The budget proposal for 2022 aims to support post-pandemic recovery, accelerate investments, enable environmentally sustainable growth and increase the availability of skilled labor.
Prime Minister Sanna Marin (the SDP) at the House of the Estates on Thursday morning, September 9, which turned out to be the final day of the prolonged budget negotiations. In the afternoon, the government had found a mutual accord on the budget proposal for 2022. Photograph: Tony Öhberg/Finland Today
On Thursday, Prime Minister Sanna Marin (the SDP) and her cabinet announced that the government has reached an agreement on the budget proposal for next year, totaling just shy of €65 billion.
The announcement comes after several days of talks between coalition parties, where the most contentious issues were climate goals and raising employment. These are also highlighted in the proposal, as the government aims to fulfill its promise of making Finland carbon neutral by 2035. The budget also allocated funds to post-pandemic recovery, thus tying recovery from the current crisis to already addressing the approaching one.
As stated in a press release, “the goal is to safeguard people’s wellbeing and to ensure favorable conditions for sustainable economic growth in the long term.”
To reach the carbon neutrality target, the government will invest in sustainable energy, one of these projects being a grant scheme aimed at phasing out oil heating in households. In 2023, the government also hopes to introduce a mining tax. In total, the budget allocates about half a billion euros to mitigating climate change.
Negotiations on climate action prolonged the budget negotiations. The negotiations were supposed to end on Wednesday but on the sixth day Prime Minister Marin decided to pause the talks as unsuccessful. The coalition had aimed to reach a compromise in some of the topics, such as reducing emissions so that the Center Party and the Green League would find the results agreeable. Minister of Finance Annika Saarikko (the Centre Party) arrived at the House of the Estates on Thursday morning to continue the negotiations. The Centre Party had noted earlier that they would not agree on, for example, raising the cost of fuel during this government term. Photograph: Tony Öhberg/Finland Today
Allocation of funds to boost employment is linked to digitalization processes, again in the context of sustainability, as well as immigration. “€83 million is proposed for implementing the Nordic labor market service model with a view to raising the employment rate and level of competence and to boost sustainable growth. To develop a digital infrastructure that utilizes world-class automation, a total of €12 million is proposed to support the immigration of experts.”
The proposal seems committed to increasing work-based immigration, particularly of skilled labor, and particularly in the digital and green sectors. Fast-track residence permit applications will be available for skilled immigrants. Offering more places in Finnish universities is also part and parcel of this employment strategy. Employment targets are already close to being achieved, according to Annika Saarikko (the Centre Party), the minister of finance.
Healthcare is also addressed in the proposal, with over €100 million in funds going toward “dismantling the backlog in treatment, rehabilitation and services in healthcare and social welfare and for faster access to care.”
Some of the funds in the government’s recovery plan are expected to come from the EU’s Recovery and Resilience Facility. The exact amount is unknown at this time, pending a decision by the European Commission, but it is estimated at around €355 million.
The budget proposal also foresees a deficit of €6.9 billion, which is almost €5 billion less than in 2020, when additional expenditure arose due to the pandemic.