 1879.
Gradually the pauper statues disappeared or fell into decay and disuse. Typical for the attitudes of the time is
that only one pauper statue of a woman was later found.
The poverty policies of the municipalities also paid attention to relative poverty, in other words to how people
with low incomes or none could participate in the contemporary way of life. In the 19th century and at the
beginning of the 20th, municipalities gave or rented cows to poor families. With the help of these cows, families
could participate in the agrarian society of the time, learn skills required as a farmer, and even earn a little extra
income by selling butter and cheese. Later, poverty policies supported the development
of small farms and
created public sector jobs to reduce unemployment.
The creation of the Nordic welfare state in Finland in the 1970s and especially 1980s was almost as effective
in reducing poverty as antibiotics and better hygiene were in eradicating tuberculosis. Society as a whole
became more affluent, but low-income earners received
proportionally higher gains; income inequality
decreased significantly. Universal income transfers and services nearly eradicated poverty by the beginning of
the 1990s, and it remained the problem of only very few people.
The social innovation leading to poverty eradication was to start extensive development of social insurance
against the social risks of unemployment, illness, and advanced age. Another possible
approach would have
been the use of income transfers mainly to poor people, as especially Anglo-American countries have done.
Another important factor in Finland’s fight against poverty was the promotion of gender equality through
family policies and labour market policies. Parental benefits and especially the creation of the public day-care
system enabled women to go to work. Typical of Finland has been that mothers also work full-time. Even low-
income families with children escaped poverty when they had two full-time wage earners instead of only one.
The Finnish welfare state’s ability to combat poverty was seriously tested at the beginning of the 1990s and
again after 2008. An economic depression and recession resulted in uncontrolled
unemployment growth, and
the only source of income for a significant number of Finns (and other inhabitants of Finland) consisted of social
security benefits, i.e. welfare in US English. The number of people grew dramatically who received
unemployment benefits or income support.
The benefits were cut a bit, but the system was not fundamentally
changed. In combating poverty, Finland still relies on universal social security.
The Finnish welfare state succeeded in preventing the growth of extreme poverty. Compared to the situation
in other countries, the level of basic social security in Finland is still good. During the 1990
depression,
breadlines became a part of life in Finland. They again grew in length during the global Great Recession. The
breadlines show that there are holes in the social safety net but also that the third sector is active in combating
poverty.
The fight against poverty in Finland has a strong legislative foundation, which was not damaged even during
the difficult years of the depression. Since the reform of fundamental rights carried out in the 1990s, section 19
of the new Finnish constitution says: “Those who cannot obtain the means necessary for a life of dignity have
the right to receive indispensable subsistence and care.” This minimum income support, officially called “social
assistan
ce” in English in Finland, has become an exceptionally strong right. Local discretion in its allocation was
reduced in the 1980s through national standardization. At the beginning of 2017, as the endpoint of this
development, the Social Insurance Institution was put in charge of granting the basic component of income
support.
Thanks
to income support, the Finnish welfare state continues to ensure almost without exception the
prerequisites for living with dignity. Relative poverty in Finland is also lower than the EU average. Offering equal
chances to all citizens is however a challenge for the Finnish welfare state. People are now unemployed and
receive income support for longer periods of time. It is difficult for young people to get a job, especially when they
have no vocational training or other (upper) secondary education.
At the beginning of 2017, Finland began a basic income trial as an innovative way to fight poverty. The trial’s
goal is to find a solution to the problem ailing all Western countries of how to get
long-term unemployed and
people who have become excluded from labour market back into working life and enable them to earn at least
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