Government wants to turn Finland into a global work and innovation hub

The Ministry of Economic Affairs and Employment (MEAE) published today its draft budget for 2020. This is the first draft budged of the Government term, which aims at sustainable economic growth based on "a socially, economically and ecologically sustainable foundation", in MEAE's own words.

In total, the MEAE is proposing total appropriations of 2,728 million euros, exceeding the current budget by more than 227 million. Of this increase, 73 million euros will be destined to "additional investment in sustainable growth".

The figures revolve around two major objectives set in Antti Rinne's Government Program for 2020-2023: achieving a 75% employment rate and internationalizing the Finnish economy. The Helsinki authorities admitted that, in recent years, the country has lost significant investments and has fallen behind other competitor countries in innovation.

Within this strategy, the Government has launched an international growth programme, in which Business Finland and its projects to globalize companies and to attract international specialists play a fundamental role. There will be also additional funding for Employment and Economic Development Offices, as well as to streamline immigrant integration and work permit procedures.

Objective: 75% employment rate

The MEAE is proposing a budget of more than 297 million euros for public employment and business services, including an increase of 17 million euros for pay subsidies. The Government Programme includes an increase in business and third sector pay subsidies. A further 2 million euros will be allocated to developing the digital pay subsidy services of Employment and Economic Development Offices, with 20 person-years added to pay subsidy disbursement staffing at Centres for Economic Development, Transport and the Environment.

“A wide range of measures and effective co-operation will be required to achieve the 75% employment target set out in the Government Programme. The Ministerial Working Group on Promoting Employment began working in July, and the task forces of social partners that it has appointed may already propose new measures to the Government budget session due in September”, Minister Harakka explains.

Resources will be ensured for Employment and Economic Development Offices. An additional allocation of 5 million euros will be made for promoting the youth guarantee and for periodic interviews in 2020. The total additional allocation for these functions will be 33 million euros over the period from 2020 to 2023.

“We have a highly competent employment and economic affairs administration that should be properly funded. Achieving a higher employment target will require a more personal service, and we must ensure an adequate standard of services”, Minister Harakka continues.

The MEAE draft budget also includes a development fund of 10 million euros to promote employment. The additional funds will be allocated to such areas as enhancing vocational guidance and career counselling.

International growth programme

The MEAE draft budget for 2020 includes an additional investment of 24 million euros in the new International Growth Programme. Of them, 13.5 million euros will be allocated to strengthening the globalisation resources of Business Finland and 6.5 million euros in underwriting for Business Finland grants will be earmarked for boosting globalisation by businesses.

As part of additional funding for international growth, a programme will be launched to boost the growth of small and medium-sized businesses, with a proposal to set aside funds for underwriting grants of 4 million euros in 2020. The programme will seek to support small and medium-sized businesses particularly in South and West Finland, where fewer subsidies have been available than in East and North Finland due to scarce European Union funding.

The Talent Hub operating model will be placed on a permanent footing with additional funding of 3 million euros. The model enables single window access to information for businesses and international specialists. Opportunities made available by additional funding will include seed financing grants to cities and corporations to support recruitment of international talent and campaigns to improve the attractiveness of working in Finland.

Another MEAE proposal is an additional 2.8 million euros in resources for Employment and Economic Development Offices in 2020. Of this increase, 1 million euros would be used for streamlining work permit procedures by engaging an additional 20 staff members, and 1.8 million euros would finance implementation of an international recruitment scheme.

Additional investment in innovation financing

The MEAE is seeking to underwrite the Business Finland innovation financing centre for grants totalling more than 332.5 million euros and loans amounting to nearly 147 million euros in 2020. The new Government Programme envisages an increase of 39.5 million euros in underwriting of grants.

“We have fallen behind competing national economies in innovation investment, so the Government is investing in higher innovation funding. Part of the increase will be processed as Government investment in the future, subject to ongoing detailed preparation”, Minister Kulmuni explains.

”It is essential to the achievement of the Government’s employment target that the conditions for entrepreneurial activities are favourable and stable. With innovations we can reform our industrial structure and promote growth and internationalisation of businesses”, says Minister of Economic Affairs Kulmuni.

An allocation of more than 97 million euros is proposed to cover the operating costs of Business Finland, including an additional investment of 13.5 million euros for an international growth programme. The additional funds would mainly be used to strengthen exports and globalisation efforts, including measures to attract international talent.

A fossil-free affluent society

Decisions already taken will terminate the use of coal for energy generating by no later than May 2029, the Ministry says. Particularly through the energy subsidy scheme, the MEAE will accelerate the decommissioning of coal-fired facilities, and is accordingly proposing to underwrite energy subsidies of 110 million euros in 2020. This package includes an increase of 30 million euros to be allocated in support of investment in alternatives to coal.

A programme will be launched to promote the circular economy with a view to accelerating progress towards a low-carbon future. An additional budget allocation of 1 million euros is proposed for implementing this programme in 2020.

Immigration and immigrant integration

The MEAE is proposing a general increase of 3 million euros to streamline immigrant integration and work permit procedures in 2020. The additional funds would especially boost the resources of Employment and Economic Development Offices for identifying the skills of immigrants, and the role of municipal centres of expertise and organisations in integrating immigrants.

In line with the Government Programme, the refugee quota will be increased to 850 people in 2020. An additional appropriation of 165,000 euros for immigrant integration training and 520,000 euros to compensate municipalities for integrating immigrants will accordingly be earmarked in the MEAE budget.

Preparations have been launched also with a view to reassigning the administration of work-related immigration from the Ministry of the Interior to the Ministry of Economic Affairs and Employment.

Competition and consumer policy

The MEAE proposes an increase of 1.5 million euros in the resources of the Finnish Competition and Consumer Authority in 2020. This proposal includes an additional appropriation of 650,000 euros to the Finnish Competition and Consumer Authority for implementing the new CPC Regulation (EU) No 2017/2394.

This instrument broadens the scope of cross-border enforcement operations, with the associated extended powers of the Consumer Ombudsman to tackle infringements of consumer protection provisions by traders and effective regulatory control requiring additional resources for the said Authority.

A general increase of 500,000 euros in State aid to the Consumers’ Union of Finland is proposed for use in improving consumer information. This increase would bring the total annual aid granted to this organisation up to 1.3 million euros.

General Government Fiscal Plan 2021–2023

The General Government Fiscal Plan for the Government term was prepared in parallel with the 2020 draft budget. The MEAE has proposed total appropriations of nearly 2,691 million euros for 2021, of 2,541.5 million euros for 2022, and approximately 2,554 million euros for 2023.

Permanent increases under the new Government Programme amount to nearly 109 million euros for 2021, more than 111 million euros for 2022, and 118.5 million euros for 2023.

The principal budgetary increases for the period from 2020 to 2023 (over a total of four years) are:

• 168 million euros (grant underwriting) in grant authorisations to Business Finland.
• 112 million euros for the international growth programme.
• 90 million in energy subsidies (grant underwriting).
• 67 million euros for Employment and Economic Development Offices.
• 66 million euros for public employment and business services.