COMMISSION STAFF WORKING DOCUMENT 2022 Country Report – Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Finland and delivering a Council opinion on the 2022 Stability Programme of Finland
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Finland, digital transformation, economic policy, economic recovery, economic reform, energy policy, fiscal policy, social security, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 611 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report – Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Finland and delivering a Council opinion on the 2022 Stability Programme of Finland {COM(2022) 611 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Finland’s economy weathered the 
COVID-19 crisis well 

Finland  experienced  one  of  the  mildest 
recessions  in  the  EU.  As  a  result  of  the 
COVID-19  outbreak,  Finnish  real  GDP  fell  by 
2.3%  in  2020,  compared  to  5.9%  in  the  EU. 
The  main  reason  behind  the  decline  in  GDP 
was a drop in domestic demand as consumers 
increased their precautionary savings and had 
fewer  opportunities  to  spend.  The  economy 
started to rebound already in the third quarter 
of  2020,  consolidating  strongly  as  of  the 
second quarter of 2021, and growth exceeded 
pre-crisis levels in the second quarter of 2021. 
Overall,  in  2021,  Finland’s  real  GDP  growth 
stood at 3.5% on the back of strong domestic 
demand. 

Public finances helped cushion the shock. 
In  2021,  the  general  government  deficit 
declined  to  2.6%  of  GDP,  thanks  to  strong 
revenue  collection  and  gradual  withdrawal  of 
stimulus  measures,  and  is  forecast  to  further 
diminish in 2022 and 2023. At the same time, 
the  debt  ratio,  which  decreased  to  65.8%  in 
2021, is expected to slightly increase in 2022 
and  2023  (see  Annex  18).  These  projections 
also  take  into  account  additional  spending  on 
defence  amounting  to  0.3%  of  GDP  in  2022 
and  0.1%  in  2023,  as  announced  by  the 
Finnish government.  

The current geopolitical events 
shake up the economic landscape 

Having  started  strongly  in  2022,  the 
Finnish  economy  is  set  to  face  risks 
stemming  from  the  Russian  invasion  of 
Ukraine.  The  start  of  2022  has  been 
promising on the back of good economic data 

2 

and  positive  expectations  by  businesses  and 
households.  However,  the  Russian  invasion  is 
set  to  have  dampening  effects  on  the 
international  trade,  investment  and  financial 
flows. These could be significant for Finland as 
a neighbouring country to Russia. For example, 
in  2021,  Finland’s  exports  of  goods  and 
services  to  Russia  amounted  to  4.5%  of  total 
exports.  Country’s 
from  Russia 
amounted  to  8.7%  of  all  imports,  with  crude 
oil  and  nickel  accounting  for  a  significant 
share. However, the trade turnover with Russia 
has  been  markedly  below  that  of  2013  and 
2014,  when  initial  sanctions  on  Russia  were 
introduced. 

imports 

More  than  2000  Finnish  companies  have 
been  involved  in  trade  with  Russia  and 
now  are  set  to  look  for  new  trade 
partners and business models. A number of 
Finnish  businesses  decided  to  pull  out  from 
the  Russian  market  completely,  while  Finnair, 
the  flag  carrier  and  largest  airline  of  Finland, 
due to the closure of the Russian airspace, lost 
its competitive route between Europe and Asia. 
Some  Finnish  companies,  directly  or  via  their 
subsidiaries,  have  investments  in  Russia  or 
participate in large joint infrastructure projects, 
such  as  Nord  Stream  2.  It  is  projected  that 
some  businesses  will  be  able  to  adjust  and 
find  new 
trading  partners,  consequently 
contributing to faster export growth already in 
2023. 

into 

lower 

business 

The  geopolitical  situation  and  elevated 
and 
on 
inflation  weigh 
household  sentiments.  This  is  expected  to 
translate 
levels  of  private 
investment,  slower  growth  of  household 
income  and,  consequently,  consumption.  In 
addition,  the  pressure  on  the  agricultural 
sector  is  set  to  increase  due  to  rising  energy 
and  fertilizer  prices,  feed  and  wage  costs.  On 
in  public 
the  other  hand,  an 
investment,  declining  unemployment  rate  and 
expected  deceleration  of  inflation  allow  to 

increase 

 
 
project  a  somewhat  stronger  growth  of  the 
economy in 2023. Against the backdrop  of all 
these developments, Finland’s real GDP growth 
is expected to reach 1.6% in 2022 and 1.7% in 
2023. 

Recovery in the labour market has 
been strong 

to  7.2% 

Employment  was  hit  by  the  COVID-19 
crisis, but its recovery has been fast and 
firm. The employment rate dropped during the 
economic recession, but the rebound was fast 
and  the  employment  rate  as  well  as  the 
number of vacancies rose above pre-pandemic 
levels  in  2021.  After  having  risen  to  7.7%  in 
2020,  the  unemployment  rate  is  forecast  to 
in  2022.  Relatively  high 
drop 
structural unemployment persists compared to 
other  Nordic  countries.  The  government  has 
set  ambitious  objectives  to 
increase  the 
employment rate to 75% by 2025 and to 80% 
by 2030. Meeting these targets requires more 
people  entering  the  labour  market,  which 
would  play  a  very  positive  role  in  supporting 
economic  growth,  fiscal  sustainability  and 
social cohesion. 

Graph 1.1: Labour market indicators 

skilled 

(15-29)  not 

slightly  above  average  in  2020.  Although  the 
share  of  young  people 
in 
employment,  education  or  training  remains 
below  the  EU  average  (see  Annex  12)  and 
decreased  in  2021,  the  indicator  is  higher 
among  non-EU-born  people  and 
remains 
especially high for non-EU-born women. In this 
context,  Finland  is  taking  steps  to  counter 
employment  gaps  for  vulnerable  groups,  such 
as  non-EU  nationals.  The persistent  shortages 
of 
structural 
labour  and  high 
unemployment  point  to  the  key  role  of 
reskilling and upskilling in ensuring the supply 
of  skilled  workers  better  matches 
labour 
market needs. This challenge will become even 
more  pronounced  in  the  next  decade  in  the 
face  of  the  twin  transition  and  a  shrinking 
workforce  due 
trends. 
Furthermore,  employment  should  also  be 
boosted by the gradual removal of the right to 
additional  days  of  unemployment  security  for 
employees  close  to  their  retirement  age 
(known  as  the  "unemployment  tunnel").  The 
reform  features  in  Finland’s  Recovery  and 
Resilience  plan  and  is  envisaged  to  enter  into 
force in 2023.  

to  demographic 

Ageing remains a major challenge  

in 

the  workforce 

Rapid  ageing  is  a  major  societal  and 
economic challenge. It is estimated that the 
share  of 
the  Finnish 
population  will  shrink  considerably.  According 
to  the  2021  Ageing  Report,  the  working  age 
population 
is  projected  to  shrink  by  1.4 
percentage  points  or  78  500  people  between 
2019  and  2030.  Finland  has  the  highest  old-
age  dependency  ratio  in  the  EU (1)  while  its 
fertility  rate 
lower  half of  the 
ranking (2).  Net  migration  is  also  relatively 

is  in  the 

Source: Eurostat 

Despite  favourable  social  outcomes,  the 
labour  market  still  faces  some  issues. 
lowest  gender 
Finland  had  one  of 
employment  gaps  in  the  EU  in  2021  (see 
Annex  12),  although  the  gender  pay  gap  was 

the 

(1)  The old-age dependency ratio in Finland stands at 39.4 
persons aged 65 or older per 100 persons aged 20 to 
74. It is the highest level in the EU, shared with Italy. 
2020 data, Eurostat.  

(2)  The fertility rate in Finland amounts to 1.35 live births 
per woman. It is one of the lowest fertility rates in the 
EU, after MT, ES, IT, CY, LU and EL (counting from the 
lowest). 2019 data, Eurostat. 

3 

010 00020 00030 00040 00050 00060 00070 0006.06.57.07.58.08.59.0Unemployment, %Vacancies (rhs) 
  
                                                 
low (3).  Beyond  the  need  for  the  welfare 
system to take care of the growing number of 
older  people,  the  ageing  society  raises  other 
economic  challenges  such  as  decreasing 
productivity, narrowing tax bases and declining 
economic dynamism, as evidenced by a falling 
rate of start-ups and less innovation. 

Ageing  costs  weigh  on  long-term  fiscal 
sustainability.  The  ageing  of  society  puts  a 
structural burden on public finances, especially 
related  to  the  costs  of 
long-term  care. 
the  European  Commission’s 
to 
According 
recent debt sustainability assessment, Finland 
will  face  debt-related  challenges 
the 
medium  and  long  term (4).  Looking  at  these 
challenges  more  broadly,  it  is  important  to 
take  into  account  the  interaction  between  the 
old-age dependency ratio and the adequacy of 
the  Finnish  pension  system  (reformed 
in 
2017),  the  health  and  long-term  care  system 
(with  a  reform  underway)  and  the  social 
security system (with a reform pending). 

in 

The  capacity  to  further  raise  taxes  to 
cover  growing  expenditures  is  limited. 
General  government  expenditures  tend  to 
grow  faster  than  revenues,  not  least  because 
of  ageing-related  spending  (health  and  long-
term  care).  Scope  for  increasing  revenues  is 
limited  by  the  relatively  high  taxation  level. 
The  public  sector  already  accounts  for  a 
relatively high share of GDP (above 50%). The 
average tax-revenue-to-GDP  ratio  amounts  to 
42% and is in the upper half of the ranking in 
the  EU (5).  The  government 
therefore 
seeking 
fiscal 
solutions 
sustainability  by  broadening  the  tax  base 
(increasing 
rate)  and 
the  employment 
containing 
reforms  aimed  at 
structural 
expenditure  (e.g.  health  and  social  services 
care reform).  

is 
improve 

to 

The housing market needs to be 
monitored 

The 

Risks  present  in  the  real  estate  market 
may  impact  the  banking  sector.  Both 
households and professional investors finance 
a  significant  share  of  their  real  estate 
transactions  with  debt. 
economic 
uncertainty  that  came  with  the  pandemic  had 
a  dampening  effect  on  both  residential  and 
commercial  real  estate  market  activity.  The 
market  quickly  recovered,  both  in  terms  of 
construction  as  well  as  house  sales  and 
investment  flows (6).  However,  major  regional 
discrepancies  persist,  particularly  between 
major urban centres where prices are high and 
the  more  remote  regions  of  the  country. 
Concerns 
household 
indebtedness  and  some  households’  potential 
vulnerability 
shocks  were 
to  economic 
reflected 
in  the  set  of  recommendations 
issued  to  Finland  by  the  European  Systemic 
Risk  Board  in  2019 (7),  advocating  a  set  of 
borrower-based measures to contain the risks. 

growing 

over 

including 

lending  and 

arrangements, 

is  sound  and 
The  banking  sector 
profitable but has some vulnerabilities. At 
the  onset  of  the  COVID-19  pandemic,  banks 
reacted  swiftly  by  granting  their  customers 
loan 
flexible 
repayment  moratoria.  The 
lowering  of 
requirements for banks’ reserves provided the 
sector  with  additional 
loss-
absorbing  capacity.  The  banks  weathered  the 
most acute part of the crisis rather well. There 
has  been  a  modest  inflow  of  non-performing 
loans,  but  the  ratio  is  still  noticeably  lower 
than the EU average. The sector is nonetheless 
heavily  exposed  to  real  estate,  and  the 
borrowers’  debt-to-income  ratio  is  one  of  the 
the  EU (8).  The 
highest 
international 
exposure  of  Finnish  banks  remains  mostly 
limited to the Nordic and Baltic region, with no 
direct links to either Ukraine or Russia. 

in 

(3)  About 16 thousand net migrants incoming (both EU and 
non-EU) in 2019, compared to 68 thousand in Sweden 
(European Commission, Atlas of Migration 2021) 

(4)  See Annex 19. 

(6)  In 2021 the transaction volume in the Finnish property 
market amounted to some EUR 7 billion, a 24% rise 
from 2020 or 10% increase compared to 2019. 

(5)  After Denmark, France, Belgium, Sweden, Italy and 

Austria; 2020, Eurostat. See also Annex 17. 

(7)  ESRB/2019/8. 

(8)  See also Annex 16. 

4 

 
                                                 
                                                 
Various structural reforms aim to 
improve productivity  

and 

equipment, 

The  impact  of  a  structural  shift  away 
from  manufacturing  to  services  has 
affected  aggregate  productivity.  Total 
factor  productivity  has  stalled  for  several 
years and remains below that of Nordic peers. 
At the same time, low investment in areas that 
provide  most  support  to  productivity  growth 
including 
(machinery 
information  and  communication  technology 
equipment,  and  intellectual  property  products) 
could  hinder  the  return  to  higher  potential 
growth. The low level of productive investment 
is  expected  to  continue  to  be  a  drag  on 
therefore  on  non-cost 
productivity,  and 
research, 
competitiveness. 
Finland’s 
development 
productive 
narrowly 
concentrated,  with  an  increasing  gap  between 
the  most  productive  firms  and  the  least 
productive ones. 

In 
and 
investment 

terms  of 
innovation, 

is 

Graph 1.2: Index of total factor productivity 

Source: European Commission 

After  a  contraction  of  the  electronics 
sector in the previous decade, successive 
governments  took  action  to  address 
Finland’s  loss  of  cost-competitiveness.  In 
2016, 
the  social  partners  concluded  a 
Competitiveness Pact, a comprehensive labour 
market  agreement  that  increased  working 
time  and  cut  employees’  income,  in  order  to 
reverse the losses in cost competitiveness and 
boost  job  creation.  A  reform  of  the  pension 
system  and  an  activation  model  for  the 
unemployed were also launched. This strategy 

5 

was successful for the industry in lowering the 
labour costs but prompted criticism related to 
the  perceived  decrease  in  welfare  standards. 
In  2019,  the  new  government  committed  to 
increasing  the  employment  rate,  combined 
with  a  reversal  of  some  of  the  budgetary 
consolidation  measures  and  with  investments 
in  human  capital  (health  care,  education  and 
Finland's  digital 
social  policies).  While 
connectivity  advances  in  line  with  the  other 
countries,  it  is  still  slightly  below  the  EU 
average (see Annex 8),  in particular lacking in 
some rural areas. 

Other  structural  reforms  are  underway 
with a view to increasing productivity. The 
government  set  an  objective  to  increase  the 
research & development expenditure to 4% of 
GDP by 2030 from 2.9% of GDP in 2020 (see 
also  Annex  9).  These  investments  may  also 
improve  the  productivity  and  competitiveness 
of  the  economy.  The  government  is  also 
pursuing  reforms  aimed  at  enhancing  skills 
and promoting continuous learning in a society 
that already boasts top education levels (9). 

The green transition is high on the 
national agenda 

Finland  has  adopted  ambitious  climate 
targets.  Finland  adopted  the  objective  of 
becoming  carbon-neutral  and  the  first  fossil-
free  welfare  society  by  2035.  Legislation  has 
been  adopted  to  phase  out  coal-fired  power 
generation  by  1  May  2029.  Achieving  these 
targets  will  require  a  comprehensive  set  of 
policies  and  measures  that  will  impact  the 
whole  economy.  Finland’s  economy  being  one 
of  the  most  energy-intensive  in  the  EU,  this 
will also require large public and private sector 
investments.  Energy,  industry,  transport  and 
buildings are the main sectors that will need to 
contribute  to  hefty  reductions  in  greenhouse 
gas  emissions.  Challenges  on  the  way include 
delays in the deployment of renewable energy 
investments  related  to  the  resource  situation 
of  permitting  and  supervising  authorities. 

(9)  47.5% of people aged 25-64 had tertiary education 

attainment; second level in the EU after Ireland; 2020, 
Eurostat. 

80.090.0100.0110.00405060708091011121314151617181920(2005=100)FinlandSwedenDenmark 
  
                                                 
In  addition, 

fairness  dimension,  Finland  had  one  of  the 
lowest  gender  employment  gaps  in  the  EU  in 
2021,  although  the  gender  pay  gap  was 
slightly  above  average  in  2020.  The  rate  of 
people at risk of poverty or social exclusion in 
Finland was 15.9% in 2020, well below the EU 
average  of  21.6%. 
income 
inequalities in Finland are among the lowest in 
the EU. On the productivity dimension, Finland 
performs well: R&D spending in terms of GDP 
was  2.8%  in  2019,  above  the  EU  average  of 
2.2%. At the same time, further investments in 
digital  infrastructure  are  needed  to  close 
connectivity  gaps  throughout  Finland  and 
support  growth  and  economic  activity 
in 
remote  areas.  On  macroeconomic  stability, 
Finland  scores  very  well  on  indicators  related 
to  peace,  justice  and  institutional  strength. 
(See Annex 1 for more details). 

Moreover,  peat  is  still  a  major  source  of 
energy  in  remote  and  sparsely  populated 
areas. The phasing out of peat is likely to lead 
to employment shifts in these areas for which 
reskilling  could  be  particularly 
up-  and 
important (see Annex 6). 

Finland is one of the Member States with 
the  highest  share  of  renewables  in  its 
energy mix. The share of renewable energy in 
Finland’s  energy  mix  was  43.8%  in  2020,  an 
overachievement  of  its  2020  target  of  38%. 
is  even  higher  for 
The  renewable  share 
electricity, with 52% of all electricity produced 
in  Finland  coming  from  renewable  sources  in 
2020.  45%  of  renewable  electricity  was 
produced  with  hydro  power,  23%  with  wind 
power and nearly all the rest with wood-based 
fuels.  34%  of  total  electricity  was  produced 
with  nuclear  power  and  14%  with  fossil  fuels 
and  peat (10).  In  December  2021,  Finland 
activated  the  Olkiluoto  3  nuclear  reactor, 
which  is  expected  to  provide  1 600  MW  of 
electrical output. When the new reactor is fully 
operational,  nuclear  power  is  expected  to 
provide  approximately  40%  of  Finland’s 
consumption (11). 
Strong 
electricity 
and 
between 
interconnections 
neighbouring countries are needed to ensure a 
well-functioning electricity market in the whole 
region  and 
the  projected 
increase 
contribution of renewable energy to the energy 
mix. 
investments  are 
necessary  to  meet  medium  and  long  term 
climate targets, as well as diversification away 
from  Russia  as  a  source  of  energy  imports 
(see also section 3).  

Large  additional 

Finland 

to 

to 

Finland is a top performer on many of the 
UN's  Sustainable  Development  Goals 
(SDGs). Finland performs well on many  SDGs 
related 
sustainability. 
environmental 
Greenhouse  gas  emissions  in  Finland  have 
decreased  at  a  similar  pace  to  the  EU  as  a 
whole 
in  2020  since  1990),  and 
Finland’s  energy  mix  contains  the  second-
highest  share  of  renewables  (43.8%).  On  the 

(-27% 

(10)  Statistics Finland, 3 November 2021: 

https://www.stat.fi/til/salatuo/2020/salatuo_2020_202
1-11-02_tie_001_en.html 

(11)  Teollisuuden Voima Oyj 

https://www.tvo.fi/en/index/production/plantunits/ol3.ht
ml 

6 

 
                                                 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

Finland’s  recovery  and  resilience  plan 
(RRP) touches upon most of the country’s 
structural  challenges.  The  plan  includes 
reforms  and  investments  relevant  for  the 
green  and  digital  transition,  labour  market, 
education and skills, R&I, competitiveness and 
healthcare.  One  element  that  has  not  been 
addressed  on  the  reform  side  is  the  social 
benefits reform. However, a roadmap towards 
a  reform  of  the  social  benefits  system  until 
2027  was  announced  in  the  government 
programme.  The  relatively  small  size  of  the 
financial  allocation  for  Finland  from  the 
Recovery 
(EUR 
2.1 billion,  or  0.8%  of  GDP)  means  that  the 
plan can only account for part of the identified 
investment needs in Finland. (See Annex 2 for 
further technical details). 

and  Resilience 

Facility 

Graph 2.1: Reforms and investments in 
Finland’s recovery and resilience plan 

Source: European Commission 

Finland already started implementing key 
elements of its plan in 2021. These include 
the  reform  of  health  and  social  care  and  the 
reform  of  continuous  learning,  as  well  as  a 
number of broad investment schemes, notably 
in  the  area  of  renewable  energy  and  R&I.  A 
new  energy  decree  has  been  adopted  that 
paved the  way  for  the  launch  of  the  calls  for 
applications 
investment 
four 
measures in the plan. They are set to promote 

large 

for 

investments  in  renewable  energy  and  related 
infrastructure, renewable hydrogen and carbon 
capture and storage and utilisation, as well as 
investments in the decarbonisation of industry. 
Finland 
is  expected  to  submit  the  first 
payment request in the third quarter of 2022. 

On the path towards carbon 
neutrality  

the 

i.e.  more 

country's 
takes 
Finland’s  RRP 
ambitious  2035  carbon  neutrality  target 
as  a  starting  point.  50.1%  of  the  plan's 
than  EUR 
financial  allocation, 
1 billion,  is  dedicated  to  the  green  transition. 
The relatively small size of the plan compared 
to  the  investment  needs  associated  with  the 
that 
decarbonisation  of 
investment gaps will persist in many sectors if 
no additional action is taken.  

society  means 

and 

through 

buildings. 

reform  and 

The  plan  includes  measures  for  the  four 
major emitting sectors – energy, industry, 
transport 
Emissions 
reductions 
in  each  of  these  sectors  are 
investment 
planned 
measures. Such measures include boosting the 
generation of renewable energy, decarbonising 
industry,  reducing  emissions  from  buildings 
forms  of 
and  promoting 
transport. Moreover, the plan includes action to 
reduce the use of fertilisers and to strengthen 
the  sustainability  of  forest  management. 
Several  other  measures  target  emissions 
reduction, 
the 
development  of  new  technologies  in  specific 
sectors  of  the  economy  relevant  to  the  green 
transition.  

skills  development  and 

low-emission 

7 

020406080100120InvestmentsReformsNumber of milestones/targets 
 
  
 
 
Increasing Finland’s 
competitiveness through digital 
and green transitions, research & 
innovation 

number 

includes 

a 
promoting 

of 
The  RRP 
investments 
the 
competitiveness  of  key  sectors  of 
Finland’s  economy.  The  plan  also  puts 
emphasis  on  the  cultural  and  creative  sectors 
as  well 
tourism,  which  were 
disproportionally  hit  by  the  crisis.  Some 
investments  are 
increase 
productivity by providing incentives for growth 
of small and medium-sized enterprises (SMEs) 
and  supporting  their  access  to  finance  and 
internationalisation.  

foreseen 

as 

to 

to 

reform 

contribute 

the  continuous 

Several  measures 
to 
addressing  challenges  related  to  the 
digital  transition.  Support  for  high-speed 
broadband  connectivity  should  help  improve 
access  to  high-speed  connections  in  sparsely 
populated areas, with benefits for productivity 
and  maintaining  economic  activity  in  those 
regions.  The  RRP  contains  measures 
to 
increase  the  availability  of  study  places  in 
areas  relevant  for  the  digital  transformation 
learning 
and 
framework,  as  well  as  to  strengthen  the 
promotion of digital skills. Other measures are 
expected to contribute to the digital transition 
in  several  areas,  including  by  supporting  the 
digitalisation of businesses, in particular SMEs, 
and of the public sector (12), by fostering cyber 
and 
information  security,  and  supporting 
research  and  innovation  in  key  technologies, 
artificial 
including 
semi-conductors, 
intelligence  and  6G.  Digitalisation 
is  also 
addressed  as  a  cross-cutting  theme  by  using 
digital  solutions  as part  of  other  measures  to 
climate  and  environmental 
help 
objectives, 
the  digitalisation  of 
transport  and  energy  infrastructure.  Likewise, 
there  is  a  strong  emphasis  on  digital  health 
solutions,  ranging  from  the  use  of  data 
analytics 
to 
improve 
investments in e-health to ensure continuity of 

diagnostics 

including 

reach 

to 

(12)  See also Annexes 8 and 11. 

8 

care.  Together,  the  measures  supporting  the 
digital transition objectives account for 27.5% 
of the Finnish plan’s financial allocation.  

increasing 

in  GDP  and 

The plan includes substantial investments 
promoting  research,  development  and 
innovation  (RDI).  Measures  included  in  the 
plan  contribute  to  raising  the  share  of  RDI 
the 
expenditure 
ambition level of RDI activities, in line with the 
National  Roadmap  for  Research,  Development 
and  Innovation  adopted  in  spring  2020.  In 
particular,  the  plan  encourages  private  sector 
investments  in  RDI  activities  and  cooperation 
between public and private entities involved in 
RDI,  including  at  international  level.  Many 
research  entities  and  companies,  including 
SMEs,  may  apply  for  grants  for  projects 
cross-sector 
promoting 
cooperation. 
innovation 
infrastructures  will  be  supported  at  both 
national  and  local  level.  Funding  may  be 
granted  for  research  infrastructure  projects 
that complement the acquisition of LUMI - the 
international  supercomputer  hosted  in  Finland 
- or quantum computers.  

innovation 
Research 

and 

and 

Addressing challenges related to 
labour market, skills development 
and healthcare 

to 

delivering 

implementing 

The RRP addresses the challenges related 
to  Finland’s  shrinking  workforce  and 
relatively  high  structural  unemployment, 
contributing 
the 
European  Pillar  of  Social  Rights.  One  of 
the  key  measures  is  the  “Nordic  employment 
public 
service  model” 
for 
employment  services.  This  new  model 
is 
expected to increase the number of job search 
interviews  to  at  least  2 million  a  year  as  of 
2023,  compared  to  1 million  in  2019.  It  is 
estimated  that  this  will  contribute  to  the 
employment  of  around  10 000  people  by 
2025. 
the 
‘unemployment tunnel’ (the right to additional 
days of unemployment security for employees 
close to their retirement age) will help increase 
the  available  workforce  and  decrease 
incentives  to  lay  off  employees  closer  to 

Furthermore, 

phasing 

out 

 
                                                 
retirement  age.  Measures  are  also  planned  to 
strengthen  the  integrated  services  for  young 
people  at  Ohjaamo  guidance  centres (13)  and 
for  people  with  partial  work  ability  through  a 
dedicated  programme.  Finland  also  aims  to 
attract  international  talent  by  streamlining 
permit  procedures  for 
job-and  education-
based migration. 

areas. To address the risks to the sustainability 
of the social  and healthcare system posed by 
the  ageing  population,  the  plan  also  includes 
measures to strengthen the cost-effectiveness 
of  the  system  based  on  knowledge  and 
evidence. 

and 

digital 

transitions, 

The plan also includes measures to boost 
skills for the labour market. The measures 
contribute to the ongoing reform of continuous 
learning,  supporting  in  particular  the  twin 
green 
under-
represented  groups  with 
low  skills,  and 
matching  with  the  labour  market’s  needs.  At 
least  7 800  people  will  participate  in  training 
programmes to respond to changes in working 
life,  including  digitalisation  and  the  green 
transition.  The  plan  also  aims  to  improve  the 
level  of  education.  At  least  600  tertiary-level 
study  places  will  be  created,  targeted  at 
sectors experiencing labour shortages, such as 
education, 
health  and 
technology and ICT.  

long-term 

care, 

In  the  social  and  healthcare  area,  the 
plan aims to improve resilience and equal 
access  to  services,  whilst  making  the 
system  more  cost-effective.  It  supports 
implementation  of  the  health  and  social 
consists  of  a 
services 
reorganisation  of  the  provision  of  services  at 
regional level (22 welfare areas).  

reform,  which 

The related investments aim to gradually 
reduce the delays accumulated during the 
COVID-19  crisis  and  contribute  to  the 
implementation  of  the  so-called  7-day  care 
guarantee,  which  is  designed  to  ensure  that 
people  can  access  non-urgent  care  no  later 
than  7  days  after  the  initial  assessment  of 
need  for  care (14). 
in  digital 
innovation are expected to help address unmet 
medical  needs,  especially  in  the  more  remote 

Investments 

(13)  One-Stop Guidance Centres for under 30-year-olds 

providing free assistance and support in various areas 
such as studying, employment and housing. 

(14)  In 2019, the median waiting times ranged from 20 to 
50 days depending on the region. The COVID-19 
pandemic has increased the backlog in the provision of 
healthcare services and it is estimated that the waiting 
times have further increased. 

9 

 
                                                 
 
                        Box 1:  Key deliverables under the recovery and resilience plan in 2022-

2023 

  Entry into force of the revised Climate Change Act to ensure  achievement of 

Finland’s carbon-neutrality objective by 2035 

  Revision  of  the  legal  framework  for  broadband  communication  networks  to 

provide high-speed internet in more remote areas 

  600  new  study  places  created  in  higher  education  institutions,  targeted  at 

professions facing labour shortages 

  Conclusion  of  a  national  agreement  on  a  low-carbon  circular  economy  to 

boost recycling 

  Entry  into  force  of  the  amended  Nature  Conservation  Act  to  preserve 

biodiversity and natural habitats 

 

Implementation of the labour market reforms to raise the employment rate: 
introducing  the  Nordic  employment  service  model,  phasing  out  of  additional 
days  of  unemployment  security  (the  ‘unemployment  tunnel’),  passing 
amendments to the Aliens Act 

  Operationalisation of 22 welfare areas established as part of the health and 
social  services  reform,  with  a  view  to  improving  access  to  services  and 
efficiency of the system 

10 

 
 
 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

Beyond  the  challenges  addressed  by  the 
RRP,  as  outlined  above,  Finland  faces 
additional  challenges  not  sufficiently 
covered  in  the  plan.  Some  measures  were 
introduced  recently  (see  Annex  4  on  progress 
on  CSRs),  but  more  efforts  are  needed,  most 
notably on the access to health and long-term 
care  services  and  the  shortage  of  health 
workers.  Moreover,  the  social  security  system 
needs  to  be  redesigned  to  address  some  of 
Finland’s  key  social  and  economic  challenges. 
The government’s ambitious green targets and 
the  Russian  invasion  of  Ukraine  also  call  for 
additional 
in  several  sectors. 
Addressing  these  challenges  will  also  help  to 
make  further  progress 
the 
Sustainable  Development  Goals  related  to 
good  health  and  wellbeing,  affordable  and 
clean  energy,  climate  action,  and  decent  work 
and economic growth.   

in  achieving 

investment 

Health and long-term care sectors 
face structural challenges 

Addressing the  cost-effectiveness  of and 
equal  access  to  social  and  healthcare 
services  has  been  a  long-standing  policy 
challenge.  Progress  is  underway  with  the 
launch  of  the  reform  of  health  and  social 
services. Its first stage should be implemented 
by  January  2023  when  22  welfare  areas (15) 
start  operating.  These  will  provide  the  basic 
structure  for  implementing  the  further  stages 
of 
centralised 
management (transferred to the welfare areas 
from  municipalities)  is  expected  to  improve 
access  to  healthcare  and  help  curb  cost 
increases  in  the  long  term  by  allowing  the 
cost-effectiveness  of  both  healthcare  and 

A  more 

reform. 

the 

(15)  21 welfare areas and the City of Helsinki, responsible 
for organising health, social and rescue services within 
its own area. 

11 

long-term  care  to  be  better  monitored  and 
managed. (16)  Digitalisation  of  health  services 
as  well  as  the  increase  in  higher  education 
places  related  to  sectors  experiencing  labour 
shortages  are  expected  to  reduce the  scarcity 
of  health  workers  in  Finland  in  the  medium 
term. 

The proportion of people reporting unmet 
needs for medical care is higher than the 
EU average and that of most other Nordic 
countries.  In  2020,  5.4%  of  the  Finnish 
population reported unmet medical care needs 
due to financial reasons, geographical barriers 
or waiting times (see Annex 12). Long waiting 
times  persist  in  both  primary  and  specialised 
care,  particularly  for  people  who  are  not 
eligible  for  occupational  health  care,  such  as 
the  unemployed  and  retired  people.  This 
situation  results  in  the  low  score  for  self-
reported  unmet  need  for  medical  care  in  the 
Social Scoreboard accompanying the European 
Pillar  of  Social  Rights.  The  health  and  social 
care  reform  and  the  RRP  measures  aim  to 
address  issues  of  access,  integration  and 
coordination  between  primary  and  specialist 
care,  and  between  health  and  other  public 
services  provided  at  different 
levels  of 
government.  The  Government  has  prepared 
draft  legislation  which  aims  to  reduce  the 
maximum waiting times for access to primary 
health  care,  applicable  in  public  health  care. 
The 7-day care guarantee would apply to both 
physical  and  mental  health  problems.  The 
proposal 
is  set  to  be  submitted  to  the 
Parliament in spring 2022. 

In  the  aftermath  of  the  COVID-19 
pandemic,  the  health  sector  continues  to 
suffer  from  labour  shortages.  This  issue 
has been addressed only indirectly in the RRP. 
Finland has fewer professionally active doctors 
than  the  EU  average  (3.2  compared  with  3.8 
per 1 000 population), but the highest number 

(16)  See also Annex 14. 

 
 
                                                 
                                                 
 
of 

distribution 

of nurses in the EU (14.3 compared to 8.9 per 
1 000) (17).  The  National  Institute  for  Health 
and  Welfare  (THL)  has  estimated  that  health 
care  centres  would  have  to  recruit  between 
1 600 and 2 600 doctors to achieve the 7-day 
the  uneven 
care  guarantee.  Moreover, 
geographic 
healthcare 
resources  heightens  disparities  in  access  to 
care. The density of doctors is much greater in 
the  capital  region  of  Helsinki  and  in  other 
major  cities,  owing  to  the  concentration  of 
hospitals  and  specialised  care  units  in  urban 
areas,  while  relatively  few  doctors  working  in 
remote  and  sparsely  populated  regions.  The 
long-term  care  sector  also  suffers  from  a 
shortage  of  health  workers.  The  new 
requirement to gradually increase the staff-to-
patient ratio in 24-hour elderly care units from 
0.5 to 0.7 per patient (by 1 April 2023) (18) will 
further increase the staff needs in the sector. 

and 

Further measures are needed to increase 
the  numbers  of  health  workers  and 
improve  their  geographical  distribution. 
More training places should be made available 
to  increase  the  number  of  trained  employees. 
Increasing  the  number  of  degree  programme 
reskilling/upskilling 
places 
study 
possibilities  could  help 
respect. 
in 
Measures  to  improve  the  attractiveness  of 
health and long-term care related professions 
would  also  be  warranted,  especially  for 
nursing.  The  national  programme  on  the 
sufficiency  and  availability  of  healthcare  and 
social  welfare  personnel  was  launched  in 
November 2021. The aim is to find sustainable 
solutions  for  meeting  the  need  for  labour  in 
healthcare  and  social  welfare  in  the  short, 
medium  and  long  term  so  that  regional 
differences are taken into account.  

this 

and  refocused.  The  social  security  system 
provides  ample  coverage  and  protects  well 
against poverty. Social spending is the highest 
in the EU in relative terms. Before the COVID-
19  pandemic,  spending  on  social  security  in 
Finland  accounted  for  24%  of  GDP  compared 
to  19%  of  GDP  in  the  EU  on  average  (2019 
data). However, over the last 20-30 years, the 
welfare  state  has  developed  in  a  piecemeal 
fashion,  through  many  small  changes.  These 
have  resulted  in  a  complex  and  bureaucratic 
system. 
is 
characterised by  significant  variation  in  terms 
of  definitions  (e.g.  concepts  of  income,  family 
for 
etc.)  and  procedures 
applications 
The 
information  flow  between  various  public 
authorities  and  services  is  not  sufficient.  The 
housing  policy  and  the  housing  benefits 
system  are  complex  and do  not  always  reach 
their objectives efficiently.  

disbursements). 

(e.g.  delays 

example, 

system 

and 

the 

For 

is 

for 

the 

The planned social security reform is key 
to  raising  the  employment  rate.  The 
largely 
complex  social  benefit  system 
to 
responsible 
inherent  disincentives 
work (19).  Allowing  for  more  flexibility 
in 
combining work income and social benefits will 
increase 
incentives  for  beneficiaries, 
especially those with low earning prospects, to 
take  up  work.  Promoting  activation  measures 
for  the  unemployed  in  order  to  make  the 
system  more  enabling  is  another  solution 
being  considered.  Tackling  these  challenges  is 
key  for  Finland  to  contribute  to  reaching  the 
2030 EU headline targets on employment and 
poverty  reduction.  Other  fundamental  issues 
for  the  future model  of  the  welfare  state  are 
also  under  discussion,  such  as  basing  the 
social security system on the principle of social 
insurance or guaranteed basic income.  

The social security system needs 
to be redesigned 

Finland  has  a  developed  social  security 
system that still needs to be streamlined 

The  RRP  recalls  the  commitment  of  the 
authorities  to  pursue  the  social  security 
reform. A parliamentary committee has been 
tasked  by  March  2027  to  prepare  the  reform 
that  would  revamp  Finland’s  welfare  system. 
The  committee  includes  representatives  of  all 
parties in  Parliament, various  external  experts 
as  well  as  representatives  of  the  labour 

(17)  The latest available data on health workers for Finland 

are from 2014 

(18)  Legislative amendment adopted in July 2020. 

(19)  Finnish Ministry of Social Affairs and Health, 
https://stm.fi/en/social-security-reform  

12 

 
                                                 
                                                 
market  and  business  lobbies.  It  started  its 
work in 2020. In January 2022, the committee 
published  the  results  of  its  problem-mapping 
work,  in  the  form  of  five  reports  on  the 
problems,  choices  and  basic  principles  of  the 
Finnish  social  security  system (20).  In  the  next 
stage, the committee will focus on developing 
possible solutions to the problems identified. A 
study on alternative ways of organising social 
security has also been launched in preparation 
of  the  reform.  The  committee  is  expected  to 
publish  an  interim  report  on  its  work  in  early 
2023, by the end of the current parliamentary 
term.  The  policy  proposals  for  the  reform 
should be ready in time for discussions on the 
next government’s programme. 

Ambitious green targets and 
reducing fossil energy dependence 
call for additional investment 

While  the  RRP  focuses  on  reducing 
greenhouse  gas  emissions  in  several  key 
sectors,  more 
investments  will  be 
required  to  match  Finland’s  ambitious 
green  targets.  This  is  the  case  for  all 
emitting sectors, but is particularly true in the 
renewable  energy,  buildings  and  transport 
investment 
sectors,  where 
needs  to  achieve  overall  carbon  neutrality 
targets are very large.  

the  remaining 

investments 

required 
The  additional 
include  existing  and  new  sources  of 
renewable  energy.  Additional  capacity  is 
expected  to  be  added  in  the  coming  years 
mainly  in  (offshore)  wind  power,  but  also  in 
other renewable energy sources including solar 
and  geothermal.  While  Finland’s  share  of 
renewables  in  the  energy  mix  is  already  high, 
the  planned  increase  in  renewable  energy  to 
meet  the  2035  carbon  neutrality  target  is 
expected  to  require 
in 
network  infrastructure.  At  the  same  time,  the 
phase-out of the use of coal by 2029 requires 
a  shift  in  the  management  of  the  electricity 

investments 

large 

(20)  https://stm.fi/en/-/reports-on-problems-choices-and-
basic-principles-of-finnish-social-security-system-
completed  

13 

include 

investment 

in  transport 

in  network 
network  and  an 
transmission  capacity.  Additional  investment 
needs 
improving  the 
efficiency  of  the  public  transport  system  and 
electrification  of  the  rail  network.  The  Finnish 
authorities  are  planning  a  cross-border  rail 
connection  between  Finland  and  Sweden  at 
Tornio  and  have  applied  for  funding  from  the 
Connecting  Europe  Facility  for  this  project (21), 
which  could  improve  supply  chain  security  in 
Finland by creating additional  overland supply 
routes.  At  the  same  time,  the  transport 
large  maintenance  deficit 
network  has  a 
(estimated at EUR 2.8 billion). 

times 

projects, 

including 

Delays  in  granting  permits  for  capital 
in 
investment 
renewable  energy,  are  still  frequent  and 
reducing  them  requires  further  efforts. 
According  to  the  OECD (22),  long  permitting 
processing 
slow  down,  or 
can 
undermine,  investment  projects  in  Finland. 
Recent  estimates (23)  show  that  at  least  EUR 
3 billion worth of investments are pending due 
to administrative procedures linked to permits. 
Streamlining  permit  procedures  for  renewable 
energy 
installations  by  removing  process-
related  barriers,  especially  with  regard  to 
administrative procedures, could speed up the 
deployment  of  investments.  In  the  transport 
sector,  long  distances  in  domestic  transport 
and  cold  weather  conditions  create  specific 
obstacles to the rollout of electric vehicles. The 
use  of  zero-emission  vehicles  can  reduce 
energy  dependency,  and  thanks  to  higher-
than-expected  sales  of  electric  vehicles  in 
Finland  in  2021  the  share  of  zero-emissions 
vehicles in Finland has now caught up with the 
EU  average.  Moreover,  additional  reforms  are 
required  to  achieve  Finland’s  objective  of 
reducing emissions from transport by 50% by 
2030  compared  to  2005.  As  the  following 

(21)  Finnish government website, 16 December 2021: 
https://valtioneuvosto.fi/en/-/finland-applies-for-
funding-from-the-eu-s-connecting-europe-facility-for-
several-transport-projects 

(22)  OECD, 21 May 2021, “The Impact of Regulation in 

International Investment in Finland”, 
https://doi.org/10.1787/b1bf8bee-en 

(23)  Finnish Confederation of Industries, 29 November 2021: 
https://ek.fi/ajankohtaista/tiedotteet/yli-3-miljardin-
euron-investoinnit-pysahdyksissa-viranomaisten-
lupakasittelyssa-elinkeinoelama-peraa-reformia/ 

 
                                                 
                                                 
imports  from  other  sources (26).  The  planned 
construction  of  the  Hanhikivi  nuclear  power 
plant  by  a  firm  partially  owned  by  a  Finnish 
subsidiary  of  the  Russian  state  corporation 
Rosatom  has  now  been  put  permanently  on 
hold by the Finnish power company. Imports of 
wood  chips  from  Russia  can  be  an  important 
heating  source  locally,  in  particular  in  Eastern 
Finland,  which  may  require  replacement  with 
biofuels from other domestic and international 
sources.  The  Russian  invasion  of  Ukraine  is 
expected  to  speed  up  and  expand  investment 
in  Finland  for  decarbonisation  and  ensure 
energy  efficiency  and  security  of  supply.  It 
should  be  noted  that  any  new  investments 
should  be  future  proof,  where  possible,  to 
avoid  lock  in  effects  in  the  path  to  climate 
neutrality. 

paragraph shows, decarbonising Finland’s fleet 
of vehicles is important also in the geopolitical 
context,  as 
increased  sustainable  mobility 
efforts  will  reduce  Finland’s  reliance  on  fossil 
oil, which in turn will reduce its dependence on 
Russian fossil fuels. 

industry. 

the  chemical 

Some  sectors 
in  Finland  depend  on 
imports of energy resources from Russia, 
but  the  country  is  already  diversifying 
away  from  Russian  imports.  According  to 
2020  data  on  the  overall  energy  mix,  oil 
(25.6%),  gas  (6.9%)  and  solid  fossil  fuels 
(9.4%) are still significant energy sources, with 
approximately  half  of  all  coal  imports,  two 
thirds  of  gas  and  84%  of  crude  oil  imports 
coming  from  Russia  in  2020 (24).  Finland's 
dependence  on  Russia  for  these  fuel  sources 
is,  however,  expected  to  decrease  over  time. 
Finnish  gas  consumers  are  mainly  power 
plants and industries such as steel, oil refinery 
and 
In  electricity 
generation, gas can in principle be replaced by 
other inputs,  while  industry  is  already  shifting 
to  alternative  sources  of gas,  though  in  some 
sectors  additional  investment  will  be  required 
for  the  decarbonisation  and  electrification  of 
industry (25).  Finland  is  developing  a  third 
liquefied  natural  gas  (LNG)  terminal,  which  is 
expected  to  be  operational  by  October  2022. 
The  Balticconnector  bi-directional  natural  gas 
pipeline between Finland and Estonia was put 
in  use  in  2020,  creating  an  alternative  gas 
supply  route  for  the  Finnish  market  and 
connecting  the  country  to  the  Baltic  states 
the  Gas 
the  opening  of 
and, 
Interconnection Poland-Lithuania in May 2022, 
to  the  rest  of  the  EU.  LNG  and  pipeline  gas 
import  capacity  is  soon  expected  to  cover  the 
majority of Finnish gas imports. Finland's main 
users of crude oil have already taken action to 
replace  most  of  Russian  oil  imports  with 

since 

(24)  Eurostat (2020), share of Russian imports over total 

imports of natural gas, crude oil. Total imports include 
intra-EU trade. Crude oil does not include refined oil 
products. 

(25)

https://energia.fi/energiapolitiikka/ukrainan_sota/v

enajan_merkitys_suomen_energiahuollolle 

(26)  Including the Neste refinery in Porvoo: 

https://www.neste.com/releases-and-news/oil-

products/neste-has-mostly-replaced-russian-crude-oil-
other-crudes 

14 

 
                                                 
 
 
 
 
                                                 
  Promoting 

in 

substantial 

additional 
renewable  energy  and 
investments 
sustainable  transport  to  speed  up  the 
progress  towards  the  2035  target  for  the 
decarbonisation of society and improve the 
security  of  energy  supply.  The  deployment 
of  energy  investments  will  also  require 
speeding 
of 
the 
environmental permits.  

processing 

up 

KEY FINDINGS 
KEY FINDINGS 

Finland’s  recovery  and  resilience  plan 
includes measures to address a series of 
its structural challenges through:   

  Contributing to the reduction of greenhouse 
gas emissions in the most relevant sectors 
through reforms and investments.  

  Supporting 

high-speed 

broadband 
the  continuous 
connectivity, 
learning  framework  and  promoting  digital 
skills.  

reforming 

  Investing in R&I.  

  Addressing  Finland’s  shrinking  workforce 
and tackling structural unemployment.  

  Supporting  the  health  and  social  services 

reform. 

Beyond  the  reforms  and  investments  in 
the RRP, Finland would benefit from:   

  Implementing 

the  health  and 

social 
services reform to improve equal access to 
services 
cost-
effectiveness of the healthcare sector.  

increase 

and 

the 

  Addressing persisting staff shortages in the 
healthcare  sector,  in  terms  of  numbers  of 
uneven 
and 
health  workers 
geographical distribution.   

their 

  Reforming  the  social  security  system  to 
increase  efficiency  of  social  benefits, 
improve  incentives  to  work  and  support 
sustainability of public finances in the long 
term,  thereby  mitigating  the  impacts  of 
population ageing.  

  Pursuing  ongoing  structural  reforms  that 
focus  on  the  green  and  digital  transition, 
to 
research  and  promoting 
provide 
increase 
effective  ways 
stagnating productivity.  

innovation 

to 

15 

 
 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan – implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Resource efficiency and productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic Stability 

Annex 16: Key financial sector developments 

Annex 17: Taxation 

Annex 18: Key economic and financial indicators 

Annex 19: Debt sustainability analysis 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 
Table A9.1: 
Table A10.1: 

Key elements of the Finnish RRP 
Summary table on 2019, 2020 and 2021 CSRs 
Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index Indicators 
Key research, development and innovation indicators 
Key single market and industry indicators 

19 

21 

21 

23 

24 

26 

28 

28 

32 

34 

34 

36 

38 

40 

43 

45 

45 

47 

49 

51 

54 

54 

55 

57 

58 

23 
27 
31 
35 
37 
39 
41 

 
 
 
Table A11.1: 
Table A12.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A19.2: 

Public administration indicators for Finland 
Social Scoreboard for Finland 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Finland, selected indicators at regional level 
Financial soundness indicators 
Indicators on taxation 
Key economic and financial indicators 
Heat map of fiscal sustainability risks for Finland 
Heat map of fiscal sustainability risks for Finland 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Finland in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

ESIF 2014-2020 total budget by fund(1),(2) 

Graph A3.2: 

Cohesion policy contribution to the SDGs (EUR billion) 

Graph A4.1: 

Finland’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition 

Graph A5.2: 

Energy Share in energy mix (solids, oil, gas, nuclear, renewables(1)) 

Graph A5.3: 

Biodiversity Terrestrial protected areas and organic farming 

Graph A5.4: 

Mobility Share of zero emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Economic importance and expansion of the circular economy 

Graph A11.1: 

Performance on evidence-based policy making indicators 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (reference scenario) 

Graph A15.1: 

GDP per capita (2010) and GDP growth (2010-2019) in Finland 

Graph A15.2: 

Labour productivity, EU-27, Finland´s NUTS 2 regions, 2000-2019 

Graph A15.3: 

Territories most affected by climate transition in Finland 

Graph A17.1: 

Indicators on tax wedge 

44 
45 
48 
50 
51 
54 
55 
57 
58 
59 

22 

23 

24 

25 

26 

28 

29 

29 

30 

32 

32 

34 

43 

49 

49 

51 

51 

52 

56 

20 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

term  care,  aiming  to  improve  the  health  and 
wellbeing status. 

Finland performs very well on SDG indicators 
related  to  productivity 
(SDG  4,  8,  9). 
Compared  to  the  EU  average  (54  %),  Finland 
performs  very  well  in  digital  skills  with  a  79  % 
share of adults with at least basic digital  skills in 
2021.  Finland  also  performs  well  on  SDG  8 
‘Decent  work  and  economic  growth’  and  SDG  9 
‘Industry,  innovation,  and  infrastructure’.  While 
Finland’s  spending  on  R&D  at  2.94 %  in  2020  is 
well  above  the  EU  average  of  2.32 %  and  has 
been increasing each year since 2016 (2.72 %), it 
is  still  below  the  2009  peak  of  3.73 %.  The  RRP 
includes measures to further improve the situation 
by  boosting  spending  on  research,  development 
and  innovation  through  funding  packages  for  the 
promotion of the green and digital transition. 

includes  a  reform  to 

Finland  performs  very  well  overall  on  SDG 
indicators related to macroeconomic stability 
(8,  16).  Finland  already  performs  very  well  on 
SDG 16 ‘peace, justice and strong institutions’ and 
the  RRP 
improve  the 
supervision  and  enforcement  of the prevention  of 
money  laundering,  which  will  further  improve  the 
stability  of  and  trust  in  public  institutions  in 
Finland.  On  SDG  8  'Decent  work  and  economic 
growth',  Finland  has  increased  its  investment 
share  of  GDP  by  more  than  the  EU  average 
between  2015  and  2020  while  it  continues  to 
perform  above  the  EU  average  on  all  metrics 
related to employment. 

This  Annex  assesses  Finland’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  towards  the 
SDGs.  The  graph  below  is  based  on  the  EU  SDG 
indicator  set  developed  to  monitor  progress  on 
SDGs in an EU context. 

in  2020,  which 

While  Finland  performs  very  well  on  several 
SDG 
indicators  related  to  environmental 
sustainability  (SDG  6,  7,  9,  11,  12,  13),  it 
needs  to  pay  attention  to  progress  on  other 
indicators 
(SDG 2,  15).  Finland  performs 
particularly  well  on  SDG  13  ‘climate  action’, 
including   the share of renewable energy in gross 
final energy consumption: Finland reached a share 
of  43.8 % 
in 
comparison  to  the  European  average  (22.09  %  in 
2020)  and  the  second-highest  in  the  EU  after 
Sweden.  Many  measures  in  Finland’s  RRP  are 
expected  to  further  contribute  to  greenhouse  gas 
in 
emission 
renewable energy, decarbonisation of industry and 
research  and  development 
low-carbon 
technologies.  On  SDG  2  'zero  hunger',  Finland's 
obesity  rate  is  above  the  EU  average  (20.9%  in 
Finland vs 16.5% in the EU in 2019) and has been 
increasing (from 18.3% in 2014).  

is  very  high 

investments 

including 

savings, 

for 

Finland performs very well on SDG indicators 
assessing  the  fairness  of  society  and 
economy (SDG 1, 3, 4, 5, 8, 10). (27) On ‘gender 
equality’  only two  EU  Member  States (France  and 
Sweden)  score  higher  than  Finland,  but  Finland  is 
improving  at  a  faster  pace  on  this  indicator.  On 
‘quality  education’,  Finland’s  tertiary  education 
attainment  among  the  population  aged  25-34  is 
well above the EU average at 43.8 % in 2020, and 
has  increased  strongly  in  recent  years,  up  from 
40.3 %  in  2018.  The  RRP  includes  measures  to 
support  the  ongoing  reform  of  health  and  long-

(27)  See ‘Annex 12 – Employment, skills and social policy 

challenges in light of the European Pillar of Social Rights’ for 
further information. 

21 

 
 
                                                 
 
 
 
 
 
 
 
 
Graph A1.1: Progress towards SDGs in Finland in the last five years 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/web/products-statistical-books/-/KS-03-21-096; Extensive country specific data on the short-term 
progress of Member States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu).  
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

22 

 
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

graph below. 

The  progress  made  by  Finland 
in  the 
implementation of its plan is published in the 
Recovery  and  Resilience  Scoreboard.  The 
Scoreboard also gives an overview on the progress 
of the implementation of the RRF as a whole, in a 
transparent manner. 

the 

twin 

The  Recovery  and  Resilience  Facility  (RRF)  is  the 
centrepiece  of  the  EU’s  efforts  to  support  its 
recovery  from  the  COVID-19  pandemic,  fast 
transition  and  strengthen 
forward 
resilience against future shocks. Finland submitted 
its  recovery  and  resilience  plan  (RRP)  on  27  May 
2021. The Commission’s positive assessment on 4 
October  and  Council’s  approval  on  29  October 
paved  the  way  for  disbursing  EUR  2.1  billion  in 
grants  under  the  Recovery  and  Resilience  Facility 
financing 
over 
agreement  was  signed  on  13  January  2022.  The 
key elements of the Finnish RRP are set out in the 
Table  A2.1.  The  share  of  funds  contributing  to 
each of the RRF’s six policy pillars is outlined in the 

the  period  2021-2026.  The 

Table A2.1: Key elements of the Finnish RRP 

(1) See Pfeiffer P., Varga J. and in ’t Veld J. (2021), “Quantifying Spillovers of NGEU investment”, European Economy Discussion 
Papers, No. 144 and Afman et al. (2021), “An overview of the economics of the Recovery and Resilience Facility”, Quarterly Report 
on the Euro Area (QREA), Vol. 20, No. 3 pp. 7-16.   

Source: European Commission 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

(1) Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on 
this chart amounts to 200% of the estimated cost of the 22 RRPs approved in 2021. The bottom part represents the amount of 
the primary pillar, the top part the amount of the secondary pillar. 

Source: RRF Scoreboard: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html 

23 

0%10%20%30%40%50%60%Green transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic,social andinstitutionalresiliencePolicies for thenext generationTotal allocation EUR 2.1 billion in grants (1% of 2019 GDP)Investments and Reforms 39 investments and 18 reforms Total number of Milestones and Targets140Estimated macroeconomic impact (1) Raise GDP by 0.4%-0.6% by 2026 (0.4% in spillover effects)Pre-financing disbursed EUR 271 million (January 2022)First instalment Finland did not yet submit a first payment request 
 
 
 
 
 
 
  
 
 
  
 
 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

Graph A3.1: ESIF 2014-2020 total budget by 
fund(1),(2) 

(1) bln EUR in current prices, % of total  
(2) The data for the EAFRD and REACT-EU refer to the period 
2014-2022 
Source: European Commission, Cohesion Open Data  

support 

long-term 

In  2021-2027,  EU  Cohesion  policy  funds (28) 
will 
development 
objectives  in  Finland  by  investing  EUR  2.12 
billion (29)  including  EUR  465.7  million  from  the 
Just  Transition  Fund  directed  to  alleviate  the 
socio-economic  impacts  of  the  green  transition  in 
the  most  vulnerable  regions.  The  2021-2027 
Cohesion policy funds Partnership agreements and 
programmes are designed to take into account the 
2019-2020  CSRs  and 
investment  guidance 
provided  within  the  context  of  the  European 
and 
Semester, 
complementarities  with  other  EU  funding. 
In 
addition,  Finland  will  benefit  from  EUR  4.4  billion 
support for the 2023-27 period from the Common 
Agricultural 
social, 
environmental,  and  economic  sustainability  and 
innovation 
rural  areas, 
contributing  to  the  European  Green  Deal,  and 
ensuring long-term food security. 

in  agriculture  and 

Policy,  which 

synergies 

supports 

ensuring 

In  2014-2020,  the  European  Structural  and 
Investment  Funds  (ESIF)  for  Finland  are  set 
to  finance  investment  totalling  EUR  4.90 
billion (30)  from  the  EU  budget.  The  overall 
investment  including  national  financing  amounts 
to  EUR  10.76  billion  (Graph  3.1),  representing 
around 0.68% of GDP for 2014-2020 and 14.94% 
of  public  investment (31).  By  31  December  2021, 
105%  of  the  total  was  allocated  to  specific 
projects  and  68%  was  reported  as  spent,  leaving 
EUR  3.44  billion  to  be  spent  by  the  end  of 
2023 (32).  Among  the  eleven  objectives  the  most 
relevant  ones  for  cohesion  policy  funding  in 
Finland 
innovation, 
competitiveness  of  SMEs,  sustainable  and  quality 
employment,  and  low  carbon  economy  (in  total 
EUR  2  billion).  By  end  2020,  cohesion  policy 
investments  have  already  supported  17  748 
companies 
led  by  R&D 
institutions,  2  468  SMEs  started  exporting  or 
expanded  to  new  export  markets,  over  39  000 
young people under 30s who were unemployed or 
outside  of  working  life  involved  in  ESF  projects, 
and 1 732 new low-carbon solutions developed in 
communities. 

in  projects 

research 

involved 

and 

are 

are 

funds 

policy 

Cohesion 
already 
substantially contributing to the Sustainable 
Development  Goals  (SDGs)  objectives. 
In 
Finland, Cohesion policy funds are supporting 8 of 
the  17  SDGs  with  up  to  95%  of  the  expenditure 
contributing to the attainment of the goals.  

The  REACT-EU  under  NextGenerationEU 
provided  EUR  234.9  million  of  additional 
to  2014-2020  cohesion  policy 
funding 
allocations  for  Finland  to  ensure  a  balanced 
recovery,  foster  convergence  and  provide  vital 
support  to  regions  following  the  impact  of  the 
coronavirus  outbreak.  REACT-EU  provided  support 
in  Finland  to  strengthen  SMEs 
in  view  of 
digitalisation  and  green  economy,  develop 
research  and  innovation  in  view  of  digitalisation 

(30)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and European Agricultural Fund for Rural Development 
(EAFRD) and European Maritime and Fisheries Fund (EMFF). 
According to the ‘N+3 rule’, the funds committed for the 
years 2014-2020 must be spent by 2023 at latest (by 2025 
for EAFRD). Data source: Cohesion Open data cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF.” 

(28)  European Regional Development Fund (ERDF), European 

(31)  Public investment is gross fixed capital formation plus 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(29) Current prices, source: Cohesion Open Data  

capital transfers, general government. 

(32)  Including REACT-EU. ESIF data on 

https://cohesiondata.ec.europa.eu/countries/FI  

24 

7.7672%0.152%1.7516%1.1110%EAFRDEMFFERDFESF 
 
  
                                                 
                                                 
 
and  carbon  neutrality,  enhance  digital  skills,  and 
promote  the  rapid  ability  of  enterprises  and 
entrepreneurs  to  change.  Over  100%  of  the  total 
allocation 
covered  by  selected 
operations. 

is  already 

Instrument 

to  support  Finland 

The  Commission  is  engaged  in  providing 
tailor-made  expertise  via  the  Technical 
in 
Support 
designing  and 
implementing  growth-enhancing 
reforms, including for implementing its RRP. Since 
2019, Finland has received assistance through 19 
technical  support  projects.  Projects  delivered  in 
2021 aimed, for example, at assessing regulatory 
barriers  to  investment,  attracting  high  quality 
foreign  investment  and  analysing  the  impact  of 
digital  economy  on  taxation  and  state  revenues. 
The  Commission  also  assisted  Finland 
in 
implementing specific reforms and investments in 
the  RRP,  for  instance  for  the  design  of  a  positive 
credit  register.  In  2022,  new  projects  will  start  to 
assist, amongst others, with the application of the 
“Do No Significant Harm” principle  to different EU 
and national funds.  

include 

from  other  EU 
Finland  benefits  also 
programmes.  These 
the  Connecting 
Europe Facility, which allocated EU funding of EUR 
259.2  million  to  specific  projects  on  strategic 
transport  networks,  and  Horizon  2020,  which 
allocated EU funding of EUR 1 520 million. 

Graph A3.2: Cohesion policy contribution to the SDGs (EUR billion) 

Source: European Commission, DG REGIO 

25 

0.010.010.070.180.200.350.541.150.00.40.81.2SDG 3 Good health and well beingSDG 13 Climate actionSDG 12 Responsible consumption and productionSDG 7 Affordable and clean energySDG 1 No povertySDG 4 Quality educationSDG 9 Industry, innovation, infrastructureSDG 8 Decent work and economic growth 
  
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (33) 
addressed  to  Finland  in  the  context  of  the 
European Semester. Member States were asked 
to effectively address all or a significant subset of 
the  relevant  country-specific  recommendations 
issued  by  the  Council  in  2019  and  2020  in  their 
RRPs.  The  assessment  takes  into  account  the 
policy  action  taken by  Finland  to  date (34),  as  well 
as 
the  Recovery  and 
Resilience Plan (RRP) (35). At this early stage of the 
RRP  implementation,  overall  75%  of  the  CSRs 
focusing  on  structural  issues  in  2019  and  2020 
have recorded at least “some progress”, while 20% 
recorded  “limited”  (see  Graph  A4.1).  Considerable 
additional  progress  in  addressing  structural  CSRs 
is  expected  in  the  years  to  come  with  the  further 
implementation of the RRP.  

the  commitments 

in 

Graph A4.1: Finland’s progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

Source: European Commission 

(33)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2827%29&qi
d=1627675454457  
2020 CSRs: EUR-Lex - 32020H0826(26) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(26) - EN - EUR-Lex 
(europa.eu) 

(34)  Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(35)  The CSR assessment presented here takes into account the 
degree of implementation of the measures included in the 
RRP and of those done outside of the RRP at the time of 
assessment. Measures foreseen in the annex of the adopted 
Council Implementing Decision on the approval of the 
assessment of the RRP which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

26 

Limited Progress20%Some Progress60%Substantial Progress15%Full Implementation5% 
 
  
                                                 
 
  
 
 
Table A4.1: Summary table on 2019, 2020 and 2021 CSRs 

* See footnote 35. 
Source: European Commission 

27 

FinlandAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Some ProgressEnsure that the nominal growth rate of net primary government expenditure does not exceed 1.9 % in 2020, corresponding to an annual structural adjustment of 0.5 % of GDP. Not relevant anymoreNot applicableImprovethecost-effectivenessofandequalaccesstosocialandhealthcare services.Some ProgressRelevant RRP measures planned as of 2021, 2023, 2024, and 2025 2019 CSR 2Some ProgressImprove incentives to work Some ProgressRelevant RRP measures planned as of 2022, 2023, 2024, and 2025 and enhance skills Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, and 2025 and enhance active inclusion, notably through well-integrated services for the unemployed and the inactive.Some ProgressRelevant RRP measures planned as of 2022, 2023, 2024, and 2025 2019 CSR 3Some ProgressFocus investment-related economic policy on research and innovation, taking into account regional disparities,Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2025 and 2026 focus investment-related economic policy on low carbon and energy transition, taking into account regional disparities,Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025 and 2026 and focus investment-related economic policy on sustainable transport, taking into account regional disparitiesLimited ProgressRelevant RRP measure planned as of 2022, 2024, and 2026 2019 CSR4Some ProgressStrengthen the monitoring of household debt Some ProgressRelevant RRP measure planned as of 2023, 2025, and 2026 and establish the credit registry systemLimited ProgressRelevant RRP measure planned as of 2023, 2025, and 2026 2020 CSR1Some ProgressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableAddressshortagesofhealthworkerstostrengthentheresilienceofthe health system Some ProgressRelevant RRP measure planned as of 2021, 2022 and 2023 and improve access to social and health services.Some ProgressRelevant RRP measure planned as of 2021, 2023, 2024 and 2025 2020 CSR2Some ProgressStrengthen measures to support employment and Some ProgressRelevant RRP measure planned as of 2021, 2022, 2023, 2024 and 2025 bolster active labour market policies.Some ProgressRelevant RRP measure planned as of 2022, 2023, 2024 and 2025 2020 CSR 3Some ProgressTakemeasurestoprovideliquiditytotherealeconomy,inparticularto small and medium-sized enterprises. Substantial ProgressRelevant RRP measure planned as of 2021, 2022, 2023, 2024, 2025 and 2026 Front-load mature public investment projects and Full Implementationpromote private investment to foster the economic recovery. Some ProgressFocusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy,Some ProgressRelevant RRP measure planned as of 2021, 2022, 2023, 2024, 2025 and 2026  sustainable and efficient infrastructure Limited ProgressRelevant RRP measure planned as of 2021, 2022, 2023, 2024, 2025 and 2026 as well as research and innovation.Some ProgressRelevant RRP measure planned as of 2021, 2022, 2023, 2025 and 2026 2020 CSR 4Limited ProgressEnsureeffectivesupervisionandenforcementoftheanti-moneylaundering framework.Limited ProgressRelevant RRP measure planned as of  2025 and 2026 2021 CSR1Substantial ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment. Full ImplementationNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Substantial ProgressNot applicableAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Substantial ProgressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Some ProgressNot applicable 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

and 

resource-efficient 

The European Green Deal intends to transform the 
EU  into  a  fair  and  prosperous  society,  with  a 
modern, 
competitive 
economy  where  there  are  no  net  emissions  of 
greenhouse  gases  in  2050  and  where  economic 
growth is decoupled from resource use. This annex 
offers  a  snapshot  of  the  most  significant  and 
economically  relevant  developments  in  Finland  in 
the  respective  building  blocks  of  the  European 
Green Deal. It is complemented by Annex 6 on the 
employment  and  social  impact  of  the  green 
transition  and  Annex  7  for  circular  economy 
aspects of the Green Deal.  

Graph A5.1: Fiscal aspects of the green transition 

Source: Eurostat 

driving 

environmental 

While  Finland  performs  well  in  collecting 
environmental 
taxes,  both  government 
spending in environmental protection as well 
as  decreasing  fossil  fuel  subsidies  could 
present challenges. Finland’s tax revenues, both 
as a share of total tax revenues and as a share of 
GDP  are  above  EU  average,  with  energy  taxes 
A 
largely 
considerable extent is attributed to transport and a 
smaller  one  to  pollution  taxes.  However,  the 
Finnish  government  spends  a  significantly  lower 
share  of  its  public  spending  on  environmental 
protection than the EU average. At the same time, 
fossil  fuel  subsidies  have  been  showing  a 
considerable  increasing  trend.  Public  budget  risks 
as  a  consequence  of  uninsured  climate  perils  are 
considered  low.  For  more  indicators  on  taxation, 
see Annex 17. 

taxation. 

Finland’s energy mix already contains a high 
share  of  renewables,  making  Finland  one  of 
the  EU  frontrunners  in  renewable  energy.  In 
2020,  the  share  of  final  consumption  of  energy 
from renewables and biofuels reached 39%. Solid 
biofuels (27%) and oil (26%) have the second and 
third highest share. Finland is committing to phase 
out coal in power generation by 2029 and provides 
support  for  a  voluntary phase  out  by  2025.  In  its 
National  Energy  and  Climate  Plan  (NECP),  Finland 
is  proposing  to  further  increase  its  share  of 
renewable  energy  target  to  50%  by  2030,  and 
expand  the  use  of  nuclear  energy,  as  well  as 
decreasing solids and oil shares.  

(excluding 

land  use) 

Finland  will  have  to  sustain  its  ongoing 
efforts  to  reduce  greenhouse  gas  emissions 
in  line  with  its  EU  and  domestic  targets. 
Between  1990  and  2019,  greenhouse  gas 
in  Finland 
emissions 
decreased by 23%. This reduction is comparable to 
the  EU  average.  Finland’s  greenhouse  gas 
emission  intensity  is  below  the  European  Union 
average,  but  emissions  per  capita  remain  well 
above the EU average. Finland has set a target of 
reaching  carbon  neutrality  by  2035  including  the 
objective  to  become  the  first  fossil  free  welfare 
society. The country’s greenhouse gas emissions in 
2020  in  sectors  not  covered  by  the  EU  emissions 
trading  system  (ETS)  just  exceeded  the  2020 
target of reducing emissions by 16% compared to 
2005.  In  its  National  Energy  and  Climate  Plan, 
Finland  includes  additional  measures  to  achieve 
reductions  similar  to  its  current  ESR  target  for 
2030 of 39%. Additional investments and reforms 
will  be  needed  to  reach  the  proposed  new  ESR 
target  of  –a  reduction  of  50%  for  Finland  under 
the  Fit  for  55  package.  Under  current  land 
management  practices,  Finland  is  projected  to 
increase net removals of carbon dioxide by 2030. 
In  its  Recovery  and  Resilience  Plan  (RRP),  Finland 
allocates  50%  of  the  financial  allocation  to 
climate  objectives  and  the  plan  includes  crucial 
reforms  and  investments  to  further  the  transition 
to  a  more  sustainable,  low-carbon  and  climate-
resilient economy (36). 

(36)  The share of financial allocation contributing to climate 

objectives has been calculated using Annex VI of the RRF 
Regulation. 

28 

0.01.02.03.04.05.06.07.0Environmental taxes (% ofGDP)Environmental taxes (% oftotal taxation)Government expenditure onenvironmental protection (%of total expenditure)FI (2020)EU27 (2020) 
 
 
                                                 
   
 
 
Graph A5.2: Energy 
Share in energy mix (solids, oil, gas, nuclear, 
renewables(1)) 

Graph A5.3: Biodiversity 
Terrestrial protected areas and organic farming 

(1) The share of renewables includes waste 
Source: Eurostat. The energy mix is based on gross inland 
consumption, and excludes heat and electricity. The share of 
renewables includes biofuels and non-renewable waste. 

Finland  has  a 

In  terms  of  biodiversity  and  ecosystem 
comprehensive 
health, 
biodiversity  strategy  for  2014-2020,  and  its 
action  plan  for  2013-2020  covers  many 
issues relevant to the implementation of the 
Nature  Directives.  The  terrestrial  part  of  the 
Natura  2000  network  covers  14.45  %  of  the 
Finnish  national  territory  (EU  average  18.17  %), 
with the SPAs covering 7.3 % (EU average 12.4 %) 
and  the  SCIs  covering  14.4  %  (EU  average  13.9 
%).  Thanks  to  an  effective  use  of  EU  funding, 
measures are being taken to restore and manage 
Natura  2000  sites.  Some  progress  has  also  been 
made  in  better  applying  measures  to  protect 
species 
agricultural 
management. However, biodiversity loss continues 
and it is currently unclear whether these measures 
agricultural 
are 
eutrophication 
intensification 
The 
in 
occurring 
conservation  status  of  many  grassland  habitats 
and  many  of  their  associated  species  is  still 
unfavourable. 

to 
and 
the  wider 

offset 
resulting 

countryside. 

sufficient 

habitats 

through 

and 

the 

Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming). For terrestrial protected areas data for 
2018, and data for the EU average (2016, 2017) is lacking. 

In  Finland,  forestry  is  the  most-reported 
pressure  on  Natura  2000  sites,  affecting 
37%  of  sites.  Finland  has  about  20  million 
hectares  of  forests,  three-quarters  of  which 
consists of privately owned and economically used 
forests.  Of  the  twelve  forest  habitats  reported  by 
Finland, ten have an unfavourable status, six have 
an unfavourable-bad status and are declining, and 
no  habitat  has  improved  since  the  last  reporting 
round. 

has 

air 
in 

In terms of air pollution, Finland is one of the 
few  Member  States  without  an  infringement 
procedure  for  exceeding  EU  limit  values  of 
one  or  more  air  pollutants.  The  emission  of 
decreased 
pollutants 
numerous 
significantly 
since  2014-2016, 
Finland 
continuing  the  previous  downward  trend.  NOx 
emissions in particular have declined by over 10 % 
since  that  period.  Finland  is  one  of  the  main 
producers  and  is  the  main  consumer  of  peat  in 
Europe.  Phasing  out  peat  and  restoration  of 
drained  peatlands  and  wetlands  could  contribute 
notably  to  Finland’s  goal  to  achieve  carbon 
neutrality by 2035. 

29 

0102030405060708090100200520102015201820192020Solid fossil fuels, peat and oil shaleOilGasNuclearRenewables0510152025302016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
  
  
Graph A5.4: Mobility 
Share of zero emission vehicles (% of new 
registrations) 

Source: European Alternative Fuels Observatory. Zero 
emission vehicles (passenger cars) include battery and fuel 
cell electric vehicles (BEV, FCEV). 

In  terms  of  mobility,  sales  of  zero-emission 
vehicles  are  increasing  only  since  recent 
years. Finland’s share of zero-emission vehicles in 
new passenger car registrations has surpassed the 
EU  average  for  the  first  time  in  2021  and  their 
share  in  the  national  fleet  of  vehicles  has  rapidly 
caught up with the EU average over recent years. 

30 

0.02.04.06.08.010.012.0201620172018201920202021% of new registrationsFIEU27 
   
Table A5.1: Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999). (2) Distance to target is the gap between Member States’ 2030 target under 
the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source: Eurostat, JRC, European Commission, EEA, EAFO  

31 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)34.4-13%-16%-39%-9-6-50%-20-17200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%29%39%41%41%43%44%51%Energy efficiency: primary energy consumption (1)Mtoe33.632.332.232.832.129.934.8Energy efficiency: final energy consumption (1)Mtoe25.225.225.325.825.423.324.9201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP2.93.13.02.92.82.82.42.42.2Environmental taxes (% of total taxation)% of taxation (3)6.77.16.96.96.66.56.05.95.6Government expenditure on environmental protection% of total exp.0.420.410.370.370.360.401.661.701.61Investment in environmental protection% of GDP (4) 0.310.330.280.29--0.420.380.41Fossil fuel subsidiesEUR2020bn0.900.920.950.981.15-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100788279817768797669GHG emissions intensity of the economykg/EUR'100.310.320.300.300.280.250.320.310.30Energy intensity of the economykgoe/EUR'100.170.170.170.170.160.160.120.110.11Final energy consumption (FEC)2015=100100.0104.0104.3106.4104.896.4103.5102.994.6FEC in residential building sector2015=100100.0107.9116.4114.9113.7106.8101.9101.3101.3FEC in services building sector2015=100100.0105.6108.1112.5110.2102.7102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)1.051.040.960.900.89-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.292282269370288-863762-Years of life lost due to air pollution by NO2per 100.000 inh.9< 1< 1< 1< 1-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-9.915.0-13.213.2-25.725.7Marine protected areas% of total-10.0--11.0--10.7-Organic farming% of total utilised agricultural area9.910.511.413.113.513.98.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'101.161.281.211.201.211.190.890.870.83Share of zero emission vehicles (8)% in new registrations0.20.20.40.61.74.41.01.95.42481714158812Share of electrified railways%55.155.255.456.256.2-55.656.0-19.918.218.118.418.3-28.928.8-YearFIEUShare of smart meters in total metering points (9) - electricity% of total201899.835.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%202176.765.9DigitalBiodiversity2000-20062006-20122012-2018MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver)3.33.30.7Fiscal and financialindicators0.7 out of 4 (slight decrease from historical level of 1). This is a low risk category (4 being a high risk).ClimateEnergyPollutionProgress to policy targetsNational contribution to 2030 EU targetFINLANDEU'Fit for 55'DistanceDistance 
 
  
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

related  to  energy  bills  (e.g.  with  the  electricity 
security deposit).  

Finland considers that few households suffer 
from  energy  poverty  and  therefore  does  not 
have related national objectives. 

Graph A6.2: Energy poverty by income decile 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social dimension.  While measures in this regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Finland's  green  transition  provides 
opportunities  as  it  benefits  from  a  large  green 
economy  with  a  strong  potential  for  job  creation, 
as  well  as  measures that ensure  a  fair  transition; 
although  limited  transition  challenges,  such  as 
labour shortages, exist. 

Graph A6.1: Fair green transition challenges 

Source: Eurostat, World Inequality Database 

Finland’s  Recovery  and  Resilience  Plan  (RRP) 
outlines  some  key  reforms  and  investments 
for a fair green transition. The green transition 
offers  opportunities  to  be  seized  to  ensure  the 
prosperity,  sustainability  and  fairness  of  our 
societies, while leaving no one behind. Finland has 
an  ambitious  plan  aiming  to  achieve  carbon 
neutrality by 2035 and to become the world’s first 
fossil-free welfare society. The continuous learning 
reform  to  strengthen  green  and  digital  skills  will 
address  the  employment  impact  of  the transition. 
At  least  20%  of  the  training  shall  be  targeted  to 
support  the  twin  transitions,  with  5%  targeting 
specifically  the  transition  to  a  carbon-neutral 
society.  A  total  of  EUR  465.7  million  will  be 
invested  in  Finland  through  the  Just  Transition 
Fund.  The  European  Social  Fund  (ESF+)  will 
anticipate  the  future  transformation  of  work  by 
investments  in  continuous  learning,  reskilling  and 
upskilling,  including  in  green  skills.  The  integrated 
national  energy  and  climate  plan  (NECP)  of  20 
December 2019 highlights the fair transition as a 
guiding 
in  Finland’s  climate  policy. 
Regarding  energy  poverty,  the  NECP  refers  to 
social  aid  schemes  that  help  mitigate  issues 

theme 

Source: Eurostat EU-SILC survey (2020) 

reduced 

The  economy  has 
its  carbon 
footprint  and  though  key  energy-intensive 
sectors  remain  sizeable,  the  green  economy 
large  and  provides  strong 
is  relatively 
potential  for  job  creation.  The greenhouse gas 
(GHG)  emissions  intensity  of  the  Finnish  economy 
decreased  between  2015  and  2020  (in  terms  of 
gross  value  added)  and  stands  just  below  the  EU 
average, whereas the average carbon footprint per 
worker  at  17.15  tons  of  GHG  emissions 
is 
considerably  above  the  EU  average  of  13.61  (see 
Figure  1).  In  Finland,  the  peat  extraction  industry 
has been identified as the biggest sector that will 
decline  due  to  the  green  transition.  The  phasing 
out  of  the  use  of  peat  for  energy  by  2030  by  at 
least half and a decline in fossil fuel-based energy 
production are likely to lead to employment shifts 
in the affected regions for which up- and reskilling 
could  be  particularly  important.  In  this  respect, 
Finland  is  preparing  the  Territorial  Just  Transition 
Plans  to  facilitate  the  phasing  out  of  peat 
production with the support of the Just Transition 
Fund  (see  Annex  15).  Energy-intensive  industry 
(EII),  including  metals,  chemicals  and  paper (37), 
has  remained  stable  compared  to  2015  and 
provides  jobs  for  2.2%  of  the  total  employed 

(37)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D). 

32 

0.000.501.001.502.00GHG GVA (MS/EU)GHG worker(MS/EU)Empl share EII(MS/EU)AROP rural(MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)FinlandEU 2020Finland 20150%5%10%15%20%25%12345678910Income decileFinlandEuropean Union 
 
  
  
                                                 
 
workforce  (3.1%  in  the  EU).  The  environmental 
goods and services sector already provides jobs to 
a  comparatively  large  share  of  the  employed 
population  (5.1%  vs  2.2%  in  the  EU) (38).  Labour 
shortages 
as 
manufacturing have been identified (39).  

greening 

sectors 

such 

in 

households in the lowest segments of the income 
distribution (43). 

As  for  the  social  dimension  of  the  green 
transition,  ensuring  access  to  essential 
transport  and  energy  services,  appears 
overall  less  of  a  challenge  in  Finland.  The 
share of the rural population at risk of poverty has 
slightly increased from 13.8% in 2015 to 14.1% in 
2020  (18.7%  in  the  EU) (40).  The  share  of  the 
population unable to keep their homes adequately 
warm remains stable at 1.8%, which is well below 
the  EU  average  (8%).  All  income  groups  have 
rather  low  percentage  of  people  affected  and 
numbers  stay  well  below  EU  average  (see  Figure 
2).  Consumption  patterns  vary  across 
the 
population: the average carbon footprint of the top 
10%  of  emitters  is  about  5.2  times  higher  than 
that  of  the  bottom  50%  of  the  population  (5.3 
times in the EU).   

Tax  systems  are  key  to  ensuring  a  fair 
transition  towards  carbon  neutrality (41). 
Finland’s revenues from total environmental taxes 
remained stable between 2015 and 2019, moving 
from  2.89%  of  GDP  to  2.81%.  They  stood  at 
2.75%  in  2020  (against  2.24%  in  the  EU).  The 
labour  tax  wedge  for  low-income  earners (42) 
dropped from 34.1% in 2015 to 31.9% in 2019. It 
stood  at  32.0%  in  2021,  compared  to  the  EU 
average  of  31.9%  in  2021  (see  Annex  17). 
accompanying 
measures 
Redistributive 
environmental  taxation  can  have  the  potential  to 
foster  progressive  measures  and  to  have  a 
positive  impact  on  the  disposable  income  of 

(38)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(39)  Eurofound (2021), Tackling labour shortages in EU Member 

States, Publications Office of the European Union, 
Luxembourg. 

(40)  Based on COM(2021) 568 final (Annex I) as a proxy for 

potential transport challenges in the context of the green 
transition (e.g. due to vulnerability to fuel prices). 

(41)  COM(2021) 801 final. 

(42)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits database, European 
Commission/OECD). 

(43)  SWD(2021) 641 final PART 3/3, on distributional effects of 

energy taxation revision, based on the European Commission 
Joint Research Centre GEM-E3 and Euromod models. 

33 

 
                                                 
                                                 
RESOURCE EFFICIENCY AND PRODUCTIVITY 
RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

also indicates that Finland’s generation of waste is 
not decoupled from its economic growth. 

is  an 

important  enabling 
Eco-innovation 
factor  for  the  circular  economy.  A  successful 
transition to a circular economy requires social and 
technological  innovation  as  its  full  potential  can 
only  be  reached  when  implemented  across  all 
value  chains.  Product design  approaches  and  new 
business  models  can  help  to  produce  systemic 
innovations,  creating  new  business 
circularity 
opportunities. 

Finland  ranked  2nd  on  the  2021  Eco-
Innovation  Scoreboard,  with  a  total  score  of 
157,  resulting  in  an  eco-innovation  leader 
performance. In three out of five components of 
the  Eco-Innovation 
Index  of  2021  Finland 
performs  above  the  EU  average,  namely  the  eco-
innovation 
inputs,  eco-innovation  outputs  and 
socio-economic  outputs.  While  its  performance  is 
below  the  EU  average  regarding  eco-innovation 
activities and resource efficiency outcomes. 

while 

minimizing 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and  open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chain  in  sectors  such  as 
energy and transport, construction and renovation, 
food and electronics, helping to create sustainable, 
local and well-paid jobs across Europe. 

for 

by 

In  2020,  the  circular  (secondary)  use  of 
material in Finland was 6.2%. This percentage 
is well below the EU27 average of 12.8% and very 
limited  progress  was  made  over  the  last  few 
years.  In  2021,  Finland  adopted  an  ambitious 
Circular  Economy  programme  which,  inter  alia, 
targets  doubling  the  circular  material  use  rate  by 
2035  and  restricts  the  use  of  domestic  primary 
raw  materials.  Further,  Finland’s  RRP  contains 
measures  to  improve  the  re-use  and  recycling  of 
industrial side streams. 

Graph A7.1: Economic importance and expansion of 
the circular economy 

Source: Eurostat 

In 2020, the resource  productivity in Finland 
with  1.09  PPS  generated  per  kg  of  material 
consumed  remains  well  below  the  EU 
average  of  2.23  PPS  per  kg.  Finland’s  Circular 
Economy  Programme,  adopted  in  2021,  commits 
to doubling the productivity of resources by 2035 
(compared  to  2015) (44).  Waste  generation  in 
Finland  has  started  to  increase  in  recent  years. 
This  growth  rate  is  well  above  the  EU  average.  It 

(44)  The high metal footprint and domestic material consumption 

per capita, and the low energy productivity as well as 
resource productivity might be obstacles to the ongoing 
transitions (see Resilience Dashboards | European 
Commission (europa.eu).” 

34 

1.74%1.65%1.58%0.96%0.93%0.88%1.72%1.73%1.75%0.94%0.94%0.96%0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%201520162017Persons employed in the circular economy, FI (% of total employment)Value added at factor cost, FI (% of GDP )Persons employed in the circular economy, EU27 (% of total employment)Value added at factor cost, EU27 (% of GDP ) 
 
 
   
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A7.1: Selected resource efficiency indicators 

Source: Eurostat 

35 

SUB-POLICY AREA201520162017201820192020EU27 CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)1.000.990.990.971.081.032.232020Material Intensity (kg/EUR)1.001.011.011.030.920.970.452020Circular Material Use Rate (%)6.45.35.65.96.36.212.82020Material footprint (Tones/capita)31.9730.6531.29832.90629.5-14.5842019Waste Waste generation (kg/capita, total waste)-22,359-23,253--5,2342018Landfilling (% of total waste treated)-88-82.1--38.52018Recycling rate (% of municipal waste)40.64240.542.343.541.647.82020Hazardous waste (% of municipal waste)-1.9-1.5--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)5.635.645.925.695.77-2.322019Private investment in circular economy (% of GDP)0.090.10.08---0.122018Latest year EU 27 
 
   
 
ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human 
capital,  digital 
connectivity, 
integration  of  digital 
technologies by businesses and digital public 
services  reflect  the  Digital  Decade’s  four 
cardinal  points (45).  This  Annex  describes 
Finland’s DESI performance. 

the 

(27.5%). 

for  digitalization 

The  Finnish  recovery  and  resilience  plan 
devotes  a  large  part  of  the  budget  to  the 
actions  on  digital  objectives 
It 
envisages  investments  in  digital  public  services, 
measures 
in  health  and 
employment services, digitalization of rail systems 
and  the  implementation  of  smart  energy  grids. 
Finland  will  also  invest  in  data-driven  innovation, 
cybersecurity,  connectivity  in  the  areas  where  the 
market  mechanism  cannot  deliver,  digital  skills  at 
various  stages  of  education  and  life,  deployment 
of  advanced  technologies  and  digital  R&D&I,  and 
the digitalization of businesses. 

is  among  the  best  performing 
Finland 
countries  in  human  capital  in  most  of  the 
indicators, 
ICT 
including  basic  digital  skills, 
specialists and also the female ICT specialists. 

the  very  high-capacity  networks 

In  the  indicators  for  digital  connectivity, 
Finland  advances  in  line  with  the  other 
countries. It scores slightly below the EU average 
(VHCN) 
on 
coverage  including  fibre  to  the  premises,  and 
above  average  on  the  5G  technology  coverage. 
Obviously,  geography  is  one  of  the  main  factors 
contributing to this average figure. 

Finland  excels  in  the  integration  of  digital 
technology with all indicators significantly above 
the  EU  averages  for  SMEs  with  at  least  a  basic 
level  of  digital  intensity,  for  enterprises  using  big 
data  solutions,  and  especially  in  the  use  of  cloud 
services and Artificial Intelligence. 

In  digital  public  services,  Finland  performs 
very  well.  The  possibilities  for  online  interaction 
between  government  authorities  and  the  public  - 
for  citizens  as  well  as  for  businesses  -  approach 
saturation and are considerably above EU average.

(45)  2030 Digital Compass: the European Way for the Digital 

Decade Communication, COM (2021) 118 final 

36 

 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A8.1: Key Digital Economy and Society Index Indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities. 
Source: Digital Economy and Society Index 

37 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA79%54%79%% individuals202120212021ICT specialists6.8%7.6%7.4%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists21%23%24%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage62%67%68%70%100%% households201920202021202120215G coverage (*)NA12%72%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA82%55%86%% SMEs202120212021Big data19%22%22%14%31%% enterprises20182020202020202020CloudNANA66%34%69%% enterprises202120212021Artificial IntelligenceNANA16%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA9075100Score (0 to 100)202120212021Digital public services for businessesNANA9382100Score (0 to 100)202120212021Finland 
 
  
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Finland’s  research  and 
innovation  system.  Finland  is  an  Innovation 
Leader according to the 2021 European Innovation 
Scoreboard (46) and its performance relative to the 
EU has improved over time. Starting from 129% in 
2018, the performance level reached 135% of the 
EU average in 2021.  

in 

robust  R&D 

focus, 
in  green  R&I  and 

Finland  is  a  strong  promoter  of  the  green 
transition  and 
related  R&I 
invests 
infrastructure. Finland’s Recovery and Resilience 
including 
Plan  has  a 
investments 
research 
infrastructures.  After  a  strong  decline  between 
2010  and  2017,  R&D  intensity  started  to  recover 
as  of  2018  and  reached  2.94%  in  2020.  While 
R&D expenditure is among the highest in the EU, it 
remains below the ambitious target of 4% of GDP 
by  2030,  set  by  Finland  in  its  National  Roadmap 
Innovation 
for  Research,  Development  and 
adopted  in  spring  2020.  Finance  for  innovation  is 
readily  available,  with  Venture  Capital  (market 
statistics) as percentage of GDP being nearly three 
times higher than the EU average. 

remains  well  below 

Business innovation is supported by a strong 
framework  of  Research  and  Technology 
Organisations.  While  Finland  does  not  provide 
R&I tax incentives and public support for business 
R&D 
the  EU  average, 
businesses R&I activities are strongly supported by 
a  strong  network  of  research  and  technology 
organisations.  After  experiencing  a  strong  decline 
(mostly  driven  by  the  manufacturing  sector), 
business  R&D  intensity  has  improved  in  recent 
years  and  is  among  the  highest  in  the  EU.  The 
Finnish  R&I  framework  benefits  from  strong 
academia-business  linkages,  as  reflected  by  the 
relatively  high  share  of  public-private  scientific 
publications. 
technological 
production,  as  measured  by  patent  applications, 
has been on a downward trend since 2010 but still 
remains substantially higher than the EU average. 

country’s 

The 

(46)  https://ec.europa.eu/docsroom/documents/45913  

38 

 
 
 
 
 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A9.1: Key research, development and innovation indicators 

Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 
Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit 

39 

CompoundEUannual growthaverageR&D Intensity (GERD)3.712.872.762.802.91-2.42.32Public expenditure on R&D 1.100.940.920.940.94-1.60.78Business expenditure on R&D (BERD) 2.581.911.811.841.95-2.81.53Scientific publications within the top 10% most cited worldwide, % of total in Finland 11.511.312.2::0.79.9PCT patent appl.-s per billion GDP (in PPS€)9.98.17.7::-3.2 3.5Public-private scientific co-publications as % of total publications11.911.011.410.910.2-1.59.05New graduates in science & engineering per thousand pop. aged 25-3423.817.817.217.6:0.916.3Public sector support for BERD as % of GDP0.0740.0810.0700.066:-1.20.196Share of environment-related patents in total patent applications filed under PCT (%) 14.014.4 12.9 : :-0.912.8 Venture Capital (market statistics) as % of GDP0.0620.0580.0700.0930.1428.70.054Finance for innovation and Economic renewalKey indicators as % of GDP Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation 2020Finland2010201520182019 
 
  
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

peers.  The  Finnish  RRP  has  measures  that  aim  to 
push SMEs towards enhanced internationalisation.  

Overall,  Finland  offers  a  very  good 
environment  for  doing  business  in  Europe, 
improvements. 
and  there  are  continuous 
Access  to  finance  for  SMEs  is  above  the  EU 
average (0.81 compared to 0.56 for the EU, 2020), 
and  Finland  has  one  of  the  best  corruption 
perception 
the  world.  Business 
digitalisation is also a strength of Finland: 79% of 
Finnish  SMEs  have  at  least  basic  level  of  digital 
intensity  (compared  to  the  EU  average  of  55%). 
On 
administrative 
procedures  related  to  permitting  can  be  seen  as 
undermining possible investment projects overall. 

downside, 

lengthy 

scores 

the 

in 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence over the long run. A major source 
of  productivity  for  the  EU  economy  is  a  well-
functioning single market, where fair and effective 
competition  and  a  business  friendly  environment 
are  ensured, 
in  which  small  and  medium 
enterprises  (SMEs)  can  operate  and  innovate 
without  difficulty.  Businesses  and  industry  rely 
heavily  on  robust  supply  chains  and  are  facing 
bottlenecks that bear a negative impact on firms’ 
productivity 
levels,  employment,  turnover  and 
entry/exit  rates.  This  may  impact  the  Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation. 

Finland’s  labour  productivity  is  worsening 
relative to the EU average. Within the Nordics, 
it  is  on  a  par  with  Sweden  but  has  been  lagging 
behind  Danish  productivity  since  the  financial 
crisis.  Productivity  in  manufacturing  is  however 
performing better than in services. The productivity 
of Finnish SMEs is significantly higher than the EU 
average  (value  added  per  person  employed  EUR 
64 600  compared  to  the  EU  average  of  EUR 
40 000  in  2020).  Skills  shortages  (23%  of  firms 
report  labour  shortages  vs.  14%  in  EU)  and 
relatively  low  rates  of  investment  in  equipment 
and  in  intangible  assets  all  have  an  impact  on 
productivity. 

The  Finnish  economy  has  been  somewhat 
affected  by  global  supply  chain  disruptions. 
Finland’s  economy  relies  slightly  less  on  both 
extra-EU  and  Single  Market  sources  of  value 
added,  relative  to  domestic  inputs,  compared  to 
the  EU  average.  Overall,  23%  of  firms  reported 
shortages  in  materials  or  equipment  in  2021  (vs. 
26%  for  the  EU  average),  with  impacts  felt 
especially  in  manufacturing.  Moreover,  due  to  its 
geographic  location,  the  shortage  of  shipping 
containers had a pronounced impact.  

related 

The  economy  is  well  integrated  into  the 
Single  Market.  Finland  performs  above  EU 
average in terms of transposition of Single Market 
directives,  and  on  average  concerning  Single 
Concerning 
Market 
regulated professions, Finland is more liberal than 
the  EU  average.  Relative  to  its  clear  strengths  in 
business  digitalisation,  Finland  has  still  untapped 
potential in e-commerce in support of trade in the 
Single  Market,  as  with  only  23%  of  SMEs  selling 
online  it  is  clearly  below  the  level  of  its  Nordic 

infringements. 

40 

 
 
 
Table A10.1: Key single market and industry indicators 

(Continued on the next page) 

41 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]71.0862.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]14.8519.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]14.117.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]n.a.n.a.n.a.n.a.n.a.n.a.127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]2369179156%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]23923211377%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]5.4%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.190.20.220.230.25-24%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]37.6035.2034.2034.0011%47.8%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]3.444.74.3-20.9%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]1.30.80.80.786%0.4%Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.851.711.621.581.6413%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])0   2-100%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]5445%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Above averageAbove averageAbove averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageOn averageAbove averageAbove averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]8256%Investment dynamicsSINGLE MARKETCompliance - cooperation EC and MSHEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependencies 
 
 
 
  
 
Table (continued) 

(*) latest available. 
Source:  See above in the table the respective source for each indicator in the column “description”. 

42 

BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.n.a.n.a.n.a.n.a.70.1Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.n.a.n.a.n.a.n.a.105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]43.545.248.2n.a.n.a.-10%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.810.620.330.4675.8%0.56EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.330.310.550.82-59.9%0.18% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]10.413.610.25.86.559.8%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]626161603.3%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]50746876-34%70.8%Business demographyAccess to financeBUSINESS ENVIRONMENT - SMEsPublic procurement  
 
  
 
(274  days 

The  justice  system  performs  efficiently.  It 
performs  at  the  EU  average  level  on  the  time  to 
resolve  both  litigious  civil  and  commercial  cases 
(300  days  in  the  first  instance  in  2020)  and 
administrative  cases 
in  the  first 
instance in 2020). The overall quality of the justice 
system  is  good.  In  particular,  digital  tools  are 
broadly used in courts, including an electronic case 
management  system,  technology  for  distance 
communication, as well as secure remote work by 
judges and staff. As regards judicial independence, 
no systemic deficiencies have been reported. (49) 

Graph A11.1: Performance on evidence-based 
policy making indicators 

(1) RIA: Regulatory Impact Assessment  

Source: OECD (iREG indicators) 

ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building  the 
resilience needed for the sustainable development 
of the EU economy.  

strategic 

capacity, 

The public administration in Finland is one of 
the  most  effective  in  the  EU (47).  It  relies  on 
strong 
inter-ministerial 
coordination  and  high-quality  public  services.  E-
government  scores  above  the  EU  average  (84.5 
(2021) vs 70.9). The share of e-government users 
is also relatively high: 92% of the citizens interact 
with  the  administration  via 
internet.  Overall, 
Finland  performs  far  above  the  EU  average  in 
public  procurement  (composite  indicator  10  vs.  -
0.7  as  EU  average),  although 
for 
improvement  exists  with  regard  to  SME  bids. 
Conversely,  Finland  ranks  in  the  EU  top-third  for 
civil servants over 50 years old, thus pointing to a 
relatively aged civil service. The Public Governance 
Renewal  Strategy  aims  to  make  the  Finish 
leader  by  2030  by 
administration  a  world 
strengthening  equality  and  diversity,  fostering 
foresight,  anticipatory  innovation,  transparency, 
dialogue, and intergenerational responsibility.  

room 

in 

structural 

The Finnish recovery and resilience plan aims 
at 
the  public 
changes 
administration.  The  reorganisation  of  public 
level  will  be 
local  and  regional 
services  at 
complemented 
further 
for 
by  measures 
modernisation and digitalisation. The plan aims to 
ensure  effective  supervision  and  enforcement  of 
the  anti-money  laundering  framework,  through 
information 
improved  collection,  exchange  of 
between 
the 
prevention  and  detection of  money-laundering,  as 
well as data processing and analysis.  

the  competent  authorities  for 

has 

initiated 

reforms (48) 

Finland 
to 
strengthen  its  legislative  process  benefiting 
from  technology  and  digitalisation.  It  aims  to 
ensure 
impact 
assessments  and  ex  post  evaluations  where 
Finland  performs  below  the  EU-average  (1.5  for 
Finland vs. 1.7 for EU27, graph A11.1).  

systematic 

approach 

to 

(47)  Worldwide Governance Indicators, 2020.  

(48)  Action Plan for Better Regulation, available at 

https://api.hankeikkuna.fi/asiakirjat/6319b68b-eb2a-4cf2-
a88d-fdcf6b6773dd/baefc769-b84d-4035-a1b0-
d4adba3b0bd0/ASETTAMISPAATOS_20200506143749.pdf 

(49)  For more detailed analysis of the performance of the justice 
system in Finland, see the 2022 EU Justice Scoreboard 
(forthcoming) and the country chapter for Finland of the 
Commission’s 2022 Rule of Law Report (forthcoming). 

43 

00.20.40.60.811.21.41.61.8FIEU27averageFIEU27averageMethodologyRIAOversightStakeholder consulationSystematic adoptionEx-post evaluationTransparency 
 
                                                 
  
 
 
                                                 
 
Table A11.1: Public administration indicators for Finland 

(1) High values stand for good performance barring indicators # 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions. 

Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12). .           

44 

FI20172018201920202021EU27188.087.091.091.092.070.82nananana84.570.93nananana85.881.1437.547.537.556.1na56.8571.672.472.375.071.155.3643.844.342.541.045.218.670.21.42.411.012.621.8824.124.724.024.026.921.390.780.780.780.80na0.72101.21.21.31.3na1.5114.76.37.310.0na-0.7121.43nana1.50na1.7Index of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Educational attainment level, adult learning, gender parity and ageingOpen government and independent fiscal institutionsParticipation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3)E-government Public Financial Management Evidence-based policy makingIndicator (1)Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorShare of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) 2021 open data maturity indexScope Index of Fiscal InstitutionsShare of public administration employees with tertiary education, levels 5-8  (3) 
 
 
 
 
 
 
 
 
  
 
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Finland’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

Table A12.1: Social Scoreboard for Finland 

across  most  dimensions  of  the  Social 
Scoreboard.  The  employment  rate  (75.5%  in 
2020  and  76.8%  in  2021)  is  higher  than  the  EU 
average  (73.1%).  Finland  had  one  of  the  lowest 
gender  employment  gaps  in  the  EU  in  2021, 
although  the  gender  pay  gap  was  slightly  above 
average  (in  2020  16.7%  in  Finland,  13%  in  the 
EU). The share of young people (15-29) neither in 
employment  nor  in  education  or  training  (NEET) 
has  increased  in  2020  (to  10.3%  from  9.5%  in 
2019), and the increase is even higher (more than 
3pps)  among  non-EU  born  NEETs.  However,  the 
rate remains below the EU average of 13.2%, and 
has  recovered  in  2021  (9.3%).  The  reform  on 
“Strengthening  the  multidisciplinary  services  for 
young  people”  (Ohjaamo  services)  in  the  Finnish 
recovery  and  resilience  plan  (RRP)  will  specifically 
address the young people NEET by improving their 
employment  prospects.  The  employment  gap  for 
the  non-EU  born  is  improving,  while  for  non-EU 
born  women  it  remains  high  at  20  pps.  At  the 
same  time,  Finland  is  taking  steps  to  reduce 
employment  gaps  for  vulnerable  groups,  such  as 
third-country  nationals.  To  phase  out 
the 
“unemployment tunnel” for older workers, there is 
scope to promote tailored activation measures for 
this group. Finland engaged in a long-term reform 
in  this  respect,  in  the  context  of  its  RRP.  Phasing 
out  of  the  additional  days  of  unemployment 
allowance for older people should start in 2023. In 
parallel,  the  eligibility  for  disability  benefits  for 
this particular age group may need to be adjusted. 
The  European  Social  Fund  Plus  (ESF+)  investment 
will  help  the  unemployed,  inactive  and  those  who 
face difficulties to integrate to the labour market, 
and 
through 
continuous learning and flexible educational paths. 

support  acquisition  of 

skills 

Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: European Commission 

In spite of the impact of the COVID-19 crisis, 
the  Finnish  labour  market  performs  well 

Finland  performs  well  on  upskilling  and 
reskilling,  particularly on  digital  skills.  Based 
on  2021  data,  participation  in  learning  over  the 
past  four  weeks  stood  at  a  very  high  level,  at 
30.5%  (versus  10.8%  in  the  EU).  Yet,  older 
workers,  especially  men,  on  average  have  lower 
skills than younger workers and the labour market 
performance  of 
those  having  no  education, 
primary education or lower secondary education is 
relatively  poor.  In  2021,  79%  of  16-74  year-olds 
had  basic  or  above  basic  digital  skills,  one  of  the 
highest  rates  in  the  EU.  Having  reformed  the 
vocational  education  and  training  system,  Finland 
is  implementing  a  continuous  learning  reform  to 

45 

8.279.09.32.03.776.87.71.8109.315.914.551.419.94.139.65.4Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20) (2020)Individuals' level of digital skills (% of population 16-74) (2021)Dynamic labour markets and fair working conditionsSocial protection and inclusionAt risk of poverty or social exclusion for children (in %) (2020)Disability employment gap (ratio) (2020)Better than averageAt risk of poverty or social exclusion (in %) (2020)Employment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Best performersImpact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Housing cost overburden (% of population) (2020) 
 
 
 
  
 
 
 
for 

retraining 

opportunities 

increase 
and 
continuing  professional  development  throughout 
the  working 
life.  For  more  on  Finland’s 
performance  on  education  indicators,  see  Annex 
13.  

Poverty  risks  are  relatively  low  in  Finland, 
however,  self-reported  unmet  needs  for 
medical  care  remain  a  challenge.  This  mainly 
concerns  long  waiting  times  in  both  primary  and 
specialised  care,  particularly  for  people  who  are 
not  eligible  for  occupational  health  care.  Multiple 
and overlapping coverage schemes, combined with 
regional  variation 
in  waiting  times  and  co-
payments,  favour  people  in  work  and  wealthier 
households,  exacerbating  income-  and  age-based 
inequalities in access and financial protection. Due 
to  the  COVID-19  pandemic,  there  has  been  an 
increase of self-reported unmet needs for medical 
care from 4.7% in 2019 to 5.4% in 2020 (versus 
1.8 in the EU). The long waiting times for primary 
healthcare and specialised care concern especially 
those  not  covered  by  occupational  and  private 
healthcare  insurance  and  those  in  the  lowest 
income  quintile,  of  whom  7%  reported  unmet 
needs  in  2020,  compared  to  2.8 %  in  the  highest 
income  quintile.  The  recently  adopted  social  and 
healthcare  reform  and  the  planned  7-day  care 
guarantee  for  non-urgent  care  are  expected  to 
improve  access  to  care.  However,  the  successful 
implementation of the reform also depends on the 
availability of healthcare workers, which may pose 
a  key  challenge  in  the  next  decade  due  to 
population  ageing  and  growing  demand  for  social 
services. The ESF+ will invest in social innovations 
through supporting the well-being of children who 
receive  child  welfare  services  and  will  support 
persons  in  disadvantaged  position  by  providing 
food and basic commodities. 

46 

 
 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Finland’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  Strategic  Framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training  Monitor.  Finland’s  education  and 
training  system  struggles  with  quality  and  equity 
challenges  that  risk  worsening  as  a  result  of  the 
pandemic.  Performing  above  the  EU  average  in 
most  indicators,  Finland  lags  significantly  behind 
the EU average and the EU-level  targets in terms 
of  participation  in  early  childhood  education  of 
children  aged  over  3  until 
the  minimum 
compulsory school age. 

for 

The shortages of teachers in early childhood 
education  and  care  (ECEC)  challenges  the 
expected  increase  of  ECEC  participation.  The 
participation  rate  in  Finland  is  below  EU  average. 
Recently  adopted  reforms  in  ECEC  have  not  born 
the expected fruits. They include the restoration of 
children’s right to ECEC, the transfer of the sector 
to the Ministry  of Education and Culture, pilots  of 
free-of-charge  ECEC 
five-year-olds,  an 
extended  pilot  of  two  year  pre-primary  education 
and  a  new  national  curriculum.  Challenging 
working  conditions  and  relatively  low  salaries 
reduce  the  attractiveness  of  the  ECEC  teachers’ 
profession,  leading  to  staff  shortages.  The  2018 
reform  required  that  two  thirds  of  ECEC  staff  to 
have  a  Bachelor  degree,  which  may  also 
exacerbate  shortages.  The  announced  creation  of 
400 new study places for ECEC teachers is a step 
in  the  right  direction  but  might  not  be  enough  to 
remedy the situation. Meanwhile, the birth rate has 
increased  again  over  the  last  2  years,  after 
previous  decline  (from  1.35  to  1.46),  requiring 
further improvement to the provision of ECEC. 

in 

notably 

reading. 

Finland 
records  good  average  student 
performance  levels,  but  gaps  have  been 
Current 
widening, 
educational  challenges  in  education  include  the 
growing impact  of  students’  home  background  on 
educational 
increasing 
performance gaps between students and between 
schools. 
In  a  study  on  equality,  equity  and 
participation,  the  Finnish  Education  Evaluation 
Centre 
“(…)  basic 
education seems not to be able to close the gaps 

(FINEEC) (50)  reported  that 

achievement 

and 

(50)  https://karvi.fi/2021/12/09/matematiikan-osaamisen-taso-

on-laskenut-ja-eriytynyt/  

caused  by  students’  home  background”.  Another 
study (51)  also  reports  that  students’  attainment 
had  declined  and  differences  between  students 
increased. The decline in Finnish students’ reading 
skills  and  reading  habits  is  also  a  matter  of 
general concern. 

 The  shift  to  distance  learning  during  the 
COVID-19  pandemic  was  quite  effective  but 
upper-secondary students seem to have been 
badly  affected,  in  particular  their  mental 
health.  Upper-secondary  students  were  the  first 
to  switch  to  distance  learning  and  the  last  to  be 
released from it. FINEEC reports on data collected 
during the COVID-19 pandemic indicate that while 
most  students  considered  their  studies  to  have 
advanced  as  planned,  about  half  of  the  students 
feel  less  motivated  and  a  fifth  believe  that  their 
studies had not advanced as planned. A joint study 
from  Tampere  and  Helsinki  Universities (52) 
the  upper-secondary 
reported 
schools’  counselling  and  guidance  staff  felt  that 
personal  student  welfare  services  provided  by 
multi-professional  teams  had  weakened  during 
the pandemic. The teachers surveyed also reported 
of declining performance. 

that  40%  of 

Recent reforms in upper-secondary education 
pose  challenges  to  students  and  teachers. 
Apart from the extension of compulsory education 
to 18, the main novelty in secondary education is 
in  the  final 
the  reform  of  student  grading 
assessment (53).  The  extension  of  compulsory 
education has brought new requirements for upper 
secondary  regarding  support  for  learning  and 
monitoring  of  absenteeism  in  upper-secondary 
education.  The  Trade  Union  for  Education  (OAJ) 
has  criticized  the  fact  that  an  excessive  share  of 
teachers’ time is now taken up by work not directly 
impact 
related  to  teaching  and 
assessment  of  the  2018  reform  of  higher 
education  students’  selection,  has  been  launched 
by the Prime Minister’s Offices. 

learning.  An 

(51)  https://karvi.fi/wp-content/uploads/2021/04/KARVI_0821.pdf  

https://tuhat.helsinki.fi/ws/portalfiles/portal/14190372

0/Raportti_ensituloksista_elokuu_2020.pdf  

https://www.oph.fi/sites/default/files/documents/Peruso
petuksen%20p%C3%A4%C3%A4tt%C3%B6arvioinnin%20kr
iteerit%2031.12.2020_0.pdf 

(52)

(53)

47 

 
 
                                                 
                                                 
 
 
 
 
contact to either their fellow students or teachers. 
Demands  for  psycho-social  help  at  the  Student 
Health  Services  keep  growing  since  the  beginning 
of the pandemic. 

Finland  is  widening  its  higher  education 
offer,  notably  for  the  study  fields  most 
demanded.  The National Recovery and Resilience 
Plan contributes to widening their higher education 
offer  and  increasing  study  places,  especially  in 
areas  with 
labour  shortage.  The  Minister  of 
Science and Culture expressed the intention of re-
decentralising  higher  education  by  allowing  the 
establishment  of  smaller units  across  the  country 
and  allowing  existing  institutions  to  expand  into 
new 
several 
stakeholders are concerned that the reform might 
endanger  the  quality  of  Finnish  higher  education 
and  the  international  attractiveness  of  Finnish 
universities.   

science.  However, 

fields  of 

Universities managed the impact of the COVID-19 
crisis  relatively  well  with  regard  to  both  research 
and  education,  but  students’  wellbeing  was  badly 
affected. Higher education run largely in a remote 
mode since the onset  of the COVID-19 pandemic. 
At  the  end  of  the  spring  semester,  Bachelor 
degrees  will  be  awarded  to  students  who  have 
studied all or most of their courses without a live 

Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

(1) The 2018 EU average on PISA reading performance does not include ES; u = low reliability, : = not available; Data is not yet 
available for the remaining EU-level targets under the European Education Area strategic framework, covering underachievement 
in digital skills, exposure of vocational education training graduates to work based learning and participation of adults in learning. 
Source:  Eurostat (UOE, LFS); OECD (PISA). 

48 

96%79.8%91.9%88.8%201992.8%2019Reading< 15%11.1% 20.4%13.5%201822.5%2018Mathematics< 15%13.6% 22.2%15.0%201822.9%2018Science< 15%11.5% 21.1%12.9%201822.3%2018< 9 %9.2%11.0%8.2%9.7%Men10.6%12.5%9.3%11.4%Women7.9%9.4%7.1%7.9%Cities7.2%9.6%5.8% 8.7%Rural areas11.2%12.2%11.0%10.0%Native8.7%10.0%7.7%8.5%EU-born:u20.7%:u21.4%Non EU-born16.8%u23.4%15.7% 21.6%45%40.2%36.5%40.1%41.2%Men32.1%31.2%33.6%35.7%Women48.7%41.8%47.0%46.8%Cities47.7%46.2%47.8%51.4%Rural areas29.0%26.9%25.1%29.6%Native41.5%37.7%42.0%42.1%EU-born23.7%32.7%28.5%40.7%Non EU-born31.1%27.0%28.2%34.7%36.0% 38.3%38.1%201938.9%201920152021IndicatorTargetFinlandEU27FinlandEU27Participation in early childhood education (age 3+)Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)TotalBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34)TotalBy genderBy degree of urbanisationBy country of birthShare of school teachers (ISCED 1-3) who are 50 years or over 
 
  
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Finland. 

Life  expectancy  in  Finland  is  higher  than  in 
the  EU  as  a  whole.  Its  growth  trend  was 
disrupted in 2020 due to COVID-19, dropping 
by  little  over  a  month.  As  of  17  April  2022, 
Finland 
reported  0.64  cumulative  COVID-19 
deaths  per  1  000  inhabitants  and  172  confirmed 
cumulative COVID-19 cases per 1 000 inhabitants. 
Treatable mortality in Finland is low, pointing to an 
overall effective health system.  

Graph A14.1: Life expectancy at birth, years 

Unmet  medical  care  needs  are  high,  mainly 
due to waiting times (see also Annex 12). This 
is  linked  to  the  uneven  geographic  distribution  of 
resources  and  differences  in  coverage  schemes. 
The  recent  health  and  social  care  reform  and 
planned  reform  of  a  basic  care  guarantee  are 
expected  to  reduce  inequalities,  foster  better 
quality  and  availability  of  services  and  curb 
expenditure growth. However, the reform’s success 
will depend on staff availability, notably doctors to 
effectively ensure access to primary care. 

Through  its  Recovery  and  Resilience  Plan, 
Finland  plans  to  invest  EUR  409.8  million 
(19.7%  of  the  total  RRP  budget)  to  clear  the 
backlog  in  social  and  health  services  due  to 
COVID-19.  The  plan  will  also  foster  equal  access, 
and overhaul service delivery models and increase 
digitalisation of the health system. 

Source: Eurostat database. 

Health spending is slightly lower than the EU 
average, both per person and relative to GDP. 
Public  expenditure  on  health  accounts  for  over 
three quarters of total spending. It is projected to 
increase  by  0.8  percentage  points  (pp)  of  GDP  by 
2070 (compared to 0.9 pp for the EU). 

Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 
(reference scenario) 

Source: European Commission / EPC (2021)  

49 

80.980.98181.380.481.581.781.882.18220162017201820192020EUFinland6.66.10.90.802468EUFinland% of GDP20192070increase 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A14.1: Key health indicators 

Source: Data sources: Eurostat Database; except: * Eurostat Database and OECD, ** ECDC. Notes: Doctors' density data refer to 
practising doctors except for FI, EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising 
nurses (imputation from year 2014 for FI) except for IE, FR, PT, SK (professionally active) and EL (nurses working in hospitals 
only). More information: https://ec.europa.eu/health/state-health-eu/country-health-profiles_en.  

50 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)76.875.771.169.192.1 (2017)Cancer mortality per 100 000 population219.7216.9212.8214.5252.5 (2017)Current expenditure on health, % GDP 9.49.19.09.29.9 (2019)Public share of health expenditure, % of current health expenditure76.276.477.077.879.5 (2018)Spending on prevention, % of current health expenditure 4.04.04.13.92.8 (2018)Acute care beds per 100 000 population293.6279.5284.1260.7387.4 (2019)Doctors per 1 000 population *4.54.64.63.8 (2018)Nurses per 1 000 population *14.314.314.38.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **15.013.613.212.610.014.5 (2020) 
 
  
 
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development across all regions. 

Territorial  cohesion  remains  a  challenge, 
with  an  evident  regional  divide  between  the 
Greater  Helsinki  region  and  the  three 
mainland  Finland  NUTS2  regions,  linked  to 
disparities  in  labour  productivity.  In  terms  of 
GDP  per  capita, the  capital  region  performed  well 
above  the  EU  average  (144%)  in  2019  and  1.5 
times  higher  than  the  weakest  Pohjois-  ja  Itä-
Suomi region, where GDP per head corresponds to 
93%  of  the  EU  average.  Länsi-Suomi  also  score 
slightly below the EU average. 

Graph A15.1: GDP per capita (2010) and GDP 
growth (2010-2019) in Finland 

Source: European Commission 

Finland lost some ground in terms of GDP per 
capita  (PPS)  in  comparison  with  EU  average 
between  2009  (119%)  and  2016  (110%).  The 

country has experienced an overall reduction in the 
internal dispersion of GDP per capita, but this has 
happened  through  a  downward  convergence  on 
the part of the capital region, rather than through 
a catch-up on the part of the poorest regions. 

Graph A15.2: Labour productivity, EU-27, Finland´s 
NUTS 2 regions, 2000-2019 

(1) Unit: real GVA in MM EUR (2015 prices) by employment in 
thousands of persons. 
(2) The light red circle shows the capital city region. The blue 
circles show the remaining NUTS2 regions. 
(3) The green diamond shows the national average. The 
purple line shows the EU27 average. 

Source: European Commission 

In  2019,  national  labour  productivity  was 
above the EU average (at 132%), but has been 
decreasing  during  the  last  two  decades  (it  was 
139%  in  2010  and  142%  in  2000).  The  gap 
between  the  capital  region  and  the  remaining 
territories  increased  during  the  years  of  the 
recession,  2008-2010, 
revealing  a  greater 
strength of the socio-economic system of Helsinki-
Uusimaa  compared  to  the  more  peripheral  and 
less populated areas of the country. Then the gap 
decreased  to  pre-crisis  levels,  mainly  due  to  a 
worsening in the productivity of the capital region, 
especially  after  2011,  coinciding  with  the  apex  of 

Table A15.1: Finland, selected indicators at regional level 

Source: Eurostat, *EDGAR Database. 

51 

NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person employed)Real productivity growthGDP growthGDP per head growthPopulation growthUnemployment rateEmployment in high-technology sectorsCO2 emissions from fossil fuels  per headInnovation performanceEU27=100, 2019EU27=100, 2018Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019Total % change, 2011-2019% of active population, 2020% of total employment, 2020tCO2 equivalent, 2018RIS regional performance groupEuropean Union1001001.001.571.391.87.14.57.2Suomi / Finland1111050.491.120.782.87.86.6Länsi-Suomi98980.400.630.411.47.74.57.7Leader innovator -Helsinki-Uusimaa144117-0.051.370.4510.27.210.29.9Leader innovator +Etelä-Suomi991011.000.990.92-0.77.75.110.4Strong innovator +Pohjois- ja Itä-Suomi93970.951.341.35-1.58.85.19.3Strong innovator +Åland11685-0.51-0.14-0.796.73.8 
 
 
 
 
  
 
 
  
 
the crisis of the Nokia company. 

Graph A15.3: Territories most affected by climate 
transition in Finland 

capacity  of  the  non-capital  regions  to  intercept 
growth  trends  in  dynamic  and  advanced  sectors. 
For  instance,  the  share  of  population  aged  30-34 
with a tertiary degree is more than 12 percentage 
points  higher  in  the  capital  region  than  in  the 
remaining  regions  on  average  (53%  as  against 
40.8%,  EU-average  being  39.4%).  Employment  in 
high  technology  sectors,  as  well  as  total  R&D 
expenditure, are twice as high in Helsinki-Uusimaa 
as in the rest of the country. 

ja 

Itä-Suomi 

The  Greater  Helsinki  region  benefited  from 
lower  unemployment  and  risk  of  poverty 
rates  than  the  non-capital  regions  in  2020. 
The  unemployment  rate  at  7.2%  in  the  capital 
region  nevertheless  exceeded  the  EU  average  of 
7.1%.  Both  Länsi-Suomi  and  Etelä-Suomi  had  a 
little  higher  unemployment  rate  at  7.7%,  while  in 
Pohjois- 
to  8.8%. 
Demographic  dynamics  (see  table  15.1)  differ 
even  more  markedly  between  the  capital  region 
and  the  rest  of  the  mainland  Finland  regions. 
Looking  to  the  at  risk  of  poverty  rate  (AROP), 
Finland  performs  better  than  the  EU  average 
(17,1%  in  2020),  but  regional  differences  are 
significant  with  Pohjois-  and  Itä-Suomi  region 
(15,9%)  standing at almost  8,5 percentage points 
higher  than  the  Helsinki-Uusimaa  (7,4%)  and  3,4 
points higher than the Etelä-Suomi region (12.5%). 

it  rose  up 

The COVID-19 pandemic affected all regions, 
but  to  a  different  degree.  In  all  regions, 
mortality  between  week  9  of  2020  and  week  30 
of 2021 was higher than average mortality in the 
same  weeks  of  years  2015-2019.  Such  excess 
mortality varies considerably across regions, being 
above  9%  in  the  capital,  most  densely  populated 
region, that is more than twice as much as in the 
second most affected region Pohjois- ja Itä-Suomi 
(4%), and far more than in Länsi-Suomi and Åland 
(below 2%). The incidence of the pandemic is also 
reflected  in  the  annual  change  in  the  share  of 
persons  usually  working  from  home,  which 
increased  in  2020  by  more  than  18  percentage 
points  in  Helsinki-Uusimaa,  while  in  other  regions 
increased by 8 points. 

The places hit most by the pandemic are not 
those,  which  suffer  most  in  socio-economic 
terms. In 2020, the unemployment rate increased 
more in  Etelä-Suomi,  Länsi-Suomi  and  Pohjois-  ja 
(+2 
Itä-Suomi 
percentage  points  as  against  +1  in  the  latter) 
compared to what would be expected based on the 
2015-2019 trend. This points, again, to an overall 

the  capital 

region 

than 

in 

Source: European Commission 

Finland is one of the main producers and the 
main  consumer  of  peat  in  Europe.  Essential 
reduction in the use of peat for energy contribute 
notably  to  Finland´s  goal  to  achieve  carbon 
neutrality by 2035. The European Commission has 
proposed  the  North  and  East  Finland  NUTS3-
regions  as  the  most  affected  by  the  transition 
from  peat  to  carbon  neutral  energy  production  to 
be  supported  from  the  Just  Transition  Fund  (JTF). 
Finland  has  asked  for  an  extension  of  the 
territorial scope of JTF to include six more NUTS3-
regions  and  four  municipalities  from  Pirkanmaa 
NUTS3-region. The territorial  Just Transition Plans 
will  include  measures  to  address  the  social, 
employment  and  demographic  aspects  of  the 
transition. 

the  population  used 

The  ICT-take  up  is  high  in  Finland.  In  2020, 
for 
88%  of 
interaction with public authorities against 56% on 
average in the EU. The capital region has a share 
of 93%, while it is only slightly lower in the other 
regions,  with  the  lowest  being  in  Pohjois-  ja  Itä-
Suomi at 85%. 

Internet 

The  Finnish  regions  have  strong  innovation 
performance.  Helsinki-Uusimaa  and  Länsi-Suomi 
belong  to  category  of  ‘leader  innovators´,  while 
Etelä-Suomi and Pohjois- ja Itä-Suomi are ´strong 
innovators. There are factors pointing to a reduced 

52 

 
 
stronger  socio-economic  system  in  the  capital 
region,  more  able  to  cope  with  the  pandemic-
induced economic crisis. 

53 

 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

Nevertheless,  private  debt  (154.6%  the  GDP 
against  a  euro  area  average  of  96%)  and, 
household  debt in  particular,  are  high  and  remain 
a  key  structural  vulnerability  of  the  Finnish 
in  the  household 
economy.  This  vulnerability 
segment  is  somehow  mitigated  by  the 
long 
maturities  of  mortgages  (on  average  above  20 
years),  low  interest  burden  and  overall  strong 
payment  culture.  Domestic  banks  continue  to  be 
reliant on wholesale funding (for over 40% of total 
assets),  which  in  particular  in  crisis  times  may 
become an issue. Nevertheless, the loan to deposit 
ratio has been trending down over the past years, 
and  reached  108.4%,  down  from  close  to  137% 
before the pandemic. 

This  Annex  provides  an  overview  of  key 
developments  in  Finland’s  financial  sector. 
Finland  has  a  big  and  heavily  concentrated 
banking  system.  The  ratio  of  total  assets  in 
relation  to  the  country’s  economic  output  is  close 
to 300%, while the 5 top players own over 80% of 
total banking sector assets. The sector is efficient, 
competitive and invests heavily into IT systems to 
keep  up  with  the  newest  technologies.  Domestic 
banks have operations both in Finland and abroad. 
international  exposure  remains  however 
Their 
mostly  limited  to  the  Nordic  and  Baltic  regions. 
Overall,  the  sector  has  locally  some  20  thousand 
employees.  

Finnish  lenders  generated  an  8.7%  average 
return  on  equity 
in  2021.  Following  the 
pandemic,  the  profitability  of  the  banking  sector 
rapidly  recovered  to  reach  pre-pandemic  levels  in 
2021.  This  reflects  the  strengthening  of  the 
operating  environment  in  Finland  following  the 
uncertainty-driven  2020.  Finnish  banks  are  well-
capitalised  –  the  capital  adequacy  ratio  (CAR  at 
21.4%)  belongs  to  the  highest  in  the  EU  -  while 
the  share  of  problem  loans  is  low,  equivalent  to 
just 1.2% of the loan portfolio. 

Businesses  are  overall  in  good  financial 
health and households seized the opportunity 
of  low  interest  rates  to  invest  into  real 
estate  assets.  This  is  reflected  in  the  dynamic 
lending  growth  trend (4.5%  year-on-year  growth). 

Table A16.1: Financial soundness indicators 

(1) Last data: Q3 2021. 
Source: ECB, Eurostat, Refinitiv. 

54 

20172018201920202021Total assets of the banking sector (% of GDP)199.7269.2271.7295.9287.9Share (total assets) of the five largest bank (%)73.581.680.480.1-Share (total assets) of domestic credit institutions (%)146.089.288.086.584.5Financial soundness indicators:1- non-performing loans (% of total loans)1.21.51.41.51.2- capital adequacy ratio (%)23.420.921.321.221.4- return on equity (%)8.88.14.95.88.7NFC credit growth (year-on-year % change)4.28.47.24.53.9HH credit growth (year-on-year % change)2.72.22.93.34.0Cost-to-income ratio (%)155.755.460.755.650.0Loan-to-deposit ratio (%)194.8133.2136.7127.7108.4Central bank liquidity as % of liabilities2.51.80.93.95.5Private sector debt (% of GDP)147.7145.3146.1154.6-Long-term interest rate spread versus Bund (basis points)23.126.631.929.027.8Market funding ratio (%)64.463.862.762.5-Green bond issuance (bn EUR)1.40.63.43.94.5 
 
 
 
 
 
  
 
same wage level.  On the other hand, in 2020 the 
tax-benefit  system  helped  reduce  inequality  as 
measured  by  the  GINI  coefficient,  by  more  than 
the EU average. 

is  doing  well 

in  terms  of  tax 
Finland 
administration.  Outstanding  tax  arrears  have 
declined  slightly  by  0.2  pp.  to  5.0%  of  total 
revenue.  This  is  significantly  below  the  EU27 
average of 31.8%, though that average is inflated 
by very large values in a few Member States. The 
VAT gap (an indicator of the effectiveness of VAT 
enforcement  and  compliance)  has  dropped  by  1.1 
pp to 2.9%, well below the EU-wide gap of 10.5%. 
Finally,  the  average  forward-looking  effective 
corporate  income  tax  rates  were  close  to  the  EU 
average in 2020. 

ANNEX 17: TAXATION 
ANNEX 17: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  Finland’s  tax  system.  It  includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax  that  Finland  derives  most  revenue  from,  the 
tax  burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance  and  on  the  risks  of  aggressive  tax 
planning activity.  

information  on 

address 

Finland’s tax revenues in relation to GDP are 
relatively  high,  and  the  tax  system  relies 
primarily  on  labour  and  consumption  taxes. 
Finland  has  a  relatively  high  taxation  level  which 
limits the room for further tax increases necessary 
to 
government 
expenditure.  In  2020,  Finnish  labour  tax  revenues 
as  %  of  GDP  were  around  the  EU  average.  By 
contrast,  consumption  and  environmental  tax 
revenues  as  %  of  GDP  were  above  the  EU 
taxes  on  property  are 
aggregate.  Recurrent 
relatively low compared to the EU average. 

growing 

faster 

Finland’s labour tax burden is around the EU 
average for different wage levels. The labour 
tax wedge for Finland in 2021 was around the EU 
average  at  various  wage  levels,  i.e.  for  single 
persons at the average wage (100%) as well as at 
50%, 67%, and slightly higher for those at 167% 
of  the  average  wage.  Second  earners  at  a  wage 
level of 67% of the average wage, whose spouse 
earns  the  average  wage,  face  a  lower  tax  wedge 
compared  to  the  EU  average,  and  they  are  not 
taxed  more  heavily  than  single  persons  at  the 

Table A17.1: Indicators on taxation 

(1) Forward-looking Effective Tax Rate (OECD). 
(*) EU-27 simple average, as no aggregated EU-27 value. 
Source: European Commission, Eurostat, OECD. 

55 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)40.642.442.341.942.837.940.139.940.1Labour taxes (as % of GDP)21.121.021.020.920.020.720.721.5Consumption taxes (as % of GDP)12.914.214.014.110.811.111.110.8Capital taxes (as % of GDP)6.57.27.27.27.18.28.17.9Total property taxes (as % of GDP)1.11.51.61.61.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.60.80.80.81.11.21.21.2Environmental taxes as % of GDP2.72.92.82.72.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)33.532.631.830.432.033.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)42.342.642.241.442.741.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)20.020.019.819.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)11.712.311.511.58.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)5.25.031.931.8VAT Gap (% of VTTL)4.02.911.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)8.77.56.610.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)0.01.047.846.236.7Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity RiskFinlandEU-27 
 
 
 
  
 
Graph A17.1: Indicators on tax wedge 

(1) The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: 
sum of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer).  
(2) The second earner average tax wedge measures how much extra personal income tax (PIT) plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en.  
(*) EU-27 simple average, as no aggregated EU-27 value. 
Source: European Commission 

56 

32.036.242.749.136.2At 50% of Average Wage (Singleperson)At 67% of Average Wage (Singleperson)At 100% of Average Wage (Singleperson)At 167% of Average Wage (Singleperson)For second earner at 67% of AverageWage (Two earner couple, 1st earner100% of AW) (1)Tax wedge 2021 (%)FIEU-27 (*) 
  
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A18.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares.         
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
Source:  Eurostat and ECB as of 2022-05-02, where available; European Commission for forecast figures (Spring forecast 2022). 

57 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)4.0-0.71.11.2-2.33.51.61.7Potential growth (y-o-y)2.50.50.71.41.11.21.51.4Private consumption (y-o-y)3.61.01.10.7-4.13.12.11.7Public consumption (y-o-y)1.50.70.92.00.43.21.6-0.8Gross fixed capital formation (y-o-y)4.8-1.31.8-1.5-0.31.22.13.0Exports of goods and services (y-o-y)8.6-1.62.16.7-7.54.72.14.3Imports of goods and services (y-o-y) 8.30.52.82.4-6.65.32.93.7Contribution to GDP growth:Domestic demand (y-o-y)3.20.41.20.5-2.12.71.91.4Inventories (y-o-y)0.3-0.20.2-0.90.10.80.00.0Net exports (y-o-y)0.6-0.8-0.31.6-0.3-0.2-0.30.3Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.5-0.10.10.40.10.20.40.2Capital accumulation (y-o-y)0.70.50.40.60.50.50.60.6Total factor productivity (y-o-y)1.30.00.20.40.50.50.50.6Output gap1.2-1.1-1.50.3-3.1-1.0-0.8-0.5Unemployment rate8.17.98.66.87.77.77.26.9GDP deflator (y-o-y)1.32.11.41.51.62.73.82.3Harmonised index of consumer prices (HICP, y-o-y)0.92.70.91.10.42.14.52.3Nominal compensation per employee (y-o-y)3.32.90.81.20.44.43.33.0Labour productivity (real, hours worked, y-o-y)2.7-0.50.8-0.10.22.10.71.3Unit labour costs (ULC, whole economy, y-o-y)0.93.90.21.90.83.02.71.7Real unit labour costs (y-o-y)-0.41.7-1.20.4-0.70.3-1.1-0.5Real effective exchange rate (ULC, y-o-y)0.01.2-0.3-1.6....Real effective exchange rate (HICP, y-o-y)-1.4-0.80.8-1.51.6-0.7..Net savings rate of households (net saving as percentage of net disposable income)0.31.5-0.40.44.71.0..Private credit flow, consolidated (% of GDP)10.17.44.26.56.4...Private sector debt, consolidated (% of GDP)114.9141.9148.2146.1153.3...of which household debt, consolidated (% of GDP)45.857.563.565.869.1...of which non-financial corporate debt, consolidated (% of GDP)69.184.584.780.384.2...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)0.60.91.21.21.3...Corporations, net lending (+) or net borrowing (-) (% of GDP)4.13.63.43.26.35.86.56.8Corporations, gross operating surplus (% of GDP)27.724.423.624.625.226.126.326.4Households, net lending (+) or net borrowing (-) (% of GDP)-3.2-2.2-2.9-2.50.0-2.4-4.0-4.6Deflated house price index (y-o-y)6.00.2-0.40.01.3...Residential investment (% of GDP)6.46.26.57.07.17.2..Current account balance (% of GDP), balance of payments4.20.5-1.5-0.30.70.70.20.4Trade balance (% of GDP), balance of payments4.80.9-0.90.20.20.2..Terms of trade of goods and services (y-o-y)-2.2-1.10.8-0.51.20.60.0-0.1Capital account balance (% of GDP)0.10.10.10.10.10.1..Net international investment position (% of GDP)-24.27.51.04.0-4.4-4.7..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)19.54.14.26.95.616.9..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)178.4225.6226.7236.3240.4215.4..Export performance vs. advanced countries (% change over 5 years)3.9-11.5-17.61.512.8...Export market share, goods and services (y-o-y)-1.1-7.5-0.72.81.4-4.8-2.50.1Net FDI flows (% of GDP)-1.41.8-0.8-3.22.7-1.8..General government balance (% of GDP)3.5-0.8-1.9-0.9-5.5-2.6-2.2-1.7Structural budget balance (% of GDP)..-1.0-1.2-3.7-2.0-1.7-1.4General government gross debt (% of GDP)38.644.660.659.669.065.865.966.6forecast 
 
 
 
 
 
 
  
 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks for Finland over the short, medium and 
long term. It follows the same multi-dimensional 
approach as the 2021 Fiscal Sustainability Report, 
updated  on  the  basis  of  the  Commission  2022 
spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU. 

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 
‘adverse interest-growth rate’ scenario assumes a 
in  the 
less  favourable  snowball  effect  than 

baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022. 

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 
projected 
public 
expenditure  such  as  pensions,  health  care  and 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

in  ageing-related 

the  debt 

change 

Table A19.1: Heat map of fiscal sustainability risks for Finland 

Source:  European Commission  

58 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)59.669.065.865.966.666.165.464.764.363.963.763.362.962.5Change in debt-0.29.4-3.20.10.7-0.5-0.7-0.7-0.4-0.4-0.3-0.4-0.4-0.4of whichPrimary deficit0.14.82.11.71.21.21.21.11.21.31.31.41.41.4Snowball effect-0.81.1-3.6-2.9-2.0-1.7-1.8-1.8-1.6-1.6-1.6-1.8-1.8-1.7Stock-flow adjustment0.53.4-1.71.31.50.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)7.618.87.29.69.68.58.68.68.89.19.39.59.69.6S1S2Overall index (pps. of GDP)0.03.1of whichInitial budgetary position-0.91.2Debt requirement0.5Ageing costs0.42.0of whichPensions-0.10.4Health care0.30.7Long-term care0.61.7Others-0.4-0.8                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators4550556065707580852019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p90455565758520192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
  
 
Table A19.2: Heat map of fiscal sustainability risks for Finland 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty. 
Source:  European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
classification 
fiscal 
(Table A19.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA. 

the  medium  risks  reflect  the  current  deficit, 
moderate debt level and the projected increase in 
public expenditure on long-term care. 

Long-term  risks  to  fiscal  sustainability  are 
medium.  Over  the  long  term,  the  sustainability 
gap  indicator  S2  (at  3.1  pps.  of  GDP)  points  to 
medium  risks,  while  the  DSA  points  to  low  risks, 
leading  to  the  overall  medium  risk  assessment. 
The  S2  indicator  suggests  that,  to  stabilise  debt 
over the long term, it will be necessary to address 
budgetary pressures on long-term care and health 
care stemming from population ageing (Table 2).   

short-term 

fiscal 
Overall, 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table A19.2). 

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  medium.  On  the  one  hand,  the  debt 
sustainability analysis (DSA) points to low risks. In 
the  baseline,  government  debt  is  projected  to 
decline steadily from 66% of GDP in 2022 to 62% 
of GDP in 2032 (Table 1). This debt path is rather 
robust to possible shocks to fiscal, macroeconomic 
and 
illustrated  by 
variables,  as 
alternative  scenarios  and  stochastic  simulations, 
all  pointing  to  low  risks  (Table  A19.1  and  A19.2). 
On the other hand, the sustainability gap indicator 
S1  signals  medium  risks,  as  a  (very)  small  fiscal 
adjustment  would  be  needed  to  reduce  debt  to 
60%  of  GDP  in  15  years’  time  (Table 2).  Overall, 

financial 

59 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWLOWLOWLOWLOWDebt level (2032), % GDP6252656763Debt peak year20232023202320232023Fiscal consolidation space92%67%93%92%92%Probability of debt ratio exceeding in 2026 its 2021 level44%Difference between 90th and 10th percentiles (pps. GDP)24Short termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)OverallMEDIUMMEDIUMDeterministic scenariosStochastic projectionsLOWMEDIUMMEDIUMLOW