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Home BUSINESSFinland struggles for sound welfare system with a stiff budget: PM tells Xinhua
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Sun, 01 Sep, 2013 12:47:43 AM
FTimes- Xinhua Report by Li Jizhi and Elina Qian-Xu, September 1
File picture of Prime Minister Jyrki Katainen. Photo - Lehtikuva
The Finland Prime Minister, Jyrki Katainen argued that the country is still featured by its extensive welfare system, although decisions have been made to limit children's care and to prolong working life.
"What we are basically doing now is that we are trying to limit the kind of allowances which allow people to be out of working life for too long," said the Finnish Premier in an exclusive interview with Xinhua on Friday.
Earlier reports said the proposed budget trimming measures included reducing family benefits.
Children will only be able to enjoy part-time day care instead of full day care in cases one of the parents is at home due to maternity, paternity, parent or care leave.
Another heated issue is the extended official working age from 63 to 65, in order to raise the effective retirement age from 60.9 to 62.4.
"We cannot afford to lose people too early, because we need more labour force," said Katainen, referring to the challenge of aging population.
"That's why we have to take measures that help people to continue until the official pension age, and we also have to raise the official pension age," he added.
Questioned about the percentage of the total welfare budget, Katainen believed the size of public sector remains enormous even after the painful measures are implemented.
"It's like 53 percent of GDP. So it is very big. We have free school, very high quality of schooling system, elderly people's care, almost free health care and stuff like that," he elaborated at his residence in western Helsinki.
The proposed budget, to be approved by the parliament in autumn, adopts a heavier state debt which approaches the redline of 60 percent of the GDP.
"Finland is a fiscal disciplined country. We know how to cut the budget or how to raise taxes, but currently our biggest challenge is to improve our competitiveness," the pilot of the Finnish cabinet underlined.
Finland's industrial production in June went down by 5.9 percent compared with the same period last year, and the decline turned out to be the most drastic in the European Union, according to Eurostat report in mid August.
Katainen attributed the downslide to the shrinking export, from where some 50 percent of Finnish economy comes.
Companies in traditional industries like forestry and steel are in the middle of structural change, resulting in job cuts and less tax payments, said the prime minister.
He pinned the hope on innovation driven businesses. "We believe in research and education, and we continue to invest quite heavily the public money to R&D."
Commenting on European economy, Katainen said Europe is not the crisis hot spot any more.
"There are some clear positive signals. We can see some light at the end of tunnel."
He depicted Finland as "fiscal hawk" during the crisis. "We are very committed to further integrate Europe."
Finland strongly advocated the European Banking Union, because it would strengthen the currency union and avoid banking crises in the future, he added.
"After the crisis, ... after a few years, we have been stronger than ever." 
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