Finland - Growth of the Social Welfare System

Growth of the social welfare system

In the last years of the nineteenth century, Finnish social policy had as its goal a lessening of class friction. The few existing pieces of social legislation addressed the needs of specific groups rather than of society as a whole. After the Civil War, little was accomplished in welfare legislation. A woefully insufficient national pension plan was set up in 1937, as were measures to aid needy mothers. It was only after World War II that Finnish social policy acquired the characteristics that in the next decades made it similar to other Nordic systems of social welfare.

According to Finnish sociologist Erik Allardt, the hallmark of the Nordic welfare system was its comprehensiveness. Unlike the welfare systems of the United States or most West European countries, those of the Nordic countries covered the entire population, and they were not limited to those groups unable to care for themselves. Examples of this universality of coverage were national flat-rate pensions available to all once they reached a certain age, regardless of what they had paid into the plan, and national health plans based on medical needs rather than on financial means. In addition, the citizens of the Nordic countries had a legal right to the benefits provided by their welfare systems, the provisions of which were designed to meet what was perceived as a collective responsibility to ensure everyone a decent standard of living. The Nordic system also was distinguished by the many aspects of people's lives it touched upon.

The Finnish welfare system differed from those of other Nordic countries mainly in that its benefits were lower in some categories, such as sickness and unemployment payments; otherwise, the Finnish system fit into the Nordic conception of social welfare. Finnish social expenditures constituted about 7 percent of the country's gross domestic product (GDP) in 1950, roughly equal to what Sweden, Denmark, and Norway were spending. By the mid-1980s, Finland's social expenditures had risen to about 24 percent of GDP, compared with the other countries' respective 35, 30, and 22 percent. Less than 10 percent of these expenditures was paid for by Finnish wage earners; the remainder came roughly equally from the state and from employers. Until the second half of the 1970s, Finnish employers had paid a higher share of social outlays than had their counterparts in the other Nordic countries. In response to the slowdown of the world economy after 1973, there was some shifting of social burdens to the state, which made Finnish companies more price competitive abroad.

Finland's welfare system also differed from those of its neighbors in that it was put in place slightly later than theirs, and it was only fully realized in the decade after the formation of the Red-Earth government in 1966. Just after World War II, the Finns directed their attention to maternal and child care. In 1957 the government established an improved national pension plan and supplemented it in the early 1960s with private pension funds. Unemployment aid was organized in 1959 and in 1960, and it was reformed in 1972. Legislation of the 1950s and the 1960s also mandated the construction of a network of hospitals, the education of more medical personnel, and, from 1963 to the early 1970s, the establishment of a system of health insurance. The housing allowance system expanded during the 1960s to reach everwidening circles of the population. Health-care officials turned away from hospital care in the 1970s, and they began to emphasize the use of smaller local clinics. By the 1980s, the Finnish welfare system was up to Nordic standards and had the support of most Finns. All major political parties were committed to maintaining it, and its role in Finnish society seemed secure for the coming decades.

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