COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Finland
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Finland, budget policy, economic policy, economic recovery, economic reform, employment policy, professional qualifications, social change, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  SWD(2024) 626 final  COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Finland {COM(2024) 626 final} - {SWD(2024) 600 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

The Finnish economy is facing 
multiple headwinds 

September  2024,  is  set  to  put  some  upward 
pressure on prices mostly in 2025. 

Graph 1.1: Real GDP growth and contributions 

investment,  mostly 

Finland slipped into a recession, with real 
GDP  contracting  by  1%  in  2023 (1).  This 
was in particular due to higher borrowing costs 
and  the  impact  of  high  inflation  on  domestic 
demand.  Weak  consumer  sentiment  weighed 
on  private  consumption,  while  higher  interest 
rates  and  a  more  uncertain  demand  outlook 
in  residential 
stymied 
construction  (see  Graph  1.1).  Export  growth 
also  entered  negative  territory  as  foreign 
demand  for  Finnish  goods  and  services 
decreased. The start of 2024 has been marked 
by  weak  business  and  consumer  sentiment, 
which  does  not  point  to  a  rapid  recovery. 
However, private consumption is set to benefit 
from  several  tailwinds  in  2024,  including 
receding  inflation,  tax  cuts  supporting  real 
incomes,  and  an  anticipated 
disposable 
financing  conditions.  An 
improvement 
acceleration  in  export  growth  and  increased 
investment are expected to support a return to 
growth  for  the  Finnish  economy  in  2025  (see 
Annex 20). 

in 

Inflationary pressures are abating on the 
back of falling energy prices. In 2023, HICP 
inflation  dropped  to  4.3%,  after  averaging 
7.2%  in  2022.  Declining  energy  prices  were 
the  main  driver  of  disinflation,  which  was 
further  helped  by  a  greater  reliance  on 
renewables  and  nuclear  power  and  contained 
wage  growth.  In  2024,  modest  economic 
growth and falling energy prices are set to pull 
the HICP rate below 2%. However, an increase 
in  the  standard  VAT  rate  scheduled  for 

Source: European Commission 

led  to  a  significant  growth 

The 
fiscal  situation  has  worsened, 
resulting  in  a  wider  budget  deficit  and 
higher  debt.  The  budget  deficit  increased 
from  0.4%  of  GDP  in  2022  to  2.7%  in  2023. 
The  slowing  economy  led  to  a  fall  in  tax 
revenues,  while  wage  and  overall  price 
increases 
in 
government  spending.  Moreover,  wellbeing 
services counties (2), established with a view to 
generating  efficiency  gains,  have  so  far 
exceeded  their  spending  targets.  In  addition, 
higher  interest  rates  increased  the  cost  of 
government  financing.  The  cut 
labour 
taxation,  in  force  since  2024,  is  set  to  add 
additional  pressure  on  fiscal  revenues  this 
year. Given that growth in current expenditure 
is  expected  to  remain  strong,  the  general 
government  deficit  is  projected  to  exceed  3% 
of  GDP  in  2024.  However,  in  April  2024,  the 

in 

(1)  The cut-off date for the data used to prepare the 27 

Country Reports was 15 May 2024. 

(2)  In the beginning of 2023, an administrative reform 

transferred responsibility for the organisation of social, 
health and rescue services from municipalities to 21 
newly established ‘wellbeing services counties’ and the 
City of Helsinki. 

2 

-4-3-2-10123451617181920212223Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)pps.  
 
 
     
 
presented 

consolidation 
a 
government 
package  consisting  of  tax 
increases  and 
spending  cuts  amounting  to  almost  1%  of 
GDP. It is planned to be implemented mostly in 
2025  and  expected  to  keep  the  deficit  ratio 
below 3%. Consequently, due to larger deficit, 
the  general  government debt  level  is  forecast 
to  increase  more  rapidly  in  2024  and  stand 
slightly above 82% of GDP in 2025.  

Pillar of Social Rights (Annex 14), including on 
the gender employment gap. However, a large 
share  of  women  in  Finland  work  in  sectors 
with low earnings potential, such as education, 
healthcare  and  social  work  (38%  vs  an  EU 
average  of  30% (5)).  This  may  partly  explain 
the persistent gender pay gap, which in Finland 
remains well above the EU average (15.5% vs 
12.7% in 2022) (6). 

Employment has proven resilient 
but labour-market challenges 
remain 

Population ageing is already a 
heavy burden for the economy 

The  demographic  transition  is  weighing 
on the Finnish economy. In 2013-2023, the 
share of the population aged 65+ rose by 4.5 
percentage  points  to  23.3%,  the  fifth  fastest 
increase  in  the  EU (7).  Without  net  migration, 
the  population  would  have  been  decreasing 
since  2015 (8).  By  2022,  Finland’s  old-age 
dependency ratio (the number of people aged 
65+ as a share of people aged 20-64) reached 
in  the  EU (9).  These 
41.2%,  the  highest 
demographic  trends  vary  markedly  across 
regions, with the capital region benefiting from 
population  growth,  while  some  regions  face 
depopulation  risks  (Annex  17).  In  the  past 
decade,  reforms  and  a  strong  jobs  market 
in  the 
have  supported  continued  growth 
employment rate of the 55-64 age group (10). 
Considering 
shrinking  working-age 
population, securing a skilled labour force will 
be a key priority (11).  

the 

(5)  Source: Eurostat (online data code: lfsa_egan2) 

(6)  Source: Eurostat (online data code: sdg_05_20) 

(7)  Source: Eurostat (online data code: demo_pjanind) 

(8)  Economic Policy Council, Economic Policy Council Report 

2023, Helsinki, January 2024. 

(9)  European Commission, Ageing Report 2024. 

(10)  By 2022, the rate had reached 71.5%, which is well 
above the EU average (62.3%), but below Finland’s 
Nordic peers (Source: European Commission, Ageing 
Report 2024). 

(11)  A third of staff in the wellbeing services counties are 

expected to retire in the next 10 years, including 33% of 
practical nurses and 25% of nurses, which are 
professions in high demand in an ageing society and 

the  skills 

in  2023.  However, 

Employment  has  proven  resilient  against 
a  backdrop  of  weakening  economic 
activity  in  2023.  The  employment  rate 
reached  78.2% 
the 
unemployment  rate  increased  to  7.2%  that 
year,  compared  with  an  EU  average  of  6%.  A 
large  part  of  the  unemployment  figure  is 
estimated to be structural, reflecting in part a 
persistent mismatch between the current skills 
of  workers  and 
required  by 
employers.  Matching  the  supply  of  workers 
available for work and the skills demanded by 
employers 
considerable 
therefore  poses 
challenges (3).  In  2024,  Finland  discontinued 
the  adult  education  allowance,  the  impact  of 
which  on  reskilling  and  upskilling  workers  for 
the  changing  job  market  remains  to  be  seen. 
Finland  has  adopted  labour-market  measures 
that  aim  to  overcome the  ‘welfare  trap’ (4)  by 
increasing  the  flexibility  of  the  jobs  market 
and  encouraging  full-time  employment,  with 
the aim of increasing employment by 100 000 
people by 2027.  

Women  continue  to  face  a  persistent 
earnings disadvantage. Finland continues to 
perform  well  across  most  dimensions  of  the 
Social Scoreboard accompanying the European 

(3)  TEM-analyysi: Työvoiman saatavuus ja kohtaanto 

1/2024.   

(4)  A welfare trap occurs when switching from welfare to 

paid work is not rational for an individual if the 
withdrawal of transfer payments implies a very high 
marginal tax rate, sometimes of up to 100%. 

3 

 
 
 
 
Box 1: 

Finland’s competitiveness in brief 

Finland’s  competitiveness  relies  on  a  good  business  environment,  access  to  private 
capital, and the supply of energy from renewables (see also Annex 12). Furthermore, the Finnish 
RRP  comprehensively  tackles  several  challenges  related  to  energy,  including  the  issuing  of 
permits.  

However, competitiveness challenges remain:  

• 

To  increase  productivity,  Finland  should  seek  greater  trade  integration, 
particularly in the single market, as Finnish exports account for a smaller share of GDP 
than in other small, open economies. 

•  More  investment  is  needed  in  research  and  innovation,  as  spending  on  R&D  is 

now lower than a decade ago and is not translating into major productivity gains. 

•  Shortages  of  skilled  labour,  in  part  due  to  lower  attainment  of  tertiary 

education, hamper productivity growth.  

Higher productivity is key to 
sustaining competitiveness 

cost 

wage 
competitiveness. 

policies 
Productivity-aligned 
support 
The 
coordinated  two-tier  wage-bargaining  system 
tends  to  contain  wage  growth,  and  therefore 
growth  in  nominal  unit  labour  costs.  There 
were  also  notable  efforts  to  align  wage  and 
productivity  growth  in  the  previous  decade 
under  the  Competitiveness  Pact  of  2016.  The 
HICP-based  real  effective  exchange  rate  has 
depreciated 
to 
sustained trade competitiveness (12). Moreover, 
Finland’s  long-term  competitiveness  benefits 
from  a  good  overall  business  environment, 
including  low  regulatory  barriers,  good  access 
to  finance  and  efforts  to  speed  up  the  green 
transition (see also Box 1). 

recent  years,  pointing 

in 

Weak  productivity  growth  reduces  the 
growth  potential  of 
the  economy. 
Structural  shifts  within  the  economy  do  not 
favour  strong  productivity  growth.  In  recent 
decades, the Finnish economy has been hit by 
two  simultaneous  demand-side  shocks:  the 
crisis in the electronics sector and a collapse in 

marked by shortages. (Source: Keva pension forecast 
2023). 

(12)  European Commission. Alert Mechanism Report 2024. 

trade  due  to  the  great  financial  crisis (13). 
These  shocks  have  been  amplified  through 
international  value  chains, 
domestic  and 
resulting  in  a  loss  of  competitiveness.  Labour 
productivity  has  been  on  a  declining  trend 
following  a  shift  in  the  economy  towards  the 
services  sector  and  a  reduction  in  the  size  of 
the  manufacturing  sector  (in  particular  a 
reduction 
of 
manufacturing with higher productivity growth 
(see  Annex  12)).  The  ICT  sector  supports 
growth  in  labour  productivity,  although  it 
continues to struggle with shortages of highly 
skilled labour. 

sub-sectors 

those 

in 

The  growth  in  total  factor  productivity 
(TFP) is below the EU average. Spending on 
R&D, one of the key drivers of TFP, has not yet 
recovered to the levels seen before the 2008-
2009  financial  crisis.  However,  R&D  spending 
has  been  on  an  upward  trend  since  2017,  as 
the government aims to increase spending on 
R&D  to  4%  of  GDP  by  increasing  public 
spending on R&D (up to 1.2% of GDP by 2030) 
thereby 
funds.  A 
coordination of joint efforts and the supply of 
skilled  labour  are  essential  to  achieve  this 
objective (14) (15). 
although 

Furthermore, 

in  private 

crowding 

(13)  OECD, The slowdown in Finnish productivity growth, 

OECD Science, Technology and Industry Policy Papers, 
No. 139, February 2023. 

(14)  Finnish Productivity Board (2023). Skilled people create 
productivity: Skills shortage threatens to slow down the 
effectiveness of R&D investments and productivity 
growth. 

4 

 
 
 
 
climate 

longer-term 

industry,  transport,  and  buildings. 
energy, 
These  efforts  all  seek  to  reduce  the  country’s 
emissions  in  order  to  meet  Finland’s  2030, 
2035  and 
targets. 
However,  increased  economic  uncertainty  and 
higher interest rates have led many projects to 
be  postponed,  in  particular  in  the  energy  and 
industry sectors, calling into question Finland’s 
prospects  of  making  further  progress  on 
decarbonisation.  Finland  remains  one  of  the 
most  energy-intensive  economies  in  the  EU, 
due in part to cold weather conditions and the 
long distances between its population centres.  

Finland  has  the  second-highest  share  of 
renewables  in  its  energy  mix  in  the  EU. 
Additional  renewables  capacity  is  expected  to 
be  added  in  the  coming  years,  mainly  in 
offshore  wind  power  and  other  renewable 
energy  sources,  including  solar  (see  Annex  7). 
Finland  has  embarked  on  an  ambitious  and 
far-reaching  reform  of  permitting  procedures 
to facilitate investment in renewables.  

Finland is acknowledged to be one of Europe’s 
innovation leaders (see Annex 11), the number 
of  patent  applications  filed  from  the  country 
seem  to  be  in  decline  and  does  not  translate 
into a competitive advantage (16) (17).  

Risks related to private debt and 
financial stability are contained 

of 

and 

and 

households 

profitable, 

is  well 
The  Finnish  banking  sector 
capitalised 
and 
households  are  expected  to  cope  well 
with  higher  financing  costs.  Despite  the 
the 
indebtedness 
prevalence  of  loans  at  variable  interest  rates, 
local  households  managed  to  meet  their 
financial  obligations  in  recent  years.  At  the 
same  time,  the  issuance  of  new  mortgage 
loans  declined,  and  house  prices  started 
falling.  This  drop  is  expected  to  be  moderate, 
as the decline in residential construction is set 
to limit supply in the near term, while market 
expectations  point  to  a  potential  easing  in 
financing conditions later in 2024. By contrast, 
commercial real estate is facing challenges, in 
part  due  to  structurally  lower  demand  for 
office  space  after  the  COVID-19  pandemic 
(see also Annex 18). 

Finland is progressing with its 
ambitious green agenda 

Finland’s  target  for  carbon-neutrality  by 
2035  is  the  most  ambitious  climate 
target  in  the  EU.  Finland  has  legislated  for 
both  the  2035  carbon-neutrality  target  and 
the  phase-out  of  coal  by  2029.  Efforts  are 
the  main  sectors 
ongoing 
contributing  to  overall  emissions,  including 

in  each  of 

(15)  Business Finland. Foreign Direct Investment (FDI) 

Barometer 2023. 

(16)  The World Bank. The patent applications. 

(17)  Finnish Productivity Board (2022). Wages and 

Competitiveness Depend on Productivity. How Can We 
Foster Productivity Growth? 

5 

 
 
Box 2: 

UN Sustainable Development Goals (SDGs) 

Finland  is  performing  well  on  most  SDGs  related  to  environmental  sustainability  and  on  all 
indicators related to fairness. It is, however, moving away from the targets associated with SDG 
1 (No poverty), SDG 4 (Quality education), SDG 11 (Sustainable cities and communities) and SDG 
15 (Life on land), despite still being above EU average for all of these SDGs.  

Regarding the SDGs related to productivity and macroeconomic stability, Finland’s score is above 
the EU average, albeit showing weakening trends, and Finland faces challenges compared with 
its Nordic peers.  

Overall, Finland performs better than the EU average in 13 out of 17 SDGs. The best performing 
indicator is SDG 6 (Clean water and sanitation), with substantial and noteworthy progress in the 
last five years  made on SDG 5 (gender equality). By contrast, the  gap with the EU average on 
SDG  12  (Responsible  consumption  and  production)  and  SDG  14  (Life  below  water)  remains 
sizeable. 

6 

 
 
IMPLEMENTATION OF KEY REFORMS AND 
INVESTMENTS USING EU INSTRUMENTS 

Funding from the Recovery and Resilience 
Facility (RRF) and cohesion-policy funding 
is  mutually  reinforcing  Finland's  efforts 
to  boost  its  competitiveness  and  foster 
sustainable  growth.  In  addition  to  the 
EUR 1.9  billion  of  RRF  funding  described  in 
Annex 3, cohesion policy provides Finland with 
EUR 1.9 billion  for  the  2021-2027  period. 
Support from these two instruments combined 
represents  around  1.40%  of  the  country’s 
2023  GDP,  compared  to  the  EU  average  of 
5.38% of GDP (see Annex 4).  

for 

labour  market  policies, 

Under  its  recovery  and  resilience  plan 
(RRP),  Finland  has  launched  important 
policy  measures  that  are  expected  to 
improve the country’s competitiveness. In 
particular, the RRP contains major reforms for 
increasing 
active 
and 
continuous 
services 
developing  skills  and  making  permitting 
procedures for renewable energy more agile to 
accelerate 
the 
economy.  These  reforms  are  supported  by 
substantial investments in Finland’s green and 
digital  transition,  in  increasing  the  number  of 
places  in  higher  education  and  increasing 
expenditure  on  research,  development  and 
innovation (RDI).  

the  de-carbonisation  of 

learning 

one 

payment 

The implementation of Finland’s Recovery 
and Resilience Plan is delayed. Finland has 
submitted 
request, 
corresponding  to  20  milestones  in  the  plan 
and  resulting  in  an  overall  disbursement  of 
EUR 202 million on 1 March 2024 (see Annex 
3).  However,  the  first  payment  request  only 
concerned  milestones  achieved  until  2021, 
highlighting  the  need  to  catch  up  with  the 
agreed payment schedule. 

Cohesion-policy  funding  helps 
tackle 
Finland’s  growth  and  competitiveness 
challenges  and  support  the  country’s 
territorial  and  social  cohesion.    Under  the 

7 

research, 

2014-2020  cohesion  programming  period, 
support  focused  on 
innovation, 
employment,  social  inclusion  and  education. 
The funds supported, for example, the creation 
of 12 610 new jobs and the setting up of 584 
new  companies  in  Finland.    For  the  current 
2021-2027  programming  period,  cohesion 
policy  will 
Finland’s 
competitiveness, sustainable growth and social 
cohesion, 
living  and  working 
conditions  through  programmes  in  the  areas 
of  RDI,  digitalisation  and  SMEs’  growth, 
accelerating  the  green  transition,  as  well  as 
training,  upskilling  and  reskilling  of  the  labour 
force.  

improving 

support 

further 

The RRP helps Finland’s green 
transition 

Finland’s  RRP  is  helping  the  country 
towards achieving its ambitious target to 
be  carbon  neutral  by  2035. 
Including 
REPowerEU,  more  than  half  of  the  plan’s 
funding  contributes  to  investments  in  the 
green transition. Measures included in the plan 
aim  to  reduce  carbon  emissions  in  energy, 
industrial  production,  transport  and  buildings, 
all  while  supporting  RDI  for 
the  green 
transition.  Measures  also include  boosting the 
generation of renewable energy, decarbonising 
industry,  reducing  emissions  from  buildings, 
and  promoting 
low-  and  zero-emission 
vehicles in the transport sector. 

permitting 

The  REPowerEU  chapter  includes  a  major 
to  overhaul  Finland’s 
new 
reform 
system, 
environmental 
streamlining 
and 
centralising  them  under  a  single  national 
authority.  Moreover, 
includes 
additional investments in clean energy, in R&D 
for the green transition, and for wind power in 
Åland. 

the  chapter 

processes 

existing 

 
 
(ERDF)  focuses  on 

Other  EU  funds  add  significant  support 
for  the  green  transition  in  Finland.  For 
example,  the  European  Regional  Development 
Fund 
innovation  and 
accelerating  the  green  transition  in  Finland, 
while 
the  Just  Transition  Fund  provides 
support  to  regional  economies  that  need  to 
phase  out 
economic 
activities.  Synergies  between  the  RRP  and 
cohesion-policy  funding  have  been  identified 
with  similar  objectives  but  without  overlap  in 
individual recipients of funds. 

fuel-based 

fossil 

Increasing competitiveness 
through investments in research 
and innovation 

in 

Promoting  the  digital  transition  is  a 
cross-cutting theme across Finland’s RRP. 
Since 2021, Business Finland and the Research 
Council  of  Finland  have  launched  calls  to 
allocate  RRF  funding 
to  companies  and 
research infrastructures. The calls will support 
projects  that  promote  investments  in  RDI 
infrastructure  and  the  green  transition  for 
sustainable  growth  and  digitalisation.  Specific 
measures 
the  RRP  focus  on  digital 
infrastructure,  accelerating  the  digital  and 
data economy, and digital security (see Annex 
13).  The  objective  of  Finland’s  Digirail  project 
is  the  digitalisation  of  the  railway  system, 
making  it  compatible  with  the  Pan-European 
Rail  Traffic  Management  System  (ERTMS). 
Furthermore,  by  the  end  of  2023,  Finland’s 
RRP  had  supported  the  construction  of  fibre 
optic  networks 
regions  and  32 
in  11 
municipalities, contributing to the EU objective 
of  providing  high  speed  internet  connections 
for  everyone  by  2030.  This 
investment 
complements  the  funding  for  the  village 
networks from the European Agricultural Fund 
for Rural Development (EAFRD) in 2023-2027. 
Finland’s real-time economy (RTE) programme 
is  building  a  national  digital  environment  for 
businesses,  allowing  real-time  and  secure 
transmission  of  orders,  e-invoices,  digital 
receipts  and  business  data  between  parties. 
The e-invoicing function is now operational. 

8 

Investing in skills, education and 
social services  

to 

The  labour-market  measures  in  Finland’s 
RRP  build  on  European  Social  Fund  (ESF) 
support 
labour-market 
increase 
participation between 2014-2020. The ESF 
support 
the 
unemployed  and  older  people,  as  well  as  on 
marginalised  groups  such  as  migrants  and 
people with disabilities. 

focused  on  young  people, 

The  RRP  helps 
to  address  major 
challenges  in  Finland’s  jobs  market.  The 
measures  in  the  Finnish  RRP  aim  to  address 
skills and labour shortages in key  sectors and 
encourage those who are currently out of work 
to  find  jobs.  The  plan  supports  so-called  one-
stop-shop youth centres across Finland, which 
support people under the age of 30 in matters 
related  to  work,  education  and  everyday  life. 
Finland overhauled its employment assistance 
rules  in  May  2022,  with  the  launch  of  its  so-
called  Nordic  model  of  employment  services. 
One  part  of  the  model  includes  a  new  digital 
information  system  for  public-employment 
services  while  another  part 
involves  the 
recruitment  of  additional  staff  to  provide 
greater  assistance  to  jobseekers.  At  the  same 
time  the  model  requires  people  who  are 
unemployed to be more active in job searches. 
The  plan  also  contains  the  work  ability 
programme, which aims to eliminate obstacles 
to the employment of people with partial work 
ability  and  develop  services  to  support  the 
work ability of people with partial work ability. 
To  help  attract  foreign  talent  and  address 
skills  and  labour  shortages  in  certain  sectors, 
the Aliens Act was amended in February 2023 
by streamlining the permit processes for work- 
and 
immigration. 
the 
Furthermore, 
‘unemployment tunnel’ (the right to additional 
days of unemployment security for those close 
to  the  retirement  age)  came  into  force  in  the 
beginning of 2023 and is expected to decrease 
pre-retirement  unemployment.  The  RRP  also 
strengthens mental health and work ability by 
disseminating  effective  means  and  methods 
that  promote  mental  health  for  the  use  of 

law  phasing  out 

education-based 

the 

 
Box 3: 

Combined action for more impactful EU funds 

To  boost  economic  growth  and  maximise  the  impact  of  EU  funding,  Finland’s  RRP  includes 
measures  that  support  investments  under  other  EU  instruments,  creating  important  synergies 
and  complementarities  between  the  various  funds.    For  example, the  Just  Transition  Fund and 
the  RRP  work  together  in  supporting  Finland’s  phase-out  of  fossil  fuel-powered  energy 
generation. The Just Transition Fund is contributing to the reduction of Finland’s reliance on peat 
in  favour  of  clean  energy  sources,  with  investments  to  diversify  and  revitalise  the  local 
economies of the most affected regions. The RRP, in turn, helps accelerate the phase-out of coal 
in  energy  generation  by  financing  green  alternatives,  while  at  the  same  time  stimulating 
economic  activity.  Both  instruments  contribute  to  the  green  transition  of  the  energy  sector  by 
focusing on different fuel sources (peat and coal) and supporting investments that benefit those 
impacted by the transition. 

workplaces  and  occupational  health  care 
services. 

in service delivery, further accumulated during 
the pandemic, are expected to decrease. 

in 

The 

2021-2027. 

EU  funds  are  supporting  education  and 
skills  in  the  labour  force.  The  European 
Social  Fund  Plus  (ESF+)  will  continue  to 
support reskilling, upskilling and adult learning 
initiatives 
RRP 
complements  this  support  by  reforms  and 
investments in  continuous  learning.  Under  the 
RRP,  Finland  has  set  up  a  new  Service  Centre 
for  Continuous  Learning  and  Employment, 
which aims to address the skills mismatch by 
providing  new  opportunities  for  reskilling  and 
upskilling.  A  set  of  RRP  investments  further 
supports 
the  digitalisation  of  continuous 
learning, making it more accessible online.  

The comprehensive overhaul of the social 
welfare,  healthcare  and  rescue  services 
constitutes  a  key  reform  under  Finland’s 
RRP.  The  reform  aims  to  improve  resilience 
and equal access to care, while improving the 
cost  effectiveness  of 
the  system.  The 
responsibility  for  organising  social  welfare, 
healthcare 
services  was 
rescue 
transferred  from  municipalities  to  22 (18) 
newly  established  wellbeing  services  counties 
related 
in 
investments  to  support  this  transfer  improve 
the  knowledge  base  for  health  and  social 
services  by:  (i)  developing  monitoring  and 
analysis  methods;  and  (ii)  expanding  digital 
social  and  health  services.  As  a  result,  delays 

the  beginning  of  2023.  The 

and 

(18)  21 wellbeing services counties and the city of Helsinki 
are responsible for organising health, social and rescue 
services within their own areas. 

9 

 
 
 
 
 
 
FURTHER PRIORITIES AHEAD 

that  public 

Finland faces challenges related to public 
finances,  healthcare,  long-term  care  and 
the  jobs  market.  Fiscal  policy  needs  to 
ensure 
finances  are  on  a 
sustainable  path,  which  would  be  helped  by 
the  overall  productivity  and 
increasing 
efficiency  of  social  services.  Addressing  skills 
mismatches  and  labour  shortages  is  key  to 
increase  potential  output.  Easier  and  more 
equal access to care services would strengthen 
social  resilience.  Tackling  these  challenges, 
both  at  the  national  and  regional  level,  will 
long-term 
help 
competitiveness  and  ensure  the  resilience  of 
its economy.  

Finland’s 

increase 

Public finances require further 
consolidation  

tax 

improving 

Finland  needs  to  consolidate  to  ensure 
public  finances  are  on  a  sustainable 
fiscal  path (19).  Such  adjustments  might  be 
helped  by 
revenues.  Low 
economic  growth  and  the  limited  scope  for 
wage  increases  in  Finland  in  the  past  decade 
have reduced growth in tax revenues. The tax-
to-GDP  ratio  has  decreased  from  43.5%  in 
2013 to 43.0% in 2022 (see also Annex 19), in 
part  due 
security 
contributions. In Finland, revenues from labour 
taxes have been close to the EU level (21.0% 
in  Finland  versus  20.3%  in  the  EU  in  2022), 
despite the need to finance a rather wide and 
generous  social  security  system.  However, 
alternative tax revenue sources that tend to be 
less  distortionary  and  less  detrimental  to 
growth (including pollution and property taxes) 
account for a relatively smaller share of total 
tax  revenues,  including  when  compared  with 

social 

cuts 

to 

in 

(19)  Ministry of Finance outlook review: ‘An innovative and 

sustainable Finland’, 2022. 

10 

the  EU  aggregated  level.  Increases  in  capital 
taxation  and  reductions  in  tax  expenditures 
could also provide additional revenues. 

no 

tax 

reduce 

income 

revenues 

Recent  cuts  in  income  tax  and  social 
security  contributions  are  set  to  be 
compensated with a delay. Those cuts have 
the  positive  impact  to  reduce  the  tax  wedge. 
However, 
compensating 
comparable 
measures  to  raise  revenue  were  included  in 
the  budgetary  plan  for  2024.  The  revenue 
losses  stemming  from  the  cuts  in  income  tax 
and social security contributions are estimated 
at EUR 1.5 billion or 0.5% of GDP in 2024. The 
indexation  of  income  tax  brackets  is  also  set 
to 
by 
approximately EUR 0.6 billion each year. Given 
the  deterioration  in  the  public  finances,  the 
government  announced  tax  increases  in  April 
2024, most notably a hike in the standard VAT 
rate from 24% to 25.5%, which is set to yield 
around  EUR  1  billion 
in  extra  revenues. 
Furthermore,  the  government  proposed  an 
additional  package  of  permanent  spending 
cuts  amounting  to  approximately  EUR 1.4 
billion or 0.4% of GDP, which are mostly set to 
come  into  force  in  2025.  In  addition,  the 
government  expects  its  planned  reduction  in 
unemployment  benefits  to  encourage  around 
100 000 people who are currently not working 
to  find  a  job,  thus  reducing  social  spending 
and  increasing  revenues  from  income  tax. 
These  second-round  effects  are  projected  by 
Finland  to  yield  about  EUR  2  billion  by  2027. 
Furthermore,  the  government  has  frozen  the 
rates for several benefits paid out by Kela (the 
Finnish  social  security  institution)  at  their 
2023 level until 2027 (20).  

(20)  Unemployment benefits, childcare allowances, study 

grants, and the minimum amounts for daily allowances 
payable under the national health-insurance system will 
not be index-adjusted in 2024-2027. If this freeze 
reduces the real value of the benefits by more than 
10.2% over the following years, normal index 
adjustments will again be made. 

 
 
 
 
The  reform  of  social  and  healthcare 
services  does  not  yet  fulfil  expectations 
to  contain  spending  thanks  to  efficiency 
gains.  Due  to  higher-than-projected  spending 
on wages and general increases in the price of 
goods  and  services,  almost  all  the  newly 
established wellbeing services counties slipped 
into deficit in 2023. The total deficit has been 
EUR  1.6  billion  or  EUR  1.0  billion  higher  than 
initially  projected (21) (22).  To  cover  additional 
spending  in  2023,  the  wellbeing  services 
counties  are  set  to  receive  an  additional  EUR 
0.55  billion  in  2024.  For  2024,  the  funding 
from the central government for the wellbeing 
services  counties  is  set  to  be  approximately 
EUR  1.5  billion  higher  than  initially  budgeted, 
with  the  total  deficit  projected  at  EUR  1.6 
billion.  While  the  government  expects  that 
changes to the tasks of the wellbeing services 
to  achieve  up  to 
counties  would  allow 
EUR 0.9 billion  in  savings  by  2027,  according 
to 
the 
the  fiscal  plan  for  2025-2028, 
wellbeing  services  counties  will  remain  in 
deficit  during  the  period  covered  by  the  plan. 
In summary, there is a risk that current efforts 
to  contain  spending  might  be  insufficient  to 
reduce  the  pressure  on  public  finances  in  the 
near  term.  At  the  same  time,  additional 
revenues  are  needed 
finance  other 
priorities,  such  as  R&D  expenditure  and 
educational outcomes. 

to 

Population ageing is set to keep Finland’s 
public finances under strain. The total cost 
of ageing, including pension, health care, long-
term care and education expenditure, is set to 
increase from 26.4% of GDP in 2022 to 27.1% 
of  GDP  in  2035.  The  projected  cost  increases 
relate  to  three  main  categories  of  spending: 
healthcare,  long-term  care  and  pensions.  In 
the  assessment  of  the  European  Commission, 
sustainability risks from population ageing are 
classified as high in the medium term, which is 
a  deterioration  of 
risk  assessment 
compared  with  2023  (see  also  Annex  21).  To 
accommodate 
the 
pensions, the government plans to amend the 

costs  of 

increasing 

the 

(21)  Ministry of Finance. General government fiscal plan for 

Finnish  earnings-related  pension  scheme  to 
ensure the fiscal sustainability of the system. 

Tackling labour and skills 
shortages is an urgent priority 

and 

skills 

nurses, 

childhood 

shortages 

occupational 
early 

Labour 
are 
prevalent,  and  they  are  particularly 
pronounced in sectors such as health and 
education. Ageing and underemployment are 
weighing  on  the  size  of  the  active population. 
The  Finnish  economy  requires  a  highly  skilled 
workforce  to  drive  innovation  and  the  digital 
and  green  transition  (Annex  8).  Furthermore, 
Finland’s  efforts  to  secure  quality  education 
and  healthcare  require  a  workforce  with 
advanced  qualifications (23).  According  to  the 
recent  national  Labour  Force  Barometer (24), 
general 
nurses, 
practitioners, 
education 
teachers  and  special  education  teachers  are 
among  the  top  10  occupations  with  the  most 
pressing  staff  shortages.  In  line  with  the 
national  employment  targets  set  under  the 
European  Pillar  of  Social  Rights,  Finland  aims 
to  achieve  an  employment  rate  of  80%  by 
2031.  The  measures  planned  by  the  Finnish 
target  partly 
government 
to 
social-security 
concentrate  on 
benefits  to  improve  incentives  for  people  to 
take up full-time work. In addition, the sectoral 
nature  of  labour  shortages  and  the  level  of 
unemployment suggest employment measures 
that  focus  on  how  workers  can  be  equipped 
with  the  skills  needed  by  employers.  For 
example,  the  Finnish  programme  for  ensuring 
the  sufficiency  and  availability  of  healthcare, 
social  welfare,  and  rescue  personnel  2024-
2027 (25) aims to ensure a sufficient intake of 
students  in  education  programmes  for  the 
professions  and  skills  most  in  demand  in  the 
jobs market.  

reach 
this 
reforming 

(23)  The present shortage of kindergarten teachers needs to 
be addressed at the same time as the law on early 
childhood education will place higher qualification 
requirements for kindergarten staff from 2030. 

2023–2026, 2022:29. 

(24)  Työvoimabarometri - Etusivu (tyovoimabarometri.fi).  

(22)  Ministry of Finance. General Government Fiscal Plan for 

(25)  Ministry of Social Affairs and Health: Hyvän työn 

2025-2028, 2024:34. 

ohjelma. 

11 

 
 
 
Initiatives  such  as  the 

Finland competes for international talent 
integrating 
but  could  do  better  on 
migrants. 
‘Talent 
Boost’  programme  aim  to  attract  foreign 
talent  to  Finland.  At  the  same  time,  Finland 
would  benefit  from  further  efforts  to  better 
integrate  migrants  into  the  jobs  market.  The 
difference  between  the  employment  rate  of 
people  born  outside  the  EU  and  workers  born 
in  Finland  stood  at  12.9  percentage  points  in 
2023. From  1  January  2025,  the  reform  of 
Finland’s  public  employment  services  aims  to 
improve  the  effectiveness  of  services  by 
transferring  them  to  municipalities  and  the 
Integration  Act  will  give  the  municipalities  a 
greater role in assisting migrants to find work. 

Strengthening  incentives  to  work  could 
help those who are currently not working 
to  find  work.  In  addition  to  reforming  the 
social-security system (26) and individual social 
benefits, Finland is planning to activate people 
to 
find  employment  by  allowing  more 
flexibility  for  those  with  partial  work  ability, 
and  by  better  combining  different  benefits, 
services and work income.  

in 

Finland  does  not  yet  meet  the  EU  target 
of a NEET rate below 9%. The proportion of 
15–29-year-olds 
employment, 
not 
education  or  training  (NEETs)  was  9.2%  in 
2023. This is below the EU  average of 11.2% 
but slightly above the EU-wide goal of keeping 
the  NEET  rate  below  9%  by  2030.  Finland’s 
youth  unemployment  of  16.2%  in  2023  was 
also above the EU average of 14.5%. 

Addressing poor performance in 
education is key for 
competitiveness 

Negative trends in students’ performance 
in basic skills remain persistent. The share 
of  underachieving  students  in  basic  skills 
continues  to  grow,  while  the  share  of  top 

performers  is  shrinking (27).  In  a  context  of 
generalised  negative  results 
in  other  EU 
Member States, and still performing above the 
average, Finland registered one of the largest 
increases in underachievement in the fields of 
mathematics, 
reading  and  science.  This 
negative  trend  is  present  across  the  entire 
socioeconomic  distribution,  with  a  higher 
incidence  for  disadvantaged  students  and 
those  with  a  migrant  background.  Finland 
plans to introduce more compulsory hours for 
basic  skills  in  primary  education  from  August 
2025  onward.  Those  measures  for  higher 
quality  in  education  are  likely  to  be  more 
effective if accompanied by supportive actions 
for disadvantaged students.  

Teacher  shortages  affect  several  areas. 
The  number  of  applicants 
to  become 
schoolteachers  has  been  decreasing  since 
2015. As a result, the number of enrolments in 
teacher education in Finland now stands below 
the  EU  average.  Regional  differences  deserve 
close  attention, 
regarding 
observed shortages for special needs teachers, 
Finnish  and  Swedish  as  a  second  language, 
and Sami-speaking teachers.  

in  particular 

to 

are 

Efforts 
expand 
underway 
participation in early childhood education 
and  care  (ECEC),  especially  among  low-
income  households.  Participation  rates  in 
ECEC  remain  below  EU  targets.  This  has 
prompted  the  government  to  reduce  fees  and 
increase  the  number  of  free  entitlements  for 
increase 
around  30  000 
participation  and  accessibility  (see  Annex  15). 
ECEC  is  also  an  area  experiencing  teacher 
shortages,  for  which  Finland  is  planning  to 
expand  the  available  student  places  during 
2024-2025. 

families, 

to 

Participation in adult learning and higher 
attainment  levels  in  tertiary  education 
are  key  to  addressing  skills  shortages  in 
Finland. Reskilling and upskilling policies help 
Finland  progress  towards  its  national  2030 
target  to  have  60%  of  adults  participating  in 

(26)  A parliamentary committee with a 7-year mandate 

(2020-2027) is tasked with preparing a comprehensive 
social-security reform.  

(27)  OECD, Programme for International Student Assessment 

(PISA), 2022. 

12 

 
 
 
rate  of 

learning (28).  The 

tertiary 
adult 
educational  attainment  among  people  aged 
25-34  is  lower  than  in  other  advanced  OECD 
economies,  including  Finland’s  Nordic  peers 
(see  Annex  15).  By  contrast,  the  number  of 
international 
students 
moving to Finland increased significantly, with 
more  than  7  000  new  students  from  outside 
the EU granted a residence permit by October 
2022, a 45% increase from the previous year. 

education 

higher 

The social and healthcare sector 
needs to reign in its increasing 
costs while strengthening service 
delivery 

The  share  of  people  in  Finland  reporting 
unmet  needs  for  medical  care  is  high.  In 
2023, 7.9% of the Finnish population reported 
unmet  needs  for  medical  care  (EU  average: 
2.2%  in  2022),  which  is  higher  than  in  2022 
(6.5%).  The  main  reason  reported  is  waiting 
times (29).  Increased  waiting  that  increased 
during  the  pandemic  have  not  been  cleared 
yet. 

The  ongoing  reform  to 
improve  the 
delivery  of  public  health  and  social 
services  aims  to  ensure  more  equal 
access  to  services  while  curbing  the 
rising  costs  of  service  delivery.  While  the 
administrative reform has been completed, the 
different  counties  are  in  varying  stages  of 
preparedness  in  terms  of  reorganising  and 
reforming  their  service  delivery.  Although  the 
initial  cost  of  the  reform  has  been  much 
higher  than  anticipated,  there  is  increasing 
pressure  to  both  ensure  more  cost-efficient 
service  delivery  and  balance  the  finances  of 
the wellbeing services counties.  

The  poverty  rate  remains  low  albeit 
showing  an  upward  trend.  The  rate  of 
people  at  risk  of  poverty  or  social  exclusion 

increased  from  14.2%  in  2021  to  16.3%  in 
2022,  still  well  below  the  EU  average  of 
21.6%.  A  parliamentary  committee  with  a  7-
year  mandate  (2020-2027)  is  tasked  with 
preparing  a  comprehensive  social-security 
reform. The committee is expected to produce 
its final report in 2027. 

Insufficient  information  is  an  obstacle 
preventing  the  efficient  governance  of 
the  social  and  healthcare  sector.  The  RRP 
provides support to strengthen the knowledge 
for  Finland’s  social  welfare  and 
base 
healthcare  services.  Nevertheless,  information 
about  the  health  and  wellbeing  of  different 
population  groups,  information  on  their  needs 
for – and use of – services, as well as on the 
availability  and  reach  of  services,  remains 
scattered  between  different  authorities.  The 
comparability  of  different  datasets  leaves 
room  for  improvement.  This  calls  for  better 
management  of  reporting  requirements  and 
harmonisation  of 
information  systems  to 
strengthen  the  knowledge  base  for  evidence-
based decision making. 

Staff  shortages 
the  social  and 
in 
healthcare  sector,  including  in  long-term 
care,  persist.  The  changes  to  the 
law 
covering  both  access  to  non-urgent  care  (the 
care  guarantee)  and  the  number  of  nurses 
needed per patient in long-term care facilities 
for  older  people  have  increased  the  demand 
for  skilled  professionals in  these  sectors (30). 
The  original  targets  were  reduced  for  both 
laws,  partly  due  to  the  lack  of  suitably 
qualified  workers.  To  meet  the  requirements 
for  service  delivery  set  out  in  the  legislation, 
the  wellbeing  services  counties  have  resorted 
to  hiring  temporary  staff  from  the  private 
sector at high cost. 

The  number  of  study  places  in  the  social 
sector  have  been 
and  healthcare 
increased  in  recent  years,  but  there  is 
also  scope  for  increasing  international 
issues 
recruitment,  and  addressing 

(28)  In 2022, the adult learning participation rate stood at 
51.8% (up 0.4 pps from 2016), 12.3 pps above the EU 
average. 

(29)  See Annex 14 – Social Scoreboard for Finland. 

(30)  The Ministry of Social Affairs and Health estimates that 
in 2023 there were more than 5 000 and 6 000 open 
vacancies for registered and practical nurses 
respectively, and almost 900 vacancies for doctors. 

13 

 
 
 
electric  vehicles  beyond  the  most  densely 
populated  areas  of  the  country  requires  a 
robust and accessible electric-vehicle-charging 
network  across  the  country.  Given  the  long 
distances  between  population  centres,  the 
availability  of  land,  and  sparsely  populated 
areas  in  some  regions,  it  is  possible  that  the 
necessary  investments  may  not  be  made 
solely  by  private  investors  on  market  terms. 
Some  public  investment  in  this  area  may 
therefore be needed. Further investment needs 
in  transport 
include  the  public  transport 
system and electrifying the rail network. 

2022, 

Before 

Finland 

The  carbon  sink  from  land  use  has 
deteriorated  over  recent  years.  Although 
Finland’s  forests  are  responsible  for  most  of 
the  net  carbon  removals  in  the  country,  net 
removals  of  CO2  from  land  use,  land  use 
change and forestry (LULUCF) have decreased 
since  2013,  turning  into  net  emissions  in  the 
years  2018,  2021  and  2022.  Slower  growth 
rates  in  reforestation  and  intensification  of 
early harvesting of forests have contributed to 
this  development.  Felling  of  trees  peaked  in 
2018,  after  which  a  drop  has  been  reported 
and  it  has  remained  below  the  calculated 
maximum sustained yield of 80 million m³ per 
year. 
imported 
9 million m³  of  timber  from  Russia  a  year, 
which  has  since  been  reduced  to  zero.  About 
2 million  m³  of  these  imports  have  been 
compensated  for  by  increased  timber  imports 
from  other  countries.  A  definite  pathway 
towards  the  LULUCF  target  is  needed.  The 
conversion  of  peatlands  into  arable  land  acts 
to reduce Finland’s carbon sink. Finland needs 
to  reduce  the  burning  of  peat  as  a  fuel  for 
heating  and  energy  if  it  is  to  ensure  a  green 
transition.  The  economic  and 
and 
employment  impact  of  reducing  the  use  of 
peat  is  significant  because  peat  extraction  is 
geographically 
small, 
economically  disadvantaged  areas.  Therefore, 
targeted investment, such as through the Just 
Transition  Fund,  is  very  welcome  to  ensure  a 
smooth transition (Annex 8). 

concentrated 

just 

in 

in  promoting 

Progress 
the  circular 
economy has been limited. Both the circular 
material use rate and resource productivity are 

to 

language  barriers  and 
related 
bureaucratic  obstacles.  The  Ministry  of 
Social  Affairs  and  Health  estimates  that  the 
share  of  international  workers  in  Finland’s 
social and healthcare sector is currently only a 
few  per  cent.  The  wellbeing-services  counties 
estimate  that  international  workers  recruited 
from  outside  Finland  will  need  to  account  for 
20%  of  the  total  additional  workers  recruited 
in  the  next  2  years.  To  attract  and  retain 
workers  in  the  sector,  Finland  has  raised 
wages  for  nurses (31)  and  is  also  considering 
digital  solutions,  investments  in  wellbeing  at 
work, and the more efficient allocation of work 
in workplaces.  

Green ambitions call for sustained 
investments 

Finland’s  green  objectives  have  suffered 
from  the  investment  environment,  which 
has  deteriorated  in  recent  years.  Supply-
chain  bottlenecks,  higher  prices  for  raw 
materials and energy and rising interest  rates 
have  all  contributed  to  delay  projects  in  both 
the  energy  sector  and  decarbonising  industry. 
Even  though  Finland  has  made  progress 
reducing  its  reliance  on  fossil  fuels  in  recent 
years,  further  measures  may  be  necessary  to 
ensure  the  country  reaches  its  2035  carbon-
neutrality  target.  The  announced  reform  of 
environmental  permitting 
to 
support  energy  investments  and  reduce  the 
administrative  burden 
that  holds  back 
investments in wind and solar installations. 

is  expected 

Implementing Finland’s national roadmap 
for  fossil-free  transport 
is  key  for 
achieving  the  country’s  climate  targets. 
Timely implementation of the measures linked 
to  the  roadmap  is  necessary  for  Finland  to 
achieve  its  objective  of  reducing  emissions 
from transport by 50% by 2030 compared to 
vehicles 
2005. 
accounted 
vehicle 
registrations  in  2022,  the  further  roll-out  of 

zero-emission 
of 

for  18% 

Although 

new 

(31)  https://www.jhl.fi/uutiset/tallainen-on-kolmevuotinen-

sote-sopimus-ja-sen-palkkaohjelma/.  

14 

 
 
Box 4: 

The mid-term review of cohesion policy funds for Finland 

The  mid-term  review  of  cohesion  policy  funds  is  an  opportunity  to  assess  cohesion 
policy  programmes  and  tackle  emerging  needs  and  challenges  in  EU  Member  States 
and their regions. Member States are reviewing each programme taking into account, among 
other things, the challenges identified in the European Semester, including in the 2024 country-
specific recommendations. This review forms the basis for a proposal by each Member State for 
the definitive allocation of 15% of the EU funding included in each programme. 

Finland has made some progress in the implementation of cohesion policy programmes and the 
European  Pillar  of  Social  Rights,  but  challenges  remain  as  outlined  in  this  report,  including 
Annexes  14  and  17.  In  particular,  there  remain  disparities  between  the  capital  region  and  the 
rest  of  Finland  in  GDP  per  capita  and  labour  productivity.  Against  this  background,  it  remains 
important  to  continue  to  implement  the  planned  priorities,  especially  in  Finland’s  eastern  and 
sparsely  populated northern  regions, with particular attention to: (i) improving R&D, innovation, 
digitalisation,  and  SME  competitiveness;  (ii)  accelerating  the  green  and  just  transition;  (iii) 
addressing labour and skills shortages as well as strengthening social inclusion and active labour 
market participation, particularly for vulnerable groups; and (iv) contributing to social innovation 
actions and improving child-protection services.  

Finland could benefit from the opportunities provided by the  Strategic Technologies for Europe 
Platform (STEP) (33) initiative to support the transformation of industry, for instance in the areas 
of artificial intelligence, cybersecurity and robotics; energy and resource efficiency; and medical 
technologies vital for health security.  

among  the  lowest  in  the  EU (32).  Finland 
underperforms  in  recycling  municipal  waste 
and  relies  heavily  on  waste  incineration  (see 
Annex  9).  There  is  not  enough  investment  in 
is 
biodiversity 
experiencing  continued  biodiversity  loss  and 
uses  a  high  share  of  biomass  for  energy 
generation (see Annex 6).  

ecosystems. 

Finland 

or 

(32)  Eurostat datasets env_ac_cur and env_ac_mfa. 

(33)  Regulation (EU) 2024/795.  

15 

 
 
 
 
 
 
KEY FINDINGS 

resilience  plan 

With  its  wide  policy  scope,  Finland’s 
(RRP) 
recovery  and 
includes measures to address a series of 
structural  challenges  in  synergy  with 
other  EU  funds,  including  cohesion-policy 
funding, by: 

•  Promoting  the  green  transition  by 
reducing  greenhouse  gas  emissions  in  the 
most relevant sectors;  

•  Accelerating  the  digital  transition  by 
broadband 
supporting 
connectivity, 
the  continuous 
learning  framework,  and  promoting  digital 
skills;  

high-speed 

reforming 

•  Strengthening 

competitiveness 

by 
investing in research, development and 
innovation 
its 
(RDI)  and  promoting 
innovation and research infrastructure;  

•  Making  the  social  and  healthcare 
system  more  resilient  and  better 
performing  by  supporting  the  reform  of 
the healthcare and social services for more 
equal and cost-effective service delivery;  

tackling 
reforming 

•  Improving  the  functioning  of  the  jobs 
structural 
market 
by 
unemployment, 
public 
employment services, reforming the system 
for  continuous  learning,  and  streamlining 
the 
foreign 
employees and students. 

immigration  process 

for 

The implementation of Finland’s recovery 
and resilience plan is facing delays which 
require decisive actions to ensure a successful 
implementation  of  all 
the  measures  of 
Finland’s  recovery  and  resilience  plan  by 
August 2026.  

16 

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

•  Taking  steps  to  strengthen  the  public 
finances  by  enhancing  the  efficiency  of 
public spending, including through a reform 
of  the  social  security  system,  and  by 
broadening the tax base. 

•  Addressing  negative  trends  in  basic 
education  by  ensuring  a  quality  and 
supportive  system,  and  promoting  greater 
participation  in  tertiary  education  to  meet 
current and future demand for skills; 

•  Addressing labour and skills shortages, 
in  particular  to  ensure  the  delivery  and 
quality  of  accessible  services 
the 
healthcare,  education  and  social  care 
sectors, as well as in other sectors essential 
for 
and 
Finland’s 
competitiveness; 

productivity 

in 

•  Continuing  the  reform  of  the  social-
security  system to  increase  its  efficiency 
and increase incentives to work;  

social 

•  Ensuring that the reform of healthcare 
strengthens 
and 
governance 
data 
collection to help improve service delivery 
and tackle inefficiencies;  

services 
and 

improves 

•  Promoting  further 

investments 

to 
meet  the  2035  target  for  carbon 
neutrality,  including  by  speeding  up  the 
circular-economy 
and 
strengthening  the  capacity  of  the  land-use 
sector for carbon removals. 

transition 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan – implementation 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy transition and competitiveness 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2023 CSRs 
Key facts of the Finnish RRP 

19 

22 

22 

24 

28 

30 

33 

35 

35 

40 

46 

49 

49 

51 

53 

55 

58 

60 

60 

63 

65 

67 

71 

71 

73 

75 

76 

25 
28 

 
 
 
Support from EU instruments in Finland 
Resilience indices across dimensions for Finland and the EU-27 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
Key Energy Indicators 
Key indicators for a fair transition in Finland 
Circularity indicators 

A3.2.  Measures in Finland’s RRP 
A4.1. 
A5.1. 
A6.1. 
A7.1. 
A8.1. 
A9.1. 
A10.1.  Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Finland 
A14.2.  Situation of Finland on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level in Finland 
A18.1.  Financial Soundness Indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.   Debt sustainability analysis - Finland 
A21.2.  Heat map of fiscal sustainability risks - Finland 

LIST OF GRAPHS 

Progress towards the SDGs in Finland 
Finland’s progress on the 2019-2023 CSRs (2024 European Semester) 
Total grants disbursed under the RRF 
Distribution of cohesion policy funding across policy objectives in Finland 
Distribution of RRF funding by pillar in Finland 
Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2022 
Changes in livestock density and organic farming 
Changes in livestock density and organic farming 
Environmental investment gap, annual average 
Finland’s energy retail prices for households and industry & service 
Trends in electricity prices for non-household consumers (EU and foreign partners) 
Finland's installed renewable capacity (left) and electricity generation mix (right) 
Fair transition challenges in Finland 
Job vacancy rate in transforming sectors 
ETS emissions by sector since 2013 
Treatment of municipal waste 

A1.1. 
A2.1. 
A3.1. 
A4.1. 
A4.2. 
A6.1. 
A6.2. 
A6.3. 
A6.4. 
A7.1. 
A7.2. 
A7.3. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1.  Business enterprise expenditure on R&D as % of GDP, 2010-2022 
A12.1.  Productivity by sector 
A13.1.  Government effectiveness 
A13.2.  a) Use of public authorities’ websites or apps (left side); b) e-government maturity (centre); c) share of individuals with 

basic or above basic overall digital skills (right side) 
A15.1.  Underachievement rates by field, PISA 2012, 2018 and 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2024-2070 
A17.1.  GDP per capita (2012) and average GDP per capita growth (2013-2022) in Finland 
A17.2.  Finland, Labour productivity 2000-2022 
A18.1.  Credit growth 
A18.2.  House price index and mortgages 
A19.1.  Tax revenues from different tax types, % of total revenue 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2023 

29 
32 
33 
39 
45 
46 
50 
52 
54 
57 
59 
60 
61 
64 
66 
68 
72 
73 
75 
78 
78 

22 
24 
29 
31 
31 
35 
37 
37 
38 
40 
41 
42 
46 
47 
49 
49 
53 
55 
58 

59 
63 
65 
65 
67 
67 
71 
72 
74 
74 

20 

 
 
 
LIST OF MAPS 

A17.1.  Finland: GDP/head (PPS) by NUTS3 region. 2021 

69 

21 

 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

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  and  the 
environmental crisis, 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  on  the  SDGs.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context. 

Finland is improving on some SDG indicators 
related to environmental sustainability (2, 6, 
7,  9,  12,  13),  but  is  moving  away  from  SDG 
11  (Sustainable  cities  and  communities), 
SDG 15 (Life on land) and SDG 14 (Life below 
water).  While  Finland  performs  above  the  EU 

Graph A1.1: Progress towards the SDGs in Finland 

trends 

average on most SDGs in this area, there are some 
negative 
that  deserve  attention.  For 
instance,  recycling  rates  in  municipal  waste  fell 
from  42.1%  in  2016  to  39%  in  2021  (SDG 11) 
and  the  share  of  forested  area 
in  Finland 
compared  to  total  land  area  decreased  from 
71.3%  in  2015  to  69.9%  in  2018  (SDG 15).  The 
need  for  improvement  is  most  pronounced  for 
SDG 12 (Responsible production and consumption) 
and  SDG 14  (Life  below  water),  which  are  both 
below the EU average. At the same time, the share 
in  gross  final  energy 
of  renewable  energy 
consumption  (SDG 7)  has  continued  to  increase, 
from 40.9% in 2017 to 47.9% in 2022, more than 
double  the  EU  average,  while  energy  import 
dependency  decreased  from  43.9%  in  2017  to 
40.9%  in  2022.  Despite  the  progress,  Finland 
appears below the EU average with regard to SDG 
its  relatively  high  energy 
7, 
consumption  per  capita.  The  first  pillar  of  the 
includes 
resilience  plan 
recovery  and 
(SDG 7), 
investments 
clean 
in 
and 
decarbonisation 

largely  due  to 

industry 

(SDG 9) 

energy 

(RRP) 

of 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators - Eurostat (europa.eu). A high status does not mean that a country is close to reaching a specific SDG, but signals that it 
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 25 April 2024. Data refer mainly to the period 2017-2022 or 2018-2023. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

22 

 
 
 
 
 
 
 
the  EU  average  but 

Overall,  Finland  performs  well  and 
is 
indicators  related  to 
improving  on  SDG 
macroeconomic stability (SDGs 8 and 16) and 
is  catching  up  with  the  EU  average  on 
SDG 17.  Finland’s  GDP  per  capita  remains  well 
increased  only 
above 
marginally  between  2018  and  2023, 
from 
EUR 36 740  to  EUR 36 980  (SDG  8).  Finland 
performs  well  on  the  independence  of  the  justice 
system  and  the  Corruption  Perceptions  Index 
(SDG 16).  It  is  catching  up  regarding  the  official 
development  assistance  goal 
(SDG  17),  with 
official development assistance standing at 0.57% 
of gross national income (GNI) in 2022 compared 
with 0.42% in 2017, just below the EU average of 
0.58%. 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

biodiversity (SDGs 14 and 15). On the reform side, 
the  new  Climate  Act  entered  into  force  in  2022 
(SDG 13) and the updated Nature Conservation Act 
in June 2023.  

Finland  performs  well  on  SDG  indicators 
related to fairness (SDGs 1, 3, 4, 5, 7, 8, 10). 
The  country  is  above  the  EU  average  for  several 
fairness-related  indicators,  such  as  people  at  risk 
of  poverty  or  social  exclusion  (SDG 1;  16.3%  of 
population  in  2022,  vs  21.6%  in  the  EU)  or  the 
share  of  population  unable  to  keep  their  home 
adequately  warm  (SDG 7:  1.4%  in  2022;  EU: 
9.3%). On gender equality, the gender employment 
gap  has  narrowed  to  almost  0  (SDG 5;  0.2%  in 
2023,  vs  3.8%  in  2018  and  an  EU  average  of 
10.3%  in  2023)  and  gender  representation  in 
leadership  positions  has  improved.  In  addition, 
Finland  has  made  progress  on  several  indicators 
related  to  good  health  and  well-being  (SDG 3), 
such as reducing smoking prevalence from 19% in 
2014 to 15% in 2020. However, there is still room 
for  improvement  in  other  indicators,  such  as 
healthy  life  years  at  birth,  which  despite  recent 
progress (from 58.1 years in 2016 to 61.7 years in 
2021)  is  below  the  EU  average  (63.6  years).  The 
RRP  includes  measures  to  support  the  ongoing 
reform  of  health  and  long-term  care,  aiming  to 
improve  the  health  and  well-being  status,  in 
component  P4C1  (Social  welfare  and  health  care 
services). 

While  Finland  is  making  progress  on  SDGs 
related to productivity (SDGs 8 and 9) and on 
productivity-related  indicators  in  SDG 4,  it 
instance, 
still  has  challenges  ahead.  For 
Finland's employment rate (SDG 8) increased from 
75.3%  in  2018  to  78.2%  in  2023.  However,  this 
positive  trend  has  weakened  in  recent  years, 
accompanied  by  an  increase  in  unemployment, 
now  slightly  above  the  EU  average.  In  terms  of 
digital skills (SDG 4), Finland stands out, with 82% 
of  adults  having  at  least  basic  digital  skills  as  of 
(EU  average:  55.6%).  While  Finland’s 
2023 
spending on R&D increased from 2.72% of GDP in 
2016 to 2.95% in 2022, it is still below the 2009 
peak of 3.73% and the national target of 4% (SDG 
9). The RRP includes measures to further improve 
Finland's  productivity  by  boosting  spending  on 
R&D  through  funding  packages  to  promote  the 
green  and  digital 
in 
components  P3C3  (Research  infrastructure)  and 
P3C4 (Strengthening competitiveness) of the plan. 

transitions,  notably 

23 

 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

The Commission has assessed the 2019-2023 
country-specific  recommendations  (CSRs) (34) 
addressed to Finland as part of the European 
Semester.  These  recommendations  concern  a 
wide  range  of  policy  areas  that  are  related  to  14 
of  the  17  Sustainable  Development  Goals  (SDGs) 
(see  Annexes  1  and  3). The  assessment  considers 
the policy action taken by Finland to date (35)  and 
the  commitments  in  its  recovery  and  resilience 
plan 
RRP 
implementation,  80%  of  the  CSRs  focusing  on 
structural  issues  from  2019-2023  have  recorded 
at  least  ‘some  progress’,  while  20%  recorded 
‘limited progress’ or ‘no progress’ (see Graph A2.1). 
As  the  RRP  is  implemented  further,  considerable 
progress in addressing structural CSRs is expected 
in the coming years. 

(RRP) (36). 

stage 

this 

At 

of 

Graph A2.1: Finland’s progress on the 2019-2023 
CSRs (2024 European Semester) 

Source: European Commission. 

(34)  2023 CSRs: EUR-Lex - 32023H0901(26) - EN - EUR-Lex 

(europa.eu) 

2022 CSRs: EUR-Lex - 32022H0901(26) - EN - EUR-Lex 
(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(27) - EN - EUR-Lex 

(europa.eu) 

      2020 CSRs: EUR-Lex - 32020H0826(26) - EN - EUR-Lex 

(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(26) - EN - EUR-Lex 
(europa.eu) 

(35)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (published twice a year, reporting on progress in 
implementing milestones and targets on the basis of the 
payment requests assessment). 

(36)  Member States were asked to effectively address in their 
RRPs all or a significant subset of the relevant country-
specific recommendations issued by the Council. The CSR 
assessment presented here considers the degree of 
implementation of the measures included in the RRP and of 
those carried out outside of the RRP at the time of 
assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which have not yet been adopted or 
implemented but considered 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. 

24 

No progress5%Limited progress15%Some progress41%Substantial progress29%Full implementation10% 
 
 
 
 
 
 
   
 
 
Table A2.1:  Summary table on 2019-2023 CSRs 

(Continued on the next page) 

25 

FinlandAssessment in May 2024*RRP coverage of CSRs until 2026**Relevant SDGs2019 CSR 1Some 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 applicableSDG 8, 16Improvethecost-effectivenessofandequalaccesstosocialandhealthcare services.Some progressRelevant RRP measures being  implemented/planned as of 2021, 2023, 2024, and 2025 SDG 3, 8, 162019 CSR 2Some progressImprove incentives to work Some progressRelevant RRP measures being implemented/planned as of 2022, 2023, 2024, and 2025 SDG 8and enhance skills Some progressRelevant RRP measures being implemented/planned as of 2021, 2022, 2023, 2024, and 2025 SDG 4and enhance active inclusion, notably through well-integrated services for the unemployed and the inactive.Substantial progressRelevant RRP measures being implemented/planned as of 2022, 2023, 2024, and 2025 SDG 82019 CSR 3Some progressFocus investment-related economic policy on research and innovation, taking into account regional disparities,Substantial progressRelevant RRP measures being implemented/planned as of 2021, 2022, 2023, 2025 and 2026 SDG 9, 10, 11focus investment-related economic policy on low carbon and energy transition, taking into account regional disparities,Substantial ProgressRelevant RRP measures being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026 SDG 7, 9, 10, 11, 13and focus investment-related economic policy on sustainable transport, taking into account regional disparitiesSome ProgressRelevant RRP measure being implemented/planned as of 2022, 2024, and 2026 SDG 10, 112019 CSR 4 Substantial ProgressStrengthen the monitoring of household debt Substantial ProgressRelevant RRP measure being implemented/planned as of 2023, 2025, and 2026 SDG 8and establish the credit registry systemSubstantial ProgressRelevant RRP measure being implemented/planned as of 2023, 2025, and 2026 SDG 82020 CSR 1Some progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableSDG 8, 16Addressshortagesofhealthworkerstostrengthentheresilienceofthe health system Some progressRelevant RRP measure being implemented/planned as of 2021, 2022 and 2023 SDG 3and improve access to social and health services.Some progressRelevant RRP measure being implemented/planned as of 2021, 2023, 2024 and 2025 SDG 32020 CSR 2Some progressStrengthen measures to support employment and Some progressRelevant RRP measure being implemented/planned as of 2021, 2022, 2023, 2024 and 2025 SDG 8bolster active labour market policies.Some progressRelevant RRP measure being implemented/planned as of 2022, 2023, 2024 and 2025 SDG 42020 CSR 3Some progressTake measures to provide liquidity to the real economy, in particular to small and medium-sized enterprises. Full ImplementationRelevant RRP measure being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026 SDG 8, 9Front-load mature public investment projects and Full implementationSDG 8, 16promote private investment to foster the economic recovery. Full implementationSDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy,Some progressRelevant RRP measure being implemented/planned as of 2021, 2022, 2023, 2025 and 2026 SDG 7, 9, 13 sustainable and efficient infrastructure Limited progressRelevant RRP measure being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026 SDG 7, 9, 11, 13as well as research and innovation.Some progressRelevant RRP measure being implemented/planned as of 2021, 2022, 2023, 2025 and 2026 SDG 92020 CSR 4Some ProgressEnsureeffectivesupervisionandenforcementoftheanti-moneylaundering framework.Some ProgressRelevant RRP measure planned as of 2025 and 2026 SDG 8, 16 
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

26 

2021 CSR 1Substantial ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment. Not relevant anymoreNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Not relevant anymoreNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Not relevant anymoreNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreNot applicableSDG 8, 162022 CSR 1Limited ProgressIn 2023, ensure that the growth of nationally financed primary current expenditure is in line with an overall neutral policy stance, taking into account continued temporary and targeted support to households and firms most vulnerable to energy price hikes and to people fleeing Ukraine. Stand ready to adjust current spending to the evolving situation.No ProgressNot applicableSDG 8, 16Expand public investment for the green and digital transitions, and for energy security taking into account the REPowerEU initiative, including by making use of the Recovery and Resilience Facility and other Union funds. Limited ProgressNot applicableSDG 8, 16For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent medium-term fiscal positions. Substantial ProgressNot applicableSDG 8, 16Present policy proposals for the social security reform, aiming to increase the efficiency of the system of social benefits, improving incentives to work, and also supporting long-term sustainability of public finances.Limited ProgressSDG 1, 2, 102022 CSR 2Proceed with the implementation of its recovery and resilience plan, in line with the milestones and targets included in the Council Implementing Decision of 29 October 2021. Proceed with the implementation of the agreed 2021-2027 cohesion policy programme for Finland, and swiftly finalise the negotiations with the Commission of the 2021-2027 cohesion policy programming documents for the Åland Islands and the Just Transition Fund with a view to starting their implementation.2022 CSR 3Substantial ProgressReduce overall reliance on fossil fuels and diversify imports of fossil fuels.Substantial ProgressRelevant measures being implemented/planned as of 2021,2022, 2023, 2024, 2025 and 2026SDG 7, 9, 13 Accelerate the deployment of renewables, including by further streamlining permitting procedures, Substantial ProgressRelevant measures being implemented/planned as of 2021,2022, 2023 and 2026SDG 7, 8, 9, 13and boost investment in the decarbonisation of industry Some ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026SDG 7, 9, 13and transport, including electrification of the transport sector. Substantial ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026SDG 11Develop energy infrastructure to increase security of supply.Some ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2025 and 2026SDG 7, 9, 13RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
  
 
Table (continued) 

Note: 
* See footnote (36). 
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP may be necessary to fully implement CSRs and address their underlying challenges. Measures indicated as ‘being 
implemented’ are only those included in the RRF payment requests submitted and positively assessed by the European 
Commission. 
Source: European Commission. 

27 

2023 CSR 1Some ProgressWind down the emergency energy support measures in force, using the related savings to reduce the government deficit, as soon as possible in 2023 and 2024. Should renewed energy price increases necessitate new or continued support measures, ensure that these are targeted at protecting vulnerable households and firms, fiscally affordable, and preserve incentives for energy savings.Substantial ProgressNot applicableSDG 8, 16Ensure prudent fiscal policy, in particular by limiting the nominal increase in nationally financed net primary expenditure in 2024 to not more than 2.2%.No ProgressNot applicableSDG 8, 16Preserve nationally financed public investment and ensure the effective absorption of RRF grants and other EU funds, in particular to foster the green and digital transitions.Full ImplementationNot applicableSDG 8, 16For the period beyond 2024, continue to pursue a medium-term fiscal strategy of gradual and sustainable consolidation, combined with investments and reforms conducive to higher sustainable growth, to achieve a prudent medium-term fiscal position.Substantial ProgressNot applicableSDG 8, 16Pursue the reform of the social security system to increase the efficiency of the social benefits system, which would improve incentives to work and also support the long-term sustainability of public finances.Limited ProgressSDG 1, 2, 102023 CSR 2Proceed with the steady implementation of its revised recovery and resilience plan and swiftly finalise the REPowerEU chapter with a view to rapidly starting its implementation. Proceed with the swift implementation of cohesion policy programmes, in close complementarity and synergy with the recovery and resilience plan.2023 CSR 3Limited ProgressAddress labour and skills shortages by reskilling and upskilling the workforce and widening the higher education offer, in particular for the study fields most in demand in the labour market.Limited ProgressRelevant RRP measures being implemented/planned as of 2021, 2022, 2023, 2024, and 2025 SDG 42023 CSR 4Some ProgressReduce overall reliance on fossil fuels bySubstantial ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026SDG 7, 9, 13accelerating the deployment of renewables, including by further speeding up permitting procedures, andSubstantial ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023 and 2026SDG 7, 8, 9, 13and boost investment in the decarbonisation of industrySome ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026SDG 7, 9, 13transport, including through electrification.Some ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2024, 2025 and 2026SDG 11Develop energy infrastructure to increase security of supply by strengthening the transmission of electricity.Some ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023, 2025 and 2026SDG 7, 9, 13Step up policy efforts aimed at the provision and acquisition of skills and competences needed for the green transition.Limited ProgressRelevant measures being implemented/planned as of 2021, 2022, 2023 and 2026SDG 4, 13RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

This  Annex  provides  a  snapshot  of  Finland’s 
implementation of its recovery and resilience 
plan  (RRP),  past  the  mid-way  point  of  the 
Recovery  and  Resilience  Facility’s 
(RRF) 
lifetime.  The  RRF  has  proven  central  to  the  EU’s 
recovery from the COVID-19 pandemic, helping to 
speed  up  the  twin  green  and  digital  transition, 
while  adapting  to  geopolitical  and  economic 
resilience 
developments, 
against  future  shocks.  The  RRF  is  also  helping 
implement the UN Sustainable Development Goals 
and 
country-specific 
recommendations (see Annex 2). 

strengthening 

address 

and 

the 

The  RRP  paves  the  way  for  disbursing  up  to 
EUR 1.9  billion  in  grants  under  the  RRF  over 
the  2021-2026  period, representing  0.7% of 
Finland’s GDP (37). As of mid-May 2024, EUR 498 
million  has  been  disbursed  to  Finland  under  the 
RRF. 

Finland still has EUR 1.45 billion available in 
grants from the RRF. This will be disbursed after 
the  assessment  of  the  future  fulfilment  of  the 
remaining 124 milestones and targets (38) included 
in  the  Council  Implementing  Decision (39)  (CID), 
ahead  of  the  2026  deadline  established  for  the 
RRF.  

Finland’s progress in implementing its plan is 
recorded  in  the  Recovery  and  Resilience 
Scoreboard (40).  The 
scoreboard  gives  an 
overview  of  the  progress  made  in  implementing 
the RRF as a whole. Graph A3.1 shows the current 
state of play as reflected in the scoreboard. 

Finland’s  RRP  includes  a  REPowerEU  chapter 
to phase out its dependency on Russian fossil 
its  energy  supplies  and 
fuels,  diversify 
produce  more  clean  energy  in  the  coming 
years.  To  kick-start  the  REPowerEU  chapter’s 
implementation,  EUR  25.4  million  was  disbursed 

(37)  GDP information is based on 2023 data. Source: 

https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/index.html?lang=en  

(38)  A milestone or target is satisfactorily fulfilled once a Member 
State has provided evidence to the Commission that it has 
reached the milestone or target and the Commission has 
assessed it positively in an implementing decision. 

(39)  https://data.consilium.europa.eu/doc/document/ST-12524-

2021-ADD-1/en/pdf  

as pre-financing on 25 January 2024. This helped 
to  launch  relevant  reforms  like  establishing  a 
single review procedure and a new single national 
authority  for  processing  environmental  permit 
applications,  and  investments,  such  as  in  new 
clean technologies for energy production and use, 
as  well  as  research  and  development  activities  to 
promote renewable energy solutions. 

The  plan  has  a  strong  focus  on  the  green 
transition, dedicating 52.3% of the available 
funds  to  measures  that  support  climate 
objectives  and  28.9%  of  its  total  allocation 
to support the digital transition. It also retains 
a  strong  social  dimension  with  social  protection 
measures,  especially  related  to  improving  access 
to  health  care  and  social  services  across  the 
country. 

Table A3.1:  Key facts of the Finnish RRP 

Source: RRF Scoreboard  

complete  payment 

With  one 
request 
completed,  Finland’s  implementation  of  its 
RRP is underway. However, timely completion 
requires  increased  efforts.  The  Commission 
gave  a  positive  assessment  of  Finland’s  payment 
request  on  25  January  2024,  taking  into  account 
the  opinion  of  the  Economic  and  Financial 
Committee.  This  led  to  EUR  202  million  being 
disbursed 
in  financial  support  on  1  March 
2024 (41).  The  related  20  milestones  and  targets 
covered  reforms  and  investments  such  as  tax 
reforms  to  promote  the  electrification  of  industry 
low-carbon 
investment 
and 

encourage 

in 

(40)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html  

(41)  When requested payments are disbursed, the pre-financing 
is cleared proportionally. The net amounts are quoted here.   

28 

Initial plan CID adoption date29 October 2021Scope Revised plan with REPowerEU chapterLast major revision8 December 2023Total allocation EUR 1.9 billion in grants (0.7% of 2023 GDP)Investments and reforms 40 investments and 19 reformsTotal number of milestones and targets144Fulfilled milestones and targets20 (14% of total) 
 
 
 
  
 
 
 
Table A3.2:  Measures in Finland’s RRP 

Source: FENIX 

to 

to 

tax 

incentives 

improvements 

technologies, 
promote 
sustainable  transport  and  the  use  of  electric 
employment 
vehicles, 
opportunities 
continuous 
through  matching 
learning  opportunities  with  labour  market  needs 
and  key  legislation  in  the  context  of  the  social, 
reform.  The 
rescue  services 
healthcare  and 
milestones  also 
in 
included  key 
support of the green and digital transition, such as 
the  transformation  of  energy  infrastructure  and 
new  energy  technologies  and  the  production  and 
use  of 
low-emission  hydrogen.  Other  key 
investments targeted the reduction of climate and 
environmental  impacts  of  buildings  and  support 
precision  forestry  to  promote  climate  resilient 
measures and environmental sustainability.  

investments 

Graph A3.1: Total grants disbursed under the RRF 

Note: This graph displays the amount of grants, including pre-
financing, disbursed so far under the RRF. Grants are non-
repayable financial contributions. The total amount of grants 
given to each Member State is determined by an allocation 
key and the total estimated cost of the respective RRP. 
Source: RRF Scoreboard 

As  of  15  May  2024,  Finland  is  working 
towards  its  second  payment  request.  Table 
A3.2  highlights  some  relevant  measures  achieved 
so far, and some that will be implemented before 
2026  to  keep  making  Finland’s  economy  greener, 
more digital, inclusive, and resilient. 

29 

EUR 498million (25.6%)Total allocation: EUR 1949millionReforms and investments implemented• Reform of energy taxation• Preparation of the social welfare and health care reform• Improvements to employment opportunitiesUpcoming reforms and investments• Digital innovations for social welfare and health care services • Investments in the largest solar power installation in the Nordics• Create a model for teaching cybersecurity skills to citizens 
   
 
   
 
 
 
 
 
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

and  education  policies.  ESF  measures  were 
especially  focused  on  young  people,  unemployed 
people  and  older  people  as  well  as  on 
marginalised groups such as migrants and people 
with  disabilities.  By  the  end  of  2022,  more  than 
433 000  participants,  including  around  249 000 
unemployed  people,  had  received  support  under 
ESF projects. 

in 

invest 

In  the  current  programming  period  (2021-
2027),  cohesion  policy will  provide a  further 
boost  to  Finland’s  competitiveness,  to  the 
green  transition  and  to  social  cohesion, 
improving  the  living  and  working  conditions 
of Finland’s people. In 2021-2027, the European 
Regional  Development  Fund  (ERDF)  will  increase 
R&D  and  innovation  in  line  with  regional  smart 
specialisation strategies, harness digitalisation and 
SME growth, and accelerate the green transition. A 
total  of  9 575  companies  are  expected  to  be 
supported,  15 047  new  jobs  are  expected  to  be 
created,  and  energy  savings  in  companies  are 
expected  to  amount  to  94.8  MWh/a.  The  Just 
Transition  Fund 
the 
(JTF)  will 
diversification  of  regional  economies  and  in  the 
reskilling and upskilling of the workforce in regions 
most  affected  by  the  transition  from  peat  to 
cleaner  energy  sources.  The  JTF  is  expected  to 
support  1 933  companies,  help  create  3 709  new 
jobs, and help rehabilitate 13 596 ha of land. The 
Innovation  and  Skills  Finland  programme  has 
seven  priorities  of  which  three  are  funded  from 
the  European  Social  Fund  Plus  (ESF+)  with  a 
budget  of  approximately  EUR  602  million.  The 
JTF’s  priority  also 
includes  funding  ESF-type 
activities, such as training, upskilling and reskilling 
the  labour  force.  The  ESF+  will  help  increase 
employment  and  skills  and  provide  support  to 
enhance  inclusivity  in  Finland,  social  innovation 
actions  help  to  the  most  deprived.  In  this  regard, 
cohesion  policy  substantially  contributes 
to 
achieving  the  UN  Sustainable  Development  Goals 
(SDGs)  in  Finland,  in  particular  SDG  9  (Industry, 
innovation,  infrastructure),  SDG  8  (Decent  work 
and economic growth) and SDG 1 (No poverty). 

EU funding instruments provide considerable 
resources for recovery and growth to the EU 
Member  States.  In  addition  to  the  EUR  1.95 
billion  of  Recovery  and  Resilience  Facility  (RRF) 
funding  described  in  Annex  3,  EU  cohesion  policy 
funds (42) provide EUR 1.9 billion to Finland for the 
2021-2027  period (43).  Support  from  these  two 
instruments combined represents around 1.40% of 
the country’s GDP, compared to the EU average of 
5.38%  of  GDP (44).  Cohesion  policy  supports 
regional  development,  economic,  social  and 
territorial 
competitiveness 
through  long-term  investment  in  line  with  EU 
priorities and with national and regional strategies. 

convergence  and 

During  the  2014-2020  programming  period, 
cohesion  policy  funds  boosted  Finland’s 
competitiveness, with  tangible achievements 
notably in research and innovation and social 
inclusion.  By  the  end  of  the  eligibility  period  in 
December  2023,  2014-2020  cohesion  policy 
funds (45)  had  made  EUR  1.5  billion  available  to 
Finland (46),  of  which  EUR  780  million  has  been 
disbursed  since  March  2020,  when  the  COVID-19 
pandemic  began (47).  The  achievements  of 
cohesion policy funds over the entire programming 
period included support to help create 12 760 new 
jobs  and  584  new  companies.  A  total  of  1 434 
received  support,  24  876  companies 
SMEs 
participated 
led  by  research  and 
development  institutions.  A  total  of  436 000 
people  participated  in  European  Social  Fund  (ESF) 
projects. During the same period, ESF funding was 
allocated  to  increase  labour  market  participation 
through  improved  employment,  social  inclusion 

in  projects 

(42)  In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the European Social Fund Plus 
and the Just Transition Fund. 

(43)  European territorial cooperation (ETC) programmes are 
excluded from the figure. In 2021-2027, the total 
investment, including national financing, amounts to EUR 3.2 
billion.  

(44)  RRF funding includes both grants and loans, where 

applicable. The EU average is calculated for cohesion policy 
funds excluding ETC programmes. GDP figures are based on 
Eurostat data for 2022. 

(45)  In 2014-2020, cohesion policy funds included the European 
Regional Development Fund and the European Social Fund. 
REACT-EU allocations are included but ETC programmes are 
excluded. 

(46)  In 2014-2020, the total investment, including national 

financing, amounted to EUR 2.9 billion.  

(47) Cut-off date: 14 May 2024. 

30 

 
 
 
 
 
Graph A4.1: Distribution of cohesion policy funding 
across policy objectives in Finland 

Graph A4.2: Distribution of RRF funding by pillar in 
Finland 

Source: European Commission 

impact 

Through  combined  action,  of  cohesion  policy 
and  the  recovery  and  resilience  plan  (RRP) 
have  a  mutually  reinforcing 
in 
Finland. For instance, they both support the digital 
transition,  with  RRP  investments  improving  the 
national  coverage  of  the  broadband  network, 
particularly  in  terms  of  faster  connectivity,  while 
the  ERDF  supports  the  effective  use  of  the 
improved  connectivity  for  industry  and  public 
services  users.  Together,  cohesion  policy  and  the 
RRF  also  support  the  green  transition.  The  Just 
Transition  Fund  (JTF)  focuses  on  the  areas  most 
affected  by  the  transition  from  peat  to  cleaner 
energy sources, by supporting the diversification of 
livelihoods,  revitalising  economic  structures,  and 
boosting  employment  by  reskilling  and  upskilling 
the  workforce  working  in  peat  extraction  and 
related  sectors.  The  RRP  helps  Finland  step  up 
efforts  to  reduce  the  use  of  coal  by  encouraging 
the  country  to  eliminate  its  use  within  a  shorter 
timeframe  than  envisaged  in  the  Act  on  the 
the  Use  of  Energy  of  Coal 
Prohibition  of 
(406/2019). 
in  the 
transition  of  its  industries  as  regards  reducing 
their  use  of  peat,  directly  complementing  the  JTF 
measures. Furthermore, the ESF+ supports foreign 
workers  through  efficient  labour  and  business 
services  and  ensures  labour  demand  and  supply 
are  better  matched,  while  the  RRP  contains  a 
reform 
talent  by 
streamlining  the  administrative  procedures  which 
should  help  international  degree  students  find 
in  Finland.  The  contribution  of 
employment 
cohesion  policy  and  RRP  funding  by  policy 
objectives is illustrated by Graphs A4.1 and A4.2. 

It  also  supports  Finland 

international 

to  attract 

(1) Each RRP measure helps achieve the aim of two of the six 
policy pillars of the RRF. The primary contribution is shown in 
the outer circle while the secondary contribution is shown in 
the inner circle. Each contribution represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated to 
Finland. 
Source: European Commission 

The Technical Support Instrument (TSI) helps 
Finland  invest  in  its  public  administration 
and create a better enabling environment for 
EU  and  national  investment.  The  TSI  has 
funded  projects 
to  design  and 
in  Finland 
implement growth-enhancing reforms since 2019. 
The  support  provided  in  2023  included  action  to: 
i) accelerate  permitting  procedures  for  renewable 
energy; 
regular 
ii) design  a  structured  and 
spending  review  process;  and  iii) promote  quality 
and  inclusion  in  the  educational  system.  The  TSI 
also  helps  Finland  to  increase  its  overall  capacity 
to  implement  specific  reforms  and  investments 
included  in  its  RRP,  such  as  boosting  the  regional 
mining sector in Lapland.  

Finland  also  receives  funding  from  several  other 
EU  instruments,  including  those  listed  in  Table 
A4.1. 

31 

PO1 Smarter EuropePO2 Greener EuropePO3 Connected EuropePO4 Social EuropePO8 JTF specific objectiveGreen transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generation 
   
   
Table A4.1:  Support from EU instruments in Finland 

(1) RRF implementation period is 2021-2026. 
(2) The public sector loan facility’s programming period is 2021-2025 and the amount reflects the national share in its grant 
component reserved until the end of the period. 
(3) Common agricultural policy programming periods are 2014-2022 and 2023-2027. 
(4) EMFF – European Maritime and Fisheries Fund, EMFAF – European Maritime, Fisheries and Aquaculture Fund. 
(5) Data on the Connecting Europe Facility covers transport and energy and has a cut-off date of 15 May 2024. 
(6) Data on Horizon Europe (2021-2027) has a cut-off date of 13 May 2024. 
(7) 2021-2027 data on the LIFE programme has a cut-off date of 15 May 2024. 
(8) The amount of the EU guarantee signed under the EFSI Infrastructure and Innovation Window was derived based on the 
signed amount of the operations and the average internal multiplier, as reported by the EIB (cut-off date is 31 December 2023). 
(9) The amount of the EU guarantee and of the volume of operations signed under InvestEU includes the EU compartment as well 
as the Member State compartments (cut-off date is 31 December 2023). 
Source: European Commission 

32 

Amount 2021-2027 (EUR million)Cohesion policy1 940.5RRF grants (1)1 949.1Public sector loan facility (grant component) (2)35.3Common agricultural policy (3)4 410.0EMFF/EMFAF (4)71.8Connecting Europe Facility (5) 260.1Horizon 2020 / Horizon Europe (6) 902.4LIFE programme (7) 104.9Volume of operations (EUR million)European Fund for Strategic Investment 2015-2020 (8)1 684.0InvestEU 2021-2027 (9) 236.5 645.4 77.474.4 340.11 537.0 84.4EU guaranteesEU Guarantee (EUR million)8 000.0EU grantsAmount 2014-2020 (EUR million)1 481.4-- 
 
  
 
ANNEX 5: RESILIENCE 

Table A5.1:  Resilience indices across dimensions for Finland and the EU-27 

(1)  The synthetic indices aggregate the relative resilience situation of countries across all considered indicators. For an indicator, 
each country’s relative situation in the latest available year is compared with the collection of values of that indicator for all 
Member States and all years in the reference period. 
Source: Resilience Dashboards - version spring 2024, data up to 2022 

This  Annex  uses  the  Commission’s  resilience 
(RDB) (48)  to  show  Finland’s 
dashboards 
relative 
and 
resilience 
vulnerabilities (49)  that  may  be  of  relevance 
for  societal,  economic,  digital  and  green 
transformations, and for dealing with future 
shocks and geopolitical challenges. (50) 

capacities 

According  to  the  RDB’s  set  of  resilience 
indicators,  Finland  has  medium-low  overall 
vulnerabilities  and  high  overall  capacities. 
With  respect  to  the  2023  RDB,  its  vulnerabilities 
have  improved  a  bit,  going  from  medium  to 
medium-low,  and  its  capacities  have  remained 
stable  at  a  high  level.  This  is  reflected  in  the 
distribution of indicators across different resilience 
categories:  under  25%  of  Finland’s  vulnerability 

(48)  Https://ec.europa.eu/info/strategy/strategic-

planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en. Resilience is defined as the 
ability not only to withstand and cope with challenges but 
also to undergo transitions, in a sustainable, fair, and 
democratic manner. 2020 Strategic Foresight Report: 
Charting the course towards a more resilient Europe 
(COM(2020) 493). 

(49)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals, 
while capacities refer to enablers or abilities to cope with 
crises and structural changes and to manage transitions. 

(50)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

33 

indicators  fall  into  the  high  or  medium-high 
category, while over 60% of its capacity indicators 
fall into the high or medium-high category. 

lowest 

With  respect  to  the  2023  RDB,  Finland  has 
maintained  its  strong  position  in  the  social 
and  economic dimension.  Overall  vulnerabilities 
in this dimension are low and capacities are high. 
Vulnerabilities  are  low  mainly  thanks  to  Finland’s 
high  employment  rate  and  low  inequalities  and 
poverty,  with  its  gender  employment  gap  among 
the 
in  the  EU  and  decreasing.  High 
capacities  are  thanks  to  spending  on  education, 
health and social protection, which reduce the risk 
of poverty and social exclusion. That said, some of 
Finland’s  healthcare  indicators  remain  worrying. 
The  proportion  of  Finns  reporting  unmet  medical 
needs  is  the  third  highest  in  the  EU,  having 
increased  over  the  last  few  years.  In  terms  of 
capacity,  healthy  life  years  are  increasing,  but 
Finland still scores below the EU average. 

the 

green 

dimension, 

In 
Finland’s 
vulnerabilities  have  remained  stable  with 
respect  to  last  year  but  its  capacities  have 
decreased.  Despite  ambitious  climate  targets,  its 
vulnerabilities related to climate change mitigation 
have not improved. In terms of the sustainable use 
of  resources  and  biodiversity,  Finnish  agriculture 
continues to use a lot of chemical pesticides, while 
its  economy  is  the  EU’s  most  raw  material-
intensive.  Green  capacities  have  decreased  to  a 
medium overall level. While the country continues 
to  have  a  high  number  of  environmental  patents, 
considerable renewable energy penetration, a high 

FIFIEU-272023 RDB2024 RDB2024 RDBHighMedium-highMediumMedium-lowLowHighMedium-highMediumMedium-lowLowCapacitiesGeopoliticalVulnerabilities0,450,470,41Capacities0,580,590,65DigitalVulnerabilities0,750,820,52Capacities0,910,920,65GreenVulnerabilities0,490,510,44Capacities0,630,590,70Social and economicVulnerabilities0,820,810,47Capacities0,830,820,67DimensionDistribution of indicators by vulnerabilities and capacitiesOverall resilienceVulnerabilities0,570,600,50Capacities0,800,800,67Vulnerabilities0%20%40%60%80%100%Vulnerabilities(60 indicators)Capacities(64 indicators) 
 
 
 
   
 
 
long  way 

share  of  organic  farming  and  low  soil  carbon 
content,  strengthening  the  circular  economy  and 
biodiversity  would  go  a 
towards 
improving  its  resilience  capacities.  Finland  is  one 
of  the  EU’s  poorest  performers  in  terms  of  its 
circular  material  use  rate,  energy  and  resource 
productivity  and  Natura  2000  protected  areas.  Its 
forests’ CO2 absorption has also deteriorated with 
respect to the 2023 RDB. 

Finland  has  improved  its  strong  position  in 
the  digital  dimension,  with  vulnerabilities 
further  decreasing  and  capacities  remaining 
high  compared  to  last  year’s  dashboard.  The 
reasons  for  the  decrease  in  vulnerabilities  are 
better  broadband  access  for  companies  and  the 
availability of online public services for businesses. 
Overall,  Finland’s digital  vulnerabilities are among 
the  lowest  in  the  EU,  especially  in  terms  of 
personal  and  public  space.  The  only  area  with 
is  Finland’s  trade 
medium-high  vulnerabilities 
deficit  in  both  information  and  communication 
technology  (ICT)  goods  and  services.  Finland  has 
high digital capacities overall, and ranks highest or 
second  highest  in  terms  of  adults’  and  young 
people’s digital competencies, in the use of online 
courses,  in  young  people  participating  in  online 
learning  activity,  and 
Its 
in  e-healthcare. 
the  only  area  with 
collaborative  economy, 
medium-low  capacity  in  the  2023  RDB,  has 
improved.  

Finland’s  geopolitical  vulnerabilities  and 
capacities have remained medium. Diversifying 
its  trade  partners  could  make  it  even  more 
resilient,  as  the  country  has  a  high  concentration 
of  base  metal  and  energy  carrier  suppliers  and 
inward  foreign  direct  investment  partners.  Finland 
has  managed  to  narrow  the  employment  gap 
between EU and non-EU  nationals with respect to 
last year’s dashboard. In terms of capacities, it has 
improved  its  energy  trade  with  EU  countries  and 
increased  its  trade  openness  towards  non-EU 
countries.  That  said,  it  would  do  well  to  improve 
intra-EU  trade  in  recyclable  raw  materials  and  its 
trade  openness  towards  EU  countries,  to  help 
mitigate supply risks and reduce dependencies. 

34 

 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

Finland  has  made  progress  in  the  green 
transition,  with  more  action  needed  on 
specifying  the  funding  framework  for  the 
climate  and  energy  transition,  strengthening 
the  carbon  sinks  in  the  land  use  sector, 
protecting  biodiversity  and  the  ecosystem, 
and other areas. This Annex provides a snapshot 
of  climate,  energy,  and  environmental  aspects  of 
the transition in Finland (51). 

Finland’s  draft  updated  national  energy  and 
climate plan (NECP) appears to only map out 
the private investment needed to achieve its 
2030 climate and energy targets. Although the 
NECP  provides  an  overview  of  private  investment 
in  the  clean  energy  transition  per  sector  (e.g. 
onshore  and  offshore  wind,  nuclear  power 
generation,  low-carbon  steel  production,  etc.),  the 
lack  of  consolidated  information  on  public  and 
private  investment  and  on  investment  needs  for 
the  entire  economy,  makes  it  difficult  to  assess 
any  gaps.  The  plan  only  partly  outlines  the  main 
funding  sources,  including  those  for  the  fair 
transition.  It  mentions  national  and  EU  funding, 
including  the  Connecting  Europe  Facility,  the 
recovery  and  resilience  plan,  and  the  European 
Agricultural Fund for Rural Development (52). 

With  planned  measures  that  are  yet  to  be 
adopted,  Finland  still  has  a  gap  to  close  to 
reach  its  2030  effort  sharing  target (53).  In 
2022, Finland’s greenhouse gas emissions from its 
effort  sharing  sectors  are  expected  to  be  22.5% 
below  2005  levels.  Current  policies  are  projected 
to  reduce  Finland’s  effort  sharing  emissions  by 
44.2%  from  2005  levels  by  2030.  The  additional 

(51)  This Annex is complemented by Annex 7 on energy 
autonomy and competitiveness, Annex 8 on the fair 
transition to climate neutrality, Annex 9 on resource 
efficiency, circularity, and productivity, and relevant topics in 
other annexes to this country report. 

(52)  See the Commission’s (2023) assessment of the draft 

national energy and climate plan of Finland. 

(53)  The national greenhouse gas emission reduction target is 
laid down in Regulation (EU) 2023/857 (the Effort Sharing 
Regulation). The aim is to align action in the sectors 
concerned with the objective to reach the EU-level economy 
wide target of greenhouse gas reductions of at least 55% 
compared to 1990 levels. The target also applies to the 
sectors outside the current EU Emissions Trading System, 
notably buildings (heating and cooling), road transport, 
agriculture, waste, and small industry (known as the effort 
sharing sectors). 

policies set out by Finland are projected to reduce 
these  emissions  by  an  additional  2.2  percentage 
points,  achieving  a  46.4%  reduction  compared  to 
2005 (54),  only  3.6  percentage  points  short  of 
Finland’s target to reduce emissions by 50%. 

Graph A6.1: Greenhouse gas emissions from the 
effort sharing sectors in Mt CO2eq, 2005-2022 

Source: European Environment Agency 

There is scope for increasing Finland’s target 
for  renewable  energy  and  energy  efficiency 
its  final  updated  NECP (55).  Although 
in 
Finland’s renewable energy contribution of 51% by 
2030  set  out  in  its  draft  updated  NECP  is 
significantly  below  the  required  contribution  of 
it  projects  that  the  overall  share  of 
62%, 
renewable 
energy 
in  gross 
consumption  will  reach  60%  by  2030.  Finland’s 
draft  updated  NECP  did  not  set  a  clear  2030 
national energy efficiency contribution for primary 
energy 
the  energy 
efficiency  contribution  of  20.60  Mtoe  in  final 
energy 
required 
contribution under the Energy Efficiency Directive. 

consumption.  However, 

consumption  matches 

energy 

final 

the 

(54)  The effort sharing emissions for 2022 are based on 

approximated inventory data. The final data will be compiled 
in 2027 after a comprehensive review. Finland’s draft 
updated NECP does not provide emission projections for the 
effort sharing sectors. Information on such projections is 
based on the latest data that had to be reported by 15 
March 2023 under Article 18 of Regulation 2018/1999 (the 
Governance Regulation). 

(55)  The EU target set out in the revised Renewable Energy 

Directive is to have 42.5% of gross final energy consumption 
coming from renewable energy sources by 2030, with the 
aspiration to reach 45%. The formula in Annex I to Directive 
(EU) 2023/1791 sets the indicative national contribution for 
Finland at 29.8 Mtoe for primary energy consumption and 
20.8 Mtoe for final energy consumption. See the Commission 
Recommendation of 18.12.2023 to Finland. 

35 

051015202530354020052022MtCO2eWasteSmall industryAgricultureBuildings (under ESR)Domestic transport (excl. aviation) 
 
 
 
      
 
 
 
Finland’s  shift  to  sustainable  transport  is 
taking  off  but  has  not  yet  gained  full 
momentum (56). In 2022, battery electric vehicles 
accounted for 1.3% of Finland’s passenger vehicle 
fleet. Its 9 000 publicly accessible charging points 
provided  one  charging  point  for  every  16  e-
vehicles, below the EU average of 1:10. Passenger 
cars accounted for 87% of the distances travelled 
by  passengers  (above  the  EU  average  of  85%). 
Freight is predominantly transported by road, with 
roads  accounting  for  73%  of  tonnes  transported 
(close  to  the  EU  average of  75%).  At  27%,  rail  is 
used  more  for  transporting  freight  than  the  EU 
average  (17%).  57%  of  the  rail  network  is 
electrified (EU average: 56%). 

land  use, 

in  2021.  Finland’s 

Finland is projected to fall  short of its 2030 
target  for  net  carbon  removals  from  the 
atmosphere  through 
land  use 
change and forestry (LULUCF). Its net removals 
have  decreased  since  2015,  resulting in  large  net 
emissions 
forests  are 
responsible  for  the  major  share  of  net  carbon 
removals.  To  reach  the  2030  LULUCF  target, 
additional  carbon  removals  of  2 889  kt  are 
needed (57).  By  the  latest  projections,  Finland 
shows  insufficient  ambition  and  is  at  present 
estimated  not  to  reach  the  target (58).  A  concrete 
pathway  towards  reaching  the  national  LULUCF 
the  specification  of  additional 
target  with 
measures, 
timing  and  scope,  and  a 
quantification  of  their  expected  impacts  is  yet 
missing,  that  would  ensure  that  greenhouse  gas 
removals  are  effectively  aligned  with 
the 
contribution to the 2030 EU net removal target of 
-310  MtCO2eq  and  with  the  country  specific 
removal target. 

their 

With  its  2022  climate  act  and  its  national 
adaptation  plan  for  2030,  Finland  has 
strengthened  its  approach  to  adaptation  at 
level.  The  new 
both  national  and 
assessment  of 
is 
comprehensive  and  covers  all  major  sources  of 
climate  risk,  including  floods,  drought,  heatwaves 
and  forest  fires.  Finland  is  taking  a  multitiered 

risks  and  vulnerabilities 

regional 

(56)  Unless otherwise indicated, data in this section refer to 
2021. See European Commission, 2023, EU transport in 
figures, transport.ec.europa.eu. 

(57)  National LULUCF targets of the Member States in line with 

approach to climate adaptation, involving a broad 
range  of  policymakers  and  stakeholders,  and 
harnessing  scientific  and  technological  advances. 
The national strategy for climate adaptation spans 
sectors 
risk 
management,  healthcare,  social  welfare  and 
transportation.  Water  management 
requires 
particular  attention,  as  floods,  heat  and  drought 
can disrupt energy production. There is no notable 
climate protection gap in Finland (59). 

flood  and  drought 

such  as 

Air  quality  in  Finland  is  generally  good  with 
exceptions. Both  the  indicators  on  the  years  of 
life lost due to exposure to PM2.5 and NO2 stood 
well  below the  EU  average  in  2021.  The  indicator 
for  smog-precursor  emission  intensity  to  GDP 
decreased  by  48%  between  2008  and  2021, 
equalling  0.72  tonne-EUR’10  –  below  the  EU 
average.   

Finland has room for improvement in nature 
protection  and  management,  given  the 
country’s  continued  biodiversity  loss.  At  the 
end of 2021, 15% of the land and 11% of marine 
areas  were  under  protection  and  only  32%  of 
habitats  and  45%  of  species  were  in  a  good 
conservation status (60). Furthermore, the common 
farmland  bird  index  increased  to  84  in  2020. 
However,  Finland’s  agricultural  management 
measures  aimed  at  protecting  species  and 
habitats  are  not  enough  to  offset  the  agricultural 
intensification  and  resulting  eutrophication.  The 
intensive  rearing  of  poultry  and  pigs  places  the 
highest  burden  on 
the  environment  of  all 
agricultural  practices  in  terms  of  ammonia  and 
particulate  matter  (PM2.5)  emissions  into  the  air. 
The marine waters of Finland are not yet in a good 
environmental status for all the descriptors of the 
Marine  Strategy  Framework  Directive 
(MSFD) 
based  on  the  last  data  reported  for  its  marine 
strategy.  Currently, 
the 
Environment  is  drafting  the  National  biodiversity 
strategy and action plan 2035 (61). 

the  Ministry 

of 

Although  intensive  agriculture  places  less 
pressure  on  Finland’s  nature  and  water 
resources,  improvements  are  still  needed.  In 

(59)  See the Commission’s 2023 assessment and 

recommendation Finland’s progress on climate adaptation. 

Regulation (EU) 2023/839. 

(60)  Versus, respectively, 15% and 28% in the EU.  

(58)  Projections submitted in Finland’s draft updated national 

(61)  National biodiversity strategy and action plan 2035 - 

energy and climate plan, 2023. 

Ministry of the Environment (ym.fi). 

36 

 
 
 
(EU 

ammonia 

2010-2020 Finland reduced its livestock density to 
0.42% (below the EU average of 0.75%). The total 
number of livestock units decreased in all regions 
during  this  period.  The  share  of  total  utilised 
agricultural  area  (UAA)  under  extensive  animal 
farming12  also  fell,  from  30%  in  2013  to  23%  in 
2016 
the 
(EU  average:  23.8%).  However, 
agricultural  sector  was  responsible  for  87.4%  of 
average: 
emissions 
total 
90.7%).   The  latest  figures  on  the  gross  nitrogen 
balance  on  Finland’s  agricultural  land  show  an 
average surplus of 43.7 kg of nitrogen per hectare 
per  year  in  2010,  lower  than  the  previous  year. 
The  content  of  nitrate  in  groundwater  is  among 
the lowest in the EU with 0.2 mg nitrate/l, and only 
1.6%  of  groundwater  monitoring  stations  have 
levels  above  the  maximum  of  50 mg  nitrate/l.  By 
contrast,  Finland’s  gross  phosphorous  balance  is 
among the highest in the EU, standing at 3.3 kg/ha 
in  2019.  The  chemical  status  of  waterbodies  is 
influenced  by  pesticide  contamination.  In  2020, 
10%  of  monitoring  sites  were  reported  to  have 
pesticide levels exceeding the thresholds set out in 
the  Water  Framework  Directive.  In  2021,  the 
pesticide level was reported to be zero. 

Graph A6.2: Changes in livestock density and 
organic farming 

Livestock unit (LSU)/ha of UAA: it measures the stock of 
animals (cattle, sheep, goats, equidae, pigs, poultry and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

Graph A6.3: Changes in livestock density and 
organic farming 

Livestock unit (LSU)/ha of UAA: it measures the stock of 
animals (cattle, sheep, goats, equidae, pigs, poultry and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

Food  waste  remains  relatively  high,  while 
composting and anaerobic digestion could be 
increased.  Finland  produced  125 kg  of  food 
waste  per  person  in  2021,  just  below  the  EU 
average of 131 kg. Food waste was mainly due to 
household  activities.  Composting  and  anaerobic 
digestion  of  municipal  waste  decreased  to  77 kg 
per person in 2021, accounting for 12.2% of total 
municipal waste. 

Finland  could  further  limit  the  impact  of 
agriculture  on  soil  health.  According  to  the 
impact assessment for the Soil Monitoring Law (62), 
13%  of  Finnish  soil  could  be  considered  as 
unhealthy (63),  among  the  lowest  levels  of  all 
Member States. Of this proportion, 7% of peatland 
is  in  an  agricultural  hotspot  and  6%  is  highly 
susceptible  to  soil  compaction.  The  combined 
effects of soil degradation and water scarcity can 
also  be  measured  by  the  health  status  of 
peatlands.  The net stock change of organic soils in 
Finland’s  cropland  and  grassland  areas  increased 
over  time  and  at  3 806  kt  in  2021 (64), remained 
in  the  EU.  Furthermore, 
among  the  highest 

(62)  SWD 417 final of 05.07.2023 - Impact Assessment for the 
Directive of the European Parliament and of the Council on 
Soil Monitoring and Resilience (Soil Monitoring Law), (cfr. pg. 
10, pg. 189-190, pg. 835-845). 

(63)  However, not all soil degradation processes could be 

quantified for all land uses. This number simply indicates an 
order of magnitude.  

(64)  FAOSTAT. 

37 

01202468101214161820162020% LSU per hectare% of total utilised agricultural areaLivestock density index Finland (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Finland (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area)01202468101214161820162020% LSU per hectare% of total utilised agricultural areaLivestock density index Finland (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Finland (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area) 
       
 
       
 
conservation  tillage  practices,  which  increase  soil 
organic  carbon,  covered  29%  of  Finland’s  tillable 
area in 2016. 

Finland would benefit from investing more in 
sustainable water management and pollution 
prevention  and  control.  Over  the  2014-2020 
period,  the  environmental  investment  gap  was 
estimated  at  EUR  6  billion  per  year,  or  2.1%  of 
GDP.  The  gap  is  estimated  to  be  increasing  over 
the 2021-2027 period at EUR 7.1 billion per year. 
There remains an opportunity to increase funding, 
for  sustainable  water  management  (EUR  116 
million)  and  pollution  prevention  and  control  (EUR 
1.6  billion  per  year)  as  the  investment  gap  has 
widened. 

Graph A6.4: Environmental investment gap, annual 
average 

The numbers are computed by the European Commission 
based on the latest internal reports, Eurostat, EIB and national 
data sources. 
Source: European Commission 

38 

666344873.4071.4422424543.39005001.0001.5002.0002.5003.0003.500Pollution prevention &controlWater managementCircular economy andwasteBiodiversity andecosystemsmillion EUR2014-20202021-2027 
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A6.1:  Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources:  (1)  Member  States’  emission  data  for  2019  and  2020  are  in  global  warming  potential  (GWP)  values  from  the  4th 
Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ 2005 base year emissions 
under  Regulation  (EU)  2018/842,  emissions  data  for  2021  and  2022,  and  2030  projections  are  in  GWP  values  from  the  5th 
Assessment Report (AR5) of the IPCC. 2021 data are based on the final inventory reports, 2022 data are based on approximated 
inventory reports and European Environmental Agency’s calculation of effort sharing emissions. The final data for 2021 and 2022 
will  be  established  after  a  comprehensive  review  in  2027.  The  2030  target  is  in  percentage  change  of  the  2005  base  year 
emissions. Distance to target is the gap between the 2030 target and projected effort sharing emissions with existing measures 
(WEM) and with additional measures (WAM), in percentage change from the 2005 base year emissions. The measures included 
for  the  2030  emission  projections  reflect  the  state  of  play  as  reported  in  Member  States'  draft  updated  national  energy  and 
climate plans or, if unavailable, as reported by 15 March 2023 as per Regulation 2018/1999. (2) Net removals are expressed in 
negative figures, net emissions in positive figures. Reported data are from the 2024 greenhouse gas inventory submission. 2030 
value  of  net  greenhouse  gas  removals  as  in  Regulation  (EU)  2023/839  –  Annex  IIa.  (3)  The  2030  national  objectives  for 
renewable  energy  and  energy  efficiency  are  indicative  national  contributions,  in  line  with  Regulation  (EU)  2018/1999  (the 
Governance  Regulation),  the  EU-level  2030  renewable  energy  target  set  out  in  Directive  EU/2018/2001  amended  by  Directive 
EU/2023/2413 (the revised Renewable Energy Directive) – 42.5% of gross final energy consumption with the aspiration to reach 
45% –, and the formula in Annex I to Directive (EU) 2023/1791 (the Energy Efficiency Directive). (4) Passenger battery electric 
vehicles (BEV) and fuel cell electric vehicles (FCEV). (5) The climate protection gap refers to the share of non-insured economic 
losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires, windstorms, and the insurance 
penetration rate. Scale: 0 (no protection gap) –4 (very high gap) (European Insurance and Occupational Pensions Authority, 2022). 
(6) Total water consumption in renewable freshwater resources available for a territory and period. (7) Material extractions  for 
consumption and investment. (8) Years of potential life lost through premature death due to exposure to particulate matter with a 
diameter  of  less  than  2.5  micrometres.  (9)  Share  of  habitats  in  good  conservation  status  according  to  the  records  submitted 
under  Art.  17  of  the  Habitats  Directive  (Directive  92/43/EEC)  for  2013-2018.  (10)  Multi-species  index  measuring  changes  in 
population abundances of farmland bird species. (11) Source: annex 12 of the Commission’s proposal for a soil monitoring law, 
SWD (2023) 417 final. (12) Estimates of organic carbon content in arable land. 

39 

Target200520192020202120222030WEMWAMProgress to climate and energy policy targetsGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq, %, pp34.439,9-13%-17%-20%-23%-50%-6-4Net greenhouse gas removals from LULUCF (2)Kt CO2eq-24 850-3 233-5 3543 4744 443-17.754n/an/aShare of energy from renewable sources (1) (3)%29%43%44%43%48%62%--Energy efficiency: primary energy consumption (3)Mtoe33,632,129,931,530,229,8Energy efficiency: final energy consumption (3)Mtoe25,225,523,424,923,320,6Projected20182019202020212022202120222030Green transition: mobility         Greenhouse gas emissions: road transportMt CO2e---9,99,8769,0786,66,1Share of zero-emission vehicles in new registrations (4)% 0,71,74,410,317,8912,1n/aNumber of publicly accessible AC/DC charging points --365145705514299178446956n/aShare of electrified railways%56,2%56,2%56,6%56,8%-56,1%-n/aGreen transition: buildings         Greenhouse gas emissions: buildingsMt CO2e---4,53,9537,0486,72,2Final energy consumption in buildings2015=100114,1%112,5%104,8%117,6%112,0%104,0%97,2% Climate adaptation         Climate protection gap (5)score 1-4--0,70,81,01,51,5n/a20182019202020212022202020212022State of the environmentWater | Water exploitation index (WEI+) (1) (6)% of renewable freshwater1,41,4---3,6--Circular economy | Material footprint (7)tonnes per person49,947,748,848,048,214,214,814,9Pollution | Years of life lost due to air pollution by PM2.5 (8)per 100.000 inhabitants88341231-545584-Biodiversity | Habitats in good conservation status (9)%32,014,7                       Common farmland bird index (10)2000=100777784--78--Green transition: agri-food sectorOrganic farming% of total utilised agricultural area13,0913,4813,9314,45-9,1--Nitrates in groundwatermg NO3/litre18,2516,1918,58--20,42--Food waste per capitaKg per capita116125-130131-Share of soil in poor health (11)%1341Soil organic matter in agricultural land (12)Mt per ha123----7.904--DistanceEU-27 
 
 
 
 
 
       
 
ANNEX 7: ENERGY TRANSITION AND COMPETITIVENESS 

This  annex  (65)  sets  out  Finland’s  progress 
and  challenges  in  accelerating  the  net-zero 
energy  transition  while  bolstering  the  EU’s 
competitiveness 
energy 
sector  (66). It considers measures and targets put 
forward in the draft updated National Energy and 
Climate Plans for 2030  (67).  

clean 

the 

in 

reduced 

substantially 

energy 
Finland’s 
dependence,  largely  due  to  the  Olkiluoto 3 
nuclear  power  plant  entering  operation  as 
well as a considerable increase in renewable 
installed  capacity.  Finland  remains  a  leading 
Member  State  in  energy  technology  innovation. 
Topics 
include 
further 
investments  into  grid  infrastructure  and  network 
capacity,  tapping  into  the  full  potential  of  energy 
efficiency  and  increasing  market  surveillance  on 
products with ecodesign and energy labelling. 

attention 

requiring 

In  line  with  overall  EU  trends,  energy  retail 
prices  in  Finland  declined  in  2023  but  have 
not yet reached pre-crisis levels.  Average gas 
retail prices for the industry decreased by 36% in 
the first semester 2023 and by 15% in the second 
semester while remaining 43% higher than the EU 
average.  This  made  Finland  the  second  most 
expensive  Member  State  for  industry  to  purchase 
gas.  In  2023,  average  retail  electricity  prices  for 
industrial  consumers  stood  at  a  28%  premium 
compared  to  the  2019-2020  average,  despite 
experiencing a downward trend following a peak in 
the  second  half  of  2022.  Meanwhile,  Finnish 
average  electricity  prices  for  households,  which 
had  been  on  an  upward  trend  in  the  first  half  of 
the year, dipped by 6% in the second semester of 
2023.  Average  electricity  prices  for  both  non-
household  and  household  consumers  remained 
considerably below the EU average throughout the 
year,  by  56%  and  16%  in  the  second  half  of  the 

(65)  This annex is complemented by Annex 6 (because the 

European Green Deal focuses on the clean energy transition) 
and by Annex 8 on action to protect the most vulnerable 
groups complementing ongoing efforts under the European 
Green Deal, REPowerEU and European Green Deal Industrial 
Plan. 

(66)  In line with the Green Deal Industrial Plan and the Net-Zero 

Industry Act. 

(67)  Finland submitted its draft updated NECP in June 2023. The 
Commission issued an assessment and country specific 
recommendations on 18 December 2023, Commission 
Recommendation, Assessment (SWD) and Factsheet of the 
draft updated National Energy and Climate Plan of Finland - 
European Commission (europa.eu). 

40 

respectively.  By 

year, 
the  second  semester, 
average  electricity  prices  for  Finnish  industrial 
consumers were the lowest in the EU.  

taken 

Finland  took  several  support  measures  in 
early  2023  to  limit  the  impact  of  high 
electricity  and  heating  costs,  especially  for 
low-income  families  with  children.  Increased 
into 
electricity  prices  can  now  be 
consideration when granting social assistance. The 
government  is  preparing  a  fixed-term  income  tax 
credit for electricity costs that will  be  in force for 
4 months  (reducing  tax  revenue  by  an  estimated 
EUR 265 million).  The  government  will  also 
prepare  a  separate  financial  support  scheme  for 
electricity  for  households  unable  to  fully  use  the 
fixed-term  income  tax  credit.  This  scheme  is 
expected  to  increase  spending  by  EUR 85 million. 
In  addition,  the  government  lowered  VAT  on 
electricity  from  24%  to  10%  between  December 
2022 and April 2023. 

Graph A7.1: Finland’s energy retail prices for 
households and industry & service 

(1) For industry, consumption bands are I3 for gas and IC for 
electricity, which refer to medium-sized consumers and 
provide an insight into affordability 
(2) For households, the consumption bands are D2 for gas 
and DC for electricity 
(3) Industry prices are shown without VAT and other 
recoverable taxes/levies/fees as non-household consumers 
are usually able to recover VAT and some other taxes 
Source: Eurostat 

have 

consumers 

In  relative  terms,  electricity  prices  for  non-
household 
increased 
significantly  compared  to  the  US  and  Japan 
up  until  the  second  half  of  2022.  However, 
they  have  since  registered  a  sharp  decline,  nearly 
reaching  the  levels  seen  in  the  US  and  Japan  by 
the  first  half  of  2023.  This  shift  indicates  a 

0,000,050,100,150,200,250,300,35€/KWhGas (industry & service) - FIGas (industry & service) - EUElectricity (industry & service) - FIElectricity (industry & service) - EUElectricity (households) - FIElectricity (households) - EU 
 
 
 
   
 
 
rebound 

potential 
international 
in 
competitiveness  of  energy-intensive  industries  in 
Finland. 

the 

Graph A7.2: Trends in electricity prices for non-
household consumers (EU and foreign partners) 

(1) For Eurostat data (EU and FI), the band consumption is ID 
referring to large-sized consumers with an annual 
consumption of between 2 000 MWh and 20 000 MWh, such 
as in electricity intensive manufacturing sectors, and gives an 
insight into international competitiveness  
(2) JP = Japan  
Source: Eurostat, IEA 

Consumer  empowerment  in  the  electricity 
market 
is  significant,  but  the  enabling 
framework  for  energy  communities  still 
needs to be further developed. No information 
is  available  on 
the  number  of  household 
consumers  with  a  fixed-price  electricity  or  gas 
in  Finland  (68).  Switching 
contract 
in 
electricity  increased  marginally  to  just  over  15%. 
The  legal  maximum  switching  period  is  10 days. 
99.9%  of  final  household  consumers  had  smart 
meters in 2022 (the EU average was 80%).  

rates 

Finland  has  substantially  reduced  its  energy 
dependence  on  non-EU  countries.  Around  a 
third of Finland’s energy supply (including 75% of 
its gas in 2021) used to come from Russia before 
Russia’s full-scale invasion of Ukraine, but energy 
imports  from  Russia  have  been  phased  out  since 
summer 2022 (except for some small amounts of 
nuclear fuel to the Loviisa nuclear power plant and 
some  LNG).  However,  Finland  declared  an  early 
warning  under 
the  Gas  Security  of  Supply 
Regulation on 6 May 2022 and activated the alert 
level on 27 October 2023, following the disruption 

(68)  All data on consumer empowerment are from the ACER 

Market Monitoring report 2023 (i.e. based on data for 2022); 
https://www.acer.europa.eu/Publications/2023_MMR_Energy_
Retail_Consumer_Protection.pdf. 

of  the  Balticconnector  pipeline,  which  restarted 
operations in April 2024. 

Finland  does  not  produce  any  natural  gas 
domestically.  Gas  accounted  for  around  3%  of 
gross available energy in 2022 (6% in 2021) and 
1.3% of gross electricity production (a decrease of 
4%  since  2021).  Most  of  the  gas  demand  comes 
from  the industrial  sector  (55%  in  2022)  and the 
electricity  and  heat  generation  sector  (27%  in 
2022).  The resilience of Finland’s gas system has 
been considerably improved in recent years by the 
commissioning of the Balticconnector; the creation 
of a regional gas market for the Baltic states; the 
construction  of  a  small-scale  LNG 
terminal 
connected to the national grid in Hamina; and the 
joint  rental  with  Estonia  of  a  floating  storage 
regasification  unit  (FSRU)  in  Inkoo  (69).  Finland 
does  not  have  any  underground  gas  storage 
facility.  Finland  managed  to  reduce 
its  gas 
demand  between  August  2022  and  December 
2023 by 40% (compared with the average for the 
previous  5 years)  –  the  second  highest  reduction 
rate in the EU after Denmark. Annual consumption 
amounted to 1.3 bcm in 2022 (2.6 bcm in 2021). 

(1 600 MW)  has  entered 

No  adequacy  issues  were  recorded  for  the 
security  of  the  electricity  supply  during  the 
first  half  of  2023  according  to  ENTSO-E 
analysis (70).  Since  2023,  the  Olkiluoto 3  nuclear 
power  plant 
into 
installed  wind  capacity  has 
operation  and 
increased  significantly.  Finland  aims  to  achieve 
carbon  neutrality  by  2035  by  maintaining  high 
shares  of  nuclear  energy;  increasing  renewable 
energy  sources  (RES);  electrifying  most  energy 
demand  across  the  economy;  improving  energy 
efficiency;  and  increasing  current  interconnection 
capacity up to the 20% target for 2030. 

plan 

(NECP) 

Finland’s  draft  updated  national  energy  and 
climate 
earlier 
commitment  to  phase  out  coal  and  peat  is 
not entirely clear. The NECP includes a decision 
to ban the use of coal in energy production by May 
2029, but coal may still be used as a backup fuel 

its 

on 

(69)  The Balticconnector was damaged on 7-8 October 2023 and 
was consequently out of service during the winter of 2023-
24. According to the ENTSOG winter supply outlook, this 
disruption did not pose a significant risk to the security of 
gas supplies in the region. The Commission is nevertheless 
closely monitoring ongoing developments. 

(70)  ERAA 2023 | ENTSO-E – ERAA 2023 (entsoe.eu).  

41 

050100150200250Index ( 2018 S2 = 100)JPUKUSFIEU 
  
 
 
in  exceptional  situations.  The  draft  updated  NECP 
does not mention the commitment that was made 
in the territorial just transition plans to reduce the 
use of peat by half for energy production by 2030, 
but it does seem to be consistent with those plans 
is 
overall.  However, 
missing  (71). 

information 

important 

capacity 

installed 

rose 
Renewable 
considerably by 26.5% in 2022 (compared to 
2021),  thanks  to  the  significant  increase  in 
onshore  wind  energy.  Finland’s  total  renewable 
energy  capacity  was  14 093 MW  in  2023  (72).  Its 
total  wind  capacity  in  2023  was  6 957 MW  (an 
increase of 23% y/y), made up of 6 884 MW from 
onshore wind and 73 MW from offshore wind  (73). 
Renewable  electricity  generation  is  projected  to 
reach 57% of all electricity generated in Finland in 
2030 (48% in 2022). Finland will reach 7.2 GW of 
wind power by 2030. Wind power will become the 
main  (41.8%)  source  of  renewable  electricity  (74), 
ahead  of  current  main  sources  such  as 
hydropower  (27.2%)  and  bioenergy  (25.5%).  As 
regards  the  acceleration  of  solar  deployment,  the 
total  installed  capacity  in  2023  was  900 MW  (75). 
Solar power is expected be 4.4% in 2030 (2.8 GW 
of installed capacity). 

Graph A7.3: Finland's installed renewable capacity 
(left) and electricity generation mix (right) 

(1) "Other" includes solid biofuels, renewable municipal waste 
and biogas 
Source: IRENA, Ember 

Finland  has  made  significant  progress  in 
implementing  reforms  to  accelerate  the 
deployment  of 
renewables.  Finland  has 
introduced  legislation  which  has  created  a  single 
the 
unified  application  process 
administrative  permit  application  and  granting 
streamline 
process. 
administrative  procedures 
limiting  the 
duration  of  the  licensing  process  for  priority 
investments  to  a  maximum  of  12  months  and 
allocating more resources to licensing authorities. 

Further  measures 

to 
include 

to  facilitate 

Finland’s high share of renewables in heating 
and  cooling  (60%  in  2022  and  expected  to 
reach  71%  by  2030)  is  mainly  related  to 
biomass use (93 TWh in 2030). Consumption of 
electricity from heat pumps is expected to increase 
by 60% by 2030 (13 TWh).  

Beside  renewables,  Finland  plans  to  achieve 
carbon  neutrality  by  maintaining  a  high 
share  of  nuclear  energy.  In  2022,  35%  of 
domestic  electricity  generation  (20%  of  the  total 
energy  supply)  came  from  nuclear  power.  In 
February  2023  the  Finnish  government  approved 
the  request  for  extending  the  operational  licence 
for  Units  1  and  2  of  Loviisa  nuclear  power  plant. 
This will therefore be the main nuclear investment 
project  in  the  coming  period,  with  an  estimated 
budget of EUR 1 billion to extend the lifetime until 
2050.  Following  Russia’s  full-scale  aggression 
against  Ukraine,  Finland  has  terminated  the 
contract with Rusatom Overseas to supply a VVER-
1200 reactor at Hanhikivi. 

Finland’s  grid  development  continues  to  be 
driven by the need to further strengthen the 
weak connections with the rest of the Nordic 
the 
system  and 
synchronous 

connect 

(71)  See the Commission’s assessment of the draft updated 

NECP.  

(72)  IRENA report, Renewable Energy Statistics 2024. The data 
might differ from the Eurostat data because different 
methodologies have been used to calculate AC and DC 
capacity. 

(73)  IRENA 2024 report. 

(74)  https://commission.europa.eu/system/files/2023-

12/SWD_Assessment_draft_updated_NECP_Finland_2023.p
df  

(75)  IRENA 2024 report. 

42 

 
 
 
(TSO): 

system 

production  of  renewables  in  the  region.  The 
first  EU list  of  projects  of  common  interest (PCIs) 
and  projects  of  mutual  interest  (PMIs),  which  the 
Commission  adopted  on  28 November 2023,  lists 
three  projects  promoted  by 
the  national 
two 
operator 
transmission 
interconnectors  between  Finland  and  Sweden 
(‘Aurora Line’ and ‘Aurora Line 2’) and one subsea 
cable  with  Estonia  (‘Estlink 3’).  The  two  400 kV 
transmission 
lines  with  Sweden  will  together 
increase Finland’s capacity by 1 600 MW by 2025 
and  2032  respectively,  thus  reducing  the  price 
differentials between the Nordic and Baltic regions 
and  making  the  Nordic  synchronous  system  more 
robust. In January 2023, Finland concluded a non-
binding  agreement  under  the  revised  TEN-E 
Regulation  with  the  objective  of  having  1 GW 
installed  offshore  renewable  capacity  by  2030, 
5 GW capacity by 2040 and 12 GW by 2050.  

Finland  has  made  significant  progress 
towards  the  2030  EU  targets  for  energy 
efficiency. In 2022, Finland had a primary energy 
consumption  of  30.2 Mtoe  (a  4.2%  decrease  on 
2021 and an 8.5% decrease on 2012). It had final 
energy  consumption  of  23.3 Mtoe 
(a  6.4% 
decrease on 2021 and a 7.3% decrease on 2012). 
In  the  last  year,  the  best  results  came  from  the 
industry  sector,  whose  final  energy  consumption 
decreased  by  10.2%;  and  the  worst  results  came 
from  the  transport  sector,  whose  final  energy 
consumption increased by 2.0%. 

Finland  has  good-quality  building  stock 
overall  (with  less  than  10%  of  residential 
heating energy consumption linked to on-site 
fossil  fuels  according  to  its  2020  LTRS)  but 
should  enhance  its  efforts  to  limit  energy 
demand  in  the  building  sector,  where  final 
energy  demand  reduction  does  not  seem 
sufficient  to  achieve  2030  targets  (76).  The 
residential  sector’s  final  energy  consumption 
declined  by  1.4% between  2020  and  2022  (77). 
Finland expects most of the energy savings in the 
building  sector  by  2030  to  come  from  the 
decarbonisation  of  heating  at  building 
level 
(e.g. removal  of  oil-fired  heating  boilers)  and  of 
centralised energy production (district heating and 

(76)  Finland has set a target to reduce gross heating demand in 
the residential sector by 22% by 2030 (compared to 2020). 

(77)  Final energy consumption in households from Eurostat 

(climate-corrected by the Joint Research Centre), with 2005-
2022 as a reference period. 

electricity).  Heating  and  cooling  accounted  for 
almost  82%  of  Finland’s  final  residential  energy 
consumption  in  2022  (an  increase  of  52%  on 
2021).  The  total  stock  of  installed  heat  pumps  in 
buildings  reached  around  1.4  million  and 
is 
projected  to  increase  from  10%  (2020)  to  20% 
(2030).  

Finland  carries  out  very  few  checks  on 
products  covered  by  eco-design  and  energy 
labelling.  This  has  prompted  concerns  with 
respect  to  the  level  playing  field  for  economic 
the 
uncertainty 
operators; 
compliance  levels  of  the  concerned  products  (and 
therefore  possible  missed  energy  and  CO2 
savings). 

regarding 

and 

the 

plans 

significant 

Finland 
cross-border 
hydrogen  infrastructure  development  in  the 
next  10 years, 
its  great 
into 
tapping 
renewable 
to  export  surplus 
potential 
hydrogen  to  neighbouring  countries.  Together 
with  Sweden  and  the  Baltic  states,  Finland  is 
promoting 
three  onshore  and  offshore 
hydrogen  transmission  projects  identified  in  the 
Commission’s  first  PCIs  and  PMIs  list.  The  aim  is 
that  the  Nordic  Hydrogen  Route  (Bothnian  Bay), 
the Baltic Sea Hydrogen Collector and the Nordic-
Baltic  Hydrogen  Corridor  will 
the 
renewable  hydrogen  produced  onshore  and 
offshore in the Finnish and Swedish waters of the 
Baltic  Sea  to  off-takers  among  the  Baltic  states 
and  ultimately  Poland  and  Germany.  This  should 
support the decarbonisation of industrial centres. 

transport 

Finland  remains  highly  dependent  on  non-EU 
countries  for  clean  energy  technologies  but 
does  have  a  few  small-scale  operations  for 
PV  and  battery  production.  Finland  is  home  to 
two  solar  module  manufacturing  plants  in  Juva 
and  Salo.  Finland  also  has  a  lithium-ion  battery 
manufacturing  unit  in  Varkaus  with  an  output  of 
100 MWh.  It  is  a  key  Member  State  in  the 
security 
from  an  EU  economic 
transition 
perspective:  it  has  the  largest  deposit  of  nickel  in 
the EU (3.8 Mt) and the only two cobalt-producing 
mines in the EU (see Annex 12). 

Finland is one of the leading Member  States 
in  terms  of  energy  technology  innovation.  In 
2020,  Finland  ranked  4th  among  IEA  countries  for 
government budget allocations on R&I as a share 
of  GDP.  Finland's  has  strong  expertise  in  smart 
grids,  bioenergy 
liquid  biofuels), 
(advanced 
batteries and nuclear. Finland hosts several world-

43 

 
 
class  research  facilities  and  its  public  and  private 
in 
sector  research  entities  are  highly  active 
international co-operation on energy innovation.  

In  2021,  Finland  set  a  goal  of  increasing 
total (public and private) spending on R&D to 
4%  of  GDP  by  2030  (vs  3%  of  GDP  in  2021). 
Finland supports a target for EU-wide spending on 
R&D  of 3% of EU-wide GDP by 2030 (vs 2.2% in 
2018).  The  R&D  Funding  Act,  which  entered  into 
force at the start of 2023, set increasing levels of 
annual  government  R&D  funding  to  ensure  that 
government R&D funding reaches 1.2% of GDP by 
2030. This is intended to encourage private-sector 
R&D funding to reach the 4% goal. Finland spends 
relatively  high  amounts  on  public  R&I  investment 
in energy technologies (e.g. on energy efficiency in 
industry;  and  on  renewable  fuels  &  bioenergy  – 
both  6%  of  total  EU  spending).  Finland’s  VTT  is  a 
state-owned non-profit research centre supervised 
the  Ministry  of  Economic  Affairs  and 
by 
Employment  and  one  of  its  three  main  business 
areas is R&I for carbon-neutral solutions. However, 
between 2010 to 2021, Finland’s public budget for 
energy  R&I  declined  significantly  from  0.17%  to 
0.06%  of  GDP,  mainly  due  to  lower  spending  on 
R&I for energy efficiency. 

44 

 
Table A7.1:  Key Energy Indicators 

(1) The ranking of the main suppliers is based on the latest available figures (for 2022) 
(2) Venture Capital investment includes Venture Capital deals (all stages), Small M&A deals and Private Equity (PE) growth deals 
(for companies that have previously been part of the portfolio of a VC investment firm or have received Angel or Seed funding) 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (03/2024), JRC SETIS (2024) 

45 

20192020202120222019202020212022Import Dependency [%] 43,0%43,2%38,0%40,9%60,5%57,5%55,5%62,5%of Solid fossil fuels 98,9%92,2%72,4%126,3%43,3%35,8%37,3%45,8%of Oil and petroleum products 95,1%102,4%95,5%101,7%96,7%96,8%91,7%97,7%of Natural Gas 100,6%100,3%99,6%103,1%89,7%83,6%83,6%97,6%Dependency from Russian Fossil Fuels [%]of Natural Gas 97,0%67,4%75,1%49,5%39,7%41,3%41,1%21,0%of Crude Oil88,3%80,9%81,3%16,9%28,8%26,7%26,4%19,5%of Hard Coal63,8%54,8%47,2%15,1%43,5%49,1%47,4%21,5%2016201720182019202020212022Gas Consumption (in bcm)2,5                   2,4                   2,6                   2,6                 2,6                 2,6                 1,3                 Gas Consumption year-on-year change [%]-8,6%-4,7%10,5%-1,3%-0,4%0,5%-48,4%Gas Imports - by type (in bcm)2,5                   2,3                   2,6                   2,6                 2,6                 2,6                 1,4                 Gas imports - pipeline2,5                   2,3                   2,6                   2,4                 2,4                 2,3                 1,1                 Gas imports - LNG0,00,00,10,20,20,20,3                 Gas Imports - by main source supplier (in bcm) (1)Russia2,5                   2,3                   2,6                   2,5                 1,7                 1,9                 0,7                 Estonia-                   -                   -                   -                 0,8                 0,6                 0,6                 20192020202120222023LNG Terminals - storage capacity m3 LNGNumber of LNG Terminals00011LNG Storage capacity (m3 LNG)00068.000151.000Underground StorageNumber of storage facilities00000Technical Capacity (bcm)0,00,00,00,00,020162017201820192020202120222023Gross Electricity Production (GWh) (2)68.757            67.523            70.263            68.650          69.267          72.122          72.219          -              Combustible Fuels26.399         25.030         27.959         25.923       21.391       23.672       20.693       -              Nuclear23.203         22.477         22.793         23.870       23.291       23.598       25.336       -              Hydro15.799         14.772         13.301         12.421       15.883       15.792       13.491       -              Wind3.068           4.795           5.839           6.025         8.256         8.507         12.022       -              Solar22                 48                 90                 147             219             298             392             Geothermal-                -                -                -              -              -              -              -              Other Sources266               401               281               264             227             255             285             -              Gross Electricity Production [%]Combustible Fuels38,4%37,1%39,8%37,8%30,9%32,8%28,7%-              Nuclear33,7%33,3%32,4%34,8%33,6%32,7%35,1%-              Hydro23,0%21,9%18,9%18,1%22,9%21,9%18,7%-              Wind4,5%7,1%8,3%8,8%11,9%11,8%16,6%-              Solar0,0%0,1%0,1%0,2%0,3%0,4%0,5%-              Geothermal0,0%0,0%0,0%0,0%0,0%0,0%0,0%-              Other Sources0,4%0,6%0,4%0,4%0,3%0,4%0,4%-              Net Imports of Electricity (GWh)18.951            20.425            19.936            20.042          15.104          17.768          12.517          -              As a % of electricity available for final consumption 23,1%24,8%23,7%24,3%19,3%21,3%16,0%-              Electricity Interconnection [%]28,8%28,2%29,1%29,0%24,2%24,0%20,1%Share of renewable energy consumption - by sector [%]-              Electricity32,7%35,0%36,5%38,0%39,6%39,6%47,9%-              Heating/cooling53,7%54,6%54,9%56,9%57,6%52,1%58,5%-              Transport8,8%18,7%14,8%14,8%14,3%20,7%18,8%-              Overall38,9%40,9%41,2%42,8%43,9%42,9%47,9%-                 20192020202120222023VC investments in climate tech start-ups and scale-ups (EUR Mln)47,00           52,42           104,52         87,39             108,57          as a % of total VC investment (3) in Finland start-ups and scale-ups5,3%3,9%4,7%3,9%11,7%Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)158,5           146,6           141,2           -              -              Public R&I (% GDP)0,066%0,062%0,056%-              -              Private R&I (EUR mln)508,8           405,0           -                -              -              Private R&I (% GDP)0,212%0,170%-                   -                 -                 ELECTRICITY/ENERGYCLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIESFinlandEUENERGY DEPENDNCE 
 
   
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

in 

and 

This  Annex  monitors  Finland’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
particularly  for  workers  and  households  in 
the 
vulnerable  situations.  Employment 
environmental 
sector 
services 
goods 
decreased  slightly  between  2015  and  2021  and 
now  comprises  5.5%  of  total  employment  (EU: 
2.7%).  The  green  transition  will  create  more  than 
11 500  jobs  in  processing  and  3 100  in  primary 
production  by  2030,  while  19 000 
jobs  are 
expected to be  lost in services (78).  Between 2015 
and  2022,  the  greenhouse  gas  emission  intensity 
of  Finland’s  workforce  (see  Graph  A8.1  and  Table 
A8.1)  declined  from  21.4  to  16.4  tonnes  per 
worker,  indicating  a  positive  trend  in  the  green 
transition, even though it is above the EU average 
of 14.3 tonnes (79).  Investment in skills, as part of 
the 
Council 
Recommendation of  2022  on  ensuring  a  fair 
transition  towards  climate  neutrality (80)  and  the 
REPowerEU  plan,  supports  the  fair  transition 
towards  climate  neutrality.  It  is  also  present  in 
(RRP), 
Finland’s  recovery  and  resilience  plan 
particularly  in  the  broad  reform  of  the  lifelong 
learning  services  that  focuses  on  training  and 
skills  development,  and  in  the  European  Social 
Fund  Plus  (ESF+),  which  supports  reskilling  and 
upskilling in, among other things, green skills. 

implementation 

the 

of 

The  green  economy  demands  new  skills  as 
well  as  support  for  workers  in  declining 
activities.  In  2023,  employment  in  Finland’s 
energy-intensive  industries  comprised  2.0%  of 
total  employment  (EU:  3.5%).  Employment  in 
mining  and  quarrying  has  risen  by  4.6%  since 
2015  (to  around  6  800  workers  in  2023)  but 
Finland’s  target  of  halving  the  use  of  peat  for 
energy by 2030 is expected to lead to a reduction 
in  employment  in  peat  extraction  and  related 
sectors  by  2 500  to  4 200  full-time  equivalents. 
The  economic  impact  is  significant  because  peat 
extraction is geographically  concentrated in small, 

economically  disadvantaged  areas.  The 
job 
vacancy  rate  in  construction,  a  key  sector  for  the 
green  transition,  is  lower  than  the  EU  average 
(1.6%  vs  3.6% 
in  2023)  (see  Graph  A8.2). 
Nevertheless,  63%  of  small  and  medium-sized 
enterprises (SMEs) in the sector reported that skills 
shortages  are  holding  them  back  in  general 
business  activities (81).  According  to  the  European 
Labour  Authority  (ELA) (82),  labour  shortages  were 
reported  in  2023  for  several  occupations  that 
required specific skills or knowledge for the green 
transition (83),  including  electrical  engineers  and 
construction supervisors. 

Graph A8.1: Fair transition challenges in Finland 

Source: Eurostat, EU Labour Force Survey, EMPL-JRC GD-
AMEDI/AMEDI+ and DISCO(H) projects (see Table A8.1). 

In 

sectors. 

Skills  are  key  for  ensuring  smooth  labour 
market  transitions  and  preserving  jobs  in 
transforming 
energy-intensive 
industries,  workers’  participation  in  education  and 
training  was  23.8.0%  in  2023,  well  above  the  EU 
average (10.9%). In Finland, 42% of SMEs indicate 
that  the  skills  required  for  greening  business 
activities  are  becoming  more 
(EU: 
42%) (81). 
its  projected 
If  Finland  matches 
contribution  to  the  EU’s  renewable  energy  target, 
between  2000  and  3  600  additional  skilled 
workers will be needed for the deployment of wind 
and  solar  energy,  which  may 
require  an 
investment in skills of EUR 2.3-2.9 million (84). The 

important 

(78)  Medium-term Climate Change Policy Plan 

(79)  Workforce-related calculations are based on the EU Labour 
Force Survey. Note, in 2023 country report for Finland, such 
indicators were calculated based on employment statistics in 
the national accounts. This may result in limited 
comparability across the two reports.  

(80)  Council Recommendation of 16 June 2022 on ensuring a fair 
transition towards climate neutrality (2022/C 243/04) covers 
employment, skills, tax-benefit and social protection 
systems, as well as essential services and housing. 

(81)  Eurobarometer on skills shortages, recruitment, and retention 

strategies in small and medium-sized enterprises. 

(82)  Based on the European Labour Authority 2024 EURES Report 
on labour shortages and surpluses 2023, i.e., data submitted 
by the EURES National Coordination Offices. 

(83)  Skills and knowledge requirements are based on the 

European Skills Competences and Occupations (ESCO) 
taxonomy on skills for the green transition. 

(84)  EMPL-JRC AMEDI+ project. 

46 

0.00.51.01.52.02.5Greenhouse gasemissions per workerEmployment inEnergy-intensiveindustriesEducation & trainingin Energy-IntensiveIndsutriesEnergy povertyTransport poverty(proxy)Carbon inequalityFI Latest vs EU LatestEU LatestFI 2015 vs EU Latest 
 
 
  
 
 
Table A8.1:  Key indicators for a fair transition in Finland 

Source: Eurostat (env_ac_ainah_r2, lfsa_egan2d, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-JRC 
GD-AMEDI/AMEDI+ and DISCO(H) projects. 

continuous  learning  reform  included  in  the  RRP 
addresses  the 
impacts  of  the  transition  on 
employment  by  including  measures  to  strengthen 
green  and  digital  skills.  The 
just 
transition  plans  will  facilitate  the  phasing  out  of 
peat production in Finland with the support of the 
Just  Transition  Fund,  while  addressing  the  social, 
employment and skills impacts by investing a total 
of EUR 465 million. In Finland, approximately 11% 
of  the  total  ESF+  funding  (EUR  604.7  million)  is 
earmarked to green skills and jobs.  

territorial 

Energy poverty indicators are well below the 
EU  average  and  improved  slightly  in  recent 
years. The share of the population unable to keep 
their  homes  adequately  warm  decreased  from 
1.7%  in  2015 to  1.4% in 2022  and  is  well  below 
the  EU  average  (9.3%) (85).  A  relatively  small 
proportion  of  households  are  energy  poor,  which 
has  continued  to  decrease  despite  the  spike  in 
energy  prices  between  2021  and  2022  due  to 
supply  constraints  caused  by  the  COVID-19 
pandemic  and  Russia’s  war  of  aggression  against 
Ukraine.  This  improvement  was  attributed  to 
emergency measures implemented in Finland (see 
Annex  7).  Furthermore,  3.9%  of  the  population  at 
risk of poverty (AROP) (EU: 20.1%) were unable to 
keep  their  home  adequately  warm  in  2022. 
However, 
the 
population at risk of poverty  spent a considerable 
proportion  of  their  budget  (more  than  6%)  on 
private transport fuels (EU: 37.1%) (86). 

in  January  2023,  23.8%  of 

Graph A8.2: Job vacancy rate in transforming 
sectors 

C - Manufacturing 
E - Water supply; sewerage, waste management and 
remediation activities 
F - Construction 
H - Transportation and storage 
Source: Eurostat jvs_a_rate_r2. 

in 

issue 

leading 

In  2021, 

Consumption  footprint  inequality  remains  a 
to  environmental 
critical 
inequalities 
the 
Finland. 
consumption  footprint  for  the  richest  20%  of  the 
population in 2021 was 2.0 times higher than the 
footprint  of  the  poorest  20%,  compared  to  an  EU 
average  of  1.8 (87).  For  both  groups 
the 
consumption  footprint  is  highest  for  food  and 
housing.  In  Finland,  the  average  levels  of  air 
pollution in 2021 stood below the EU average (5.0 
vs 11.4 µg/m3 PM2.5), and all regions were below 
critical  levels  of  air  pollution (88).  According  to 
estimates, around 160 premature deaths annually 
have been due to exposure to air pollution (89). 

(85)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(86)  Affordability of private transport fuels is one key dimension 

of transport poverty. The indicator has been developed in the 
context of the EMPL-JRC GD-AMEDI/AMEDI+ projects. 
Methodology explained in Economic and distributional 
effects of higher energy prices on households in the EU 

(87)  Developed in the context of the EMPL-JRC DISCO(H) project. 
Methodology explained in Joint Research Centre, 2024. 
Carbon and environmental footprint inequality of household 
consumption in the EU. JRC137520. The EU average refers to 
EU27 without Italy (household income data not available for 
IT in the HBS) 

(88)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3). 

(89)  EEA - Air Quality Health Risk Assessment 

47 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%CEFHEU 2023FI 2023FI 2015IndicatorDescriptionFI 2015FIEUGHG per workerGreenhouse gas emissions per worker – CO2 equivalent tonnes21.416.4 (2022)14.3 (2022)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24) and automotive (C29)2.2%2.0% (2023)3.5% (2023)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries22.9%23.8% (2023)10.9% (2023)Energy povertyShare of the total population living in a household unable to keep its home adequately warm1.7%1.4% (2022)9.3% (2022)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport17.2%23.8% (2023)37.1% (2023)Carbon inequalityRatio between the consumption footprint of the top 20% vs bottom 20% of the income distribution2.02.0 (2021)2.7 (2021) 
 
  
 
 
  
 
Finland  is  taking  important  steps  towards 
achieving  a  fair  transition  to  climate 
neutrality.  Russia’s  war  of  aggression  against 
Ukraine,  changes  in  consumer  behaviour,  rising 
interest  rates  and  prices have  made  the  situation 
particularly  difficult  for  construction  and  industry. 
Several  plant  closures  are  ongoing,  as  well  as 
mass redundancies. At the same time, large-scale 
wind  energy  projects  are  underway,  as  are 
investments  in  solar  energy  and  green  hydrogen 
production.  The  National  Foresight  System  is 
expected to contribute to the analysis of the green 
transition’s  impact.  Training  programmes  related 
to  the  green  transition  and  environmental  issues 
have already been implemented. However, in other 
areas Finland provides support to different groups 
the  challenges 
without  specifically 
emerging  from  the  green  transition.  This  is  the 
case  in  the  public  employment  services,  the 
support 
the  social 
protection  system.  In  addition,  the  involvement  of 
workers  and  their  representatives  in  the  green 
transition process should be strengthened (90). 

to  entrepreneurship  and 

targeting 

(90)  Based on the monitoring review of the Council 

Recommendation on ensuring a fair transition towards 
climate neutrality, which took place in October 2023. 

48 

 
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

circularity, 

The green transition of industry and the built 
environment,  in  particular  decarbonisation, 
resource  efficiency  and 
is 
Finland’s 
essential 
competitiveness (91). In this regard, priorities for 
Finland  are  reducing  its  reliance  on  incineration 
and  increasing  its  use  of  circular  materials  and 
circular  business  models 
industry  and 
construction. 

boost 

to 

in 

is  an 

‘eco-innovation’ 

leader; 
Finland 
however it is not faring well in other Circular 
Economy  aspects  with  an  economy  still 
highly  impacting  the  environment.  Finland 
reported the highest material footprint in the EU in 
2022, amounting to 46 tonnes per capita, slightly 
lower than in the previous year. Similarly, in 2020, 
the country produced more waste  per capita than 
any  other  Member  State:  almost  21  tonnes  per 
capita. In 2020, the monetary waste intensity was 
above the  EU  average,  with  0.58 kg  of  waste  per 
capita per EUR’10 (92) generated by the economy – 
versus an EU average of 0.18 kg per capita. 

Graph A9.1: ETS emissions by sector since 2013 

Source: European Commission 

In  2023,  the  sectors  covered  by  the  EU 
emissions trading system (ETS) in Finland (93) 
emitted  34%  less  greenhouse  gases  than  in 
2019,  with  the  largest  decreases  in  2020  and 
2023  respectively.  In  2023,  32%  of  greenhouse 
gases emitted by Finland’s ETS installations came 
from  power  generation,  less  than  the  EU  average 

(91)  See also Annexes 6, 7 and 12. 

(92)  In 2010 prices. 

(93)  This analysis excludes air travel. For more details and the 
data sources, see Weitzel, M; van der Vorst, C. (2024), 
Uneven progress in reducing emissions in the EU ETS, JRC 
Science for policy brief, JRC138215, Joint Research Centre. 

the  metals 

(57%).  Of  the  total  emissions  from  all  industry 
sectors, 
industry  emitted  43%, 
refineries  26%,  and  cement  and  lime  production 
10%.  20%  of  emissions  came  from  other 
industries.  Between  2019  and  2023,  the  power 
generation  sector  reduced  emissions  by  57%, 
while the industry sectors decreased emissions by 
13%. Since 2013, greenhouse gas emissions have 
declined by 74% in power generation and by 17% 
in  the  industry  sectors.  This  has  resulted  in  an 
overall reduction of 51% since 2013. 

Finland underperforms in recycling municipal 
waste  and 
relies  heavily  on  waste 
incineration.  Finland  is  on  track  to  meet  the 
2025 recycling target for all packaging waste, and 
the 2035 landfill target. However, Finland is at risk 
of missing the 2025 target (55%) for the recycling 
of  municipal  waste,  which  reached  39%  in  2021. 
Furthermore,  the  country  is  still  highly  reliant  on 
incineration. By contrast, Finland is performing well 
in  e-waste  recycling:  88.1%  of  electrical  and 
in  2021. 
electronic  equipment  was  recycled 
Furthermore,  15  new  patents  on  waste  recycling 
were  registered  in  2020,  slightly  in  decline  after 
the peak of 19 in 2016.  

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

from 

Finland  would  benefit 
improving 
construction and demolition waste treatment 
to meet the EU targets. Finland’s recovery rate 
was 
lower  than  the  EU  average  and  only 
accounted  for  63%  of  total  construction  and 

49 

00.20.40.60.8105101520253020132014201520162017201820192020202120222023Emissions relative to 2013Mt CO2eCement & LimeChemicalsMetalsRefineriesPower generationOtherFinland (both axes)5515666096300010020030040050060070020182019202020212022Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27 
 
 
  
 
 
           
 
 
  
of 

the 

industrial 

0.09 g/EUR’10.  Moreover, 

from 0.13 in 2018 to 0.10 in 2021, versus an EU 
in 
average 
2010-2021, 
sector 
Finnish 
decreased  its  emissions  of  main  pollutants  into 
the  air  and  water.  Specifically,  nitrogen  released 
into water decreased by 13%. In 2020, the country 
produced  592 kg  of  hazardous  waste  per  capita, 
well  above  the  EU  average  of  214 kg  per  capita, 
and treated 92.9% of it. 

The  built  environment  system  is  on  track  to 
reduce its impact on nature and climate and 
improve  its  resilience.  Finland  has  developed 
simplified  life  cycle  approach  methodologies  and 
whole-life carbon databases, intending to facilitate 
whole-life carbon accounting and regulation in the 
future.  Finland  plans  to  introduce  CO2  limits  for 
new  buildings  by  2025.  In  2018,  the  soil  sealing 
index  stood  at  107.7  below  the  EU  average. 
Finland’s  sealed  area  per  capita  is  below  the  EU 
average,  and  soil  sealing  affects  0.47%  of  the 
total  area,  versus  an  EU  average  of  1.86%.  In 
2012-2018,  net  land  take  stood  below  the  EU 
average  and  dramatically  decreased  by  78% 
compared  with  2006-2012.  Finland  is  on  track  to 
reach no net land take by 2050. According to the 
European  Environment  Agency,  Finland  reported 
the  highest 
recycling  and 
densification  in  the  EU  in  2006-2012,  more  than 
46%  of  total  land  consumption,  versus  an  EU 
average  of  13.5%.  For  example,  in  Helsinki,  land 
recycling  and  densification  accounted  for  60%  of 
total  land  consumption.  The  Finnish  biodiversity 
strategy  and  action  plan  for  2020  provides  the 
basis for the green infrastructure policy. European 
Environment  Agency  data  for  9  main  cities  show 
that  the  average  tree  coverage  reached  58%  in 
2018,  almost  double  the  EU  average  share  – 
30.3%. 

levels  of 

land 

demolition  waste  generated  in  2020.  Finland 
missed the Waste Framework Directive’s target of 
recovering 70% by 2020. 

the 

The Finnish national energy and climate plan 
importance  of  circular 
recognises 
economy beyond waste management. Like the 
2019  plan,  the  2023  plan  addresses  circular 
economy  connections  with  climate  mitigation  and 
the bioeconomy. The 2023 plan also mentions the 
importance  of  early  product  stages  and  training. 
However,  it  includes  few  references  to  circular 
economy in relation to decarbonisation.  

There is still room to make better use of the 
potential  of  the  circular  economy  transition 
to  improve  the  efficiency  of  the  Finnish 
industry.  Both  the  circular  material  use  rate  and 
resource productivity are among the lowest in the 
EU. The circular material use rate dropped to 0.6% 
in  2022,  and  resource  productivity  stood  at  0.89 
purchasing power standards per kilogram in 2022. 
Resource  productivity  expresses  how  efficiently 
the  economy  uses  material  resources  to  produce 
wealth.  Improving  resource  productivity  can  help 
minimise  negative  impacts  on  the  environment 
and  reduce  dependence  on  volatile  raw  material 
markets.  Finland  was  dependent  on  imports  for 
18.4%  of  materials  used  in  2022,  compared  with 
an  EU  average  of  22.4%,  making  the  country 
comparatively  less  vulnerable  to  supply  chain 
disruptions.  Water  abstraction  for  manufacturing 
purposes  accounted  for  63.4%  of  total  water 
abstracted  in  2019,  making  manufacturing  the 
sector with the highest impact on water resources. 

The  impact  of  particulate  matter  emissions 
from  Finnish  industries  on  air  quality  is  in 
line  with  the  EU  average.  The  grams  of  PM10 
emitted  per  economic  output  (EUR’10)  decreased 

Table A9.1:  Circularity indicators 

Source: Eurostat, European Environment Agency 

50 

201820192020202120222023EU-27Latest yearIndustryResource productivity (purchasing power standard (PPS) per kilogram)0,70,80,80,80,9-2,52022Circular material use rate (%)4,44,54,41,60,6-11,52022Eco-innovation index (2013=100)169,9169,4170,6170,9178,0-121,52022Recycling of plastic packaging (%)31,142,039,442,9--40,72021Cost of air emissions from industry (EUR bn)7,16,85,75,9--352,72021Built environmentRecovery rate from construction and demolition waste (%)74,0-63,056,6--89,02020Soil sealing index (base year = 2006)102,6-----103,42018Non-residential floor area (m2 per capita)43,443,944,5---18,02020Waste backfilled (%)1,1-2,7-2,5-9,92020 
 
           
 
ANNEX 10: DIGITAL TRANSFORMATION 

infrastructure/connectivity 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes  Finland’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP). Finland allocates 28.9% of its total Recovery 
and  Resilience  Facility  budget  to  digital  (EUR  0.5 
billion) (94).  Under  Cohesion  Policy,  an  additional 
EUR  0.4  billion  (20%  of  the  country’s  total 
Cohesion  Policy  funding) 
is  allocated  to  the 
country’s digital transformation (95). 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for the EU’s successful digital 
transformation  by  2030.  Finland’s  national 
roadmap outlines the actions it intends to take to 
reach the objectives and targets at national  level. 
The first Report on the State of the Digital Decade 
highlighted the need to accelerate and deepen the 
collective efforts to reach the EU-wide targets and 
objectives (96).  Among  others,  a  digitally  skilled 
population 
the  development  and 
adoption  of  digital  technologies  and  leads  to 
productivity  gains  and  new  business  models.  It 
also  leads  to  higher  inclusion  and  participation  in 
an environment increasingly shaped by the digital 
transformation (97). 
technologies, 
infrastructure  and  tools  all  play  a  role 
in 
addressing 
the  current  structural  challenges, 
including  strategic  dependencies,  cybersecurity 
and climate change. 

increases 

Digital 

(94)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII to the 
Recovery and Resilience Facility Regulation. 

(95)  This amount includes all investment specifically aimed at or 
substantially contributing to digital transformation in the 
2021-2027 Cohesion Policy programming period. The source 
funds are the European Regional Development Fund, the 
Cohesion Fund, the European Social Fund Plus, and the Just 
Transition Fund. 

(96)  European Commission (2023): Report on the state of the 

Digital Decade 2023, 2023 Report on the state of the Digital 
Decade | Shaping Europe’s digital future (europa.eu). 

(97)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org) and OECD (2019): Going Digital: 
Shaping Policies, Improving Lives – Summary, 
https://www.oecd.org/digital/going-digital-synthesis-
summary.pdf. 

was 

among 

Finland 

indicators, 

In  the  2024  Digital  Economy  and  Society 
the 
Index, 
best-performing  countries  in  digital  skills  on 
most 
including  the  share  of  the 
population  having  at  least  basic  digital  skills,  the 
proportion  of  ICT  specialists  and  the  share  of  ICT 
graduates,  which  remained  the  same  or  slightly 
increased  compared  to  2023  data.  Given  the  size 
and relevance of ICT in the economy, the demand 
for  ICT-skilled  workers  is  high  and  companies 
report  difficulties 
is 
implementing  several  measures  to  address  this, 
including  activities  to  increase  the  intake  of 
students  to  ICT  studies  but  there  is  still  room  for 
additional action.  

in  hiring (98).  Finland 

the 

Finland’s score is broadly in line with the EU 
average  on 
indicators  for  digital 
infrastructure/connectivity.  However,  due  to 
the  features  of  its  socio-geography  (large  but 
sparsely populated territory), Finland scores below 
the  EU  average  on  very  high  capacity  network 
(VHCN) and fibre to the premises (FTTP) coverage. 
By contrast, for overall 5G coverage, it scores well 
above  the  EU  average  (98%  versus  89%).  5G 
coverage on the 3.4-3.8 GHz spectrum band, which 
is  essential  for  enabling  advanced  applications 
requiring large spectrum bandwidth, is 90%, which 
is also much higher than the EU average of51%. 

Finland  excels 
in  the  digitalisation  of 
businesses, with indicators significantly above the 
EU average for SMEs with at least a basic level of 
digital  intensity,  for  enterprises  using  big  data 
solutions  and,  especially,  for  the  use  of  cloud 
services  and  artificial  intelligence.  In  2022,  4.9% 
of  enterprises  in  Finland  reported  ICT  service 
outage  due  to  cyberattacks  (e.g.  ransomware 
attacks,  denial  of  service attacks).  Over  the  same 
year,  43%  of  enterprises  developed  or  reviewed 
their 
ICT  security  policy  within  the  previous 
12 months. 

public 

of 
for  online 

the 
Finland  performs  very  well  on 
digitalisation 
The 
services. 
possibilities 
interaction  between 
government authorities and the public – citizens as 
well  as  businesses  –  are  approaching  saturation 
and  for  businesses,  the Digital  Decade  target  has 
already  been  reached.  For  access  to  electronic 
health  records,  Finland  scores  higher  than  the  EU 

(98)  Source: Eurostat – European Union Survey on ICT Usage and 

e-Commerce in Enterprises. 

51 

 
 
 
 
 
Table A10.1:Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The fibre to the premises coverage indicator is included separately as its evolution will also be monitored separately and taken 
into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75% of EU enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.   

Source: Digital Economy and Society Index 

average.  By  far  the  largest  number  of  digital 
transformation  measures  in  the  Finnish  RRP  are 
focused  on  public  services  including  measures  to 
support  the  digital  transformation  of  healthcare 
and  of  public  services,  with  a  particular  focus  on 
data-driven  innovation,  the  exchange  of  digital 
information and the use of public sector data. 

52 

EUDigital Decade target by 2030 2022202320242024(EU)Digital skillsAt least basic digital skills79%79%82%56%80%% individuals20212021202320232030ICT specialists (1)7.4%7.6%7.6%4.8%20 million% individuals in employment aged 15-7420212022202320232030Digital infrastructure/connectivityFixed very high capacity network (VHCN) coverage68%71%78%79%100%% households20212022202320232030Fibre to the premises (FTTP) coverage (2)40%50%61%64%-% households2021202220232023Overall 5G coverage72%95%98%89%100%% populated areas20212022202320232030Digitalisation of businessesSMEs with at least a basic level of digital intensity82%NA86%58%90%% SMEs2021202320232030Data analyticsNANA41%33%-% enterprises20232023Cloud66%66%73%39%-% enterprises2021202120232023Artificial intelligence16%16%15%8%-% enterprises2021202120232023AI or cloud or data analytics (3)NANA80%55%75%% enterprises202320232030Digitalisation of public servicesDigital public services for citizens90929179100Score (0 to 100)20212022202320232030Digital public services for businesses9310010085100Score (0 to 100)20212022202320232030Access to e-health recordsNA908379100Score (0 to 100)2022202320232030Finland 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Finland’s  research  and 
innovation  system,  which 
is  essential  for 
delivering  the  twin  transition  and  ensuring  long-
term competitiveness. 

some  EU  countries  in  business  R&D  expenditure 
(graph  A11.1).  While  it  has  been  on  an  increasing 
trend in the last few years, business R&D intensity 
is above the EU average (1.48% in 2022), but still 
not  back  to  its  2010  level  (2.01%  in  2022 
compared to 2.58% in 2010). 

Graph A11.1: Business enterprise expenditure on 
R&D as % of GDP, 2010-2022 

Source: Eurostat 

R&I investments  planned  under  the  recovery 
and  resilience  plan  (RRP)  and  the  cohesion 
policy  programme  ‘innovation  and  skills  in 
Finland  2021-2027’  are  expected  to  help 
foster business R&D. Business Finland, the main 
public-sector  operator  in  supporting  enterprises, 
supervised  by  the  innovation  department  of  the 
Ministry  of  Employment  and  Economy,  provides 
among  other  EU-cofunded  measures  EUR 100 
million  funding  from  the  RRF  to  some  leading 
companies  that  take  on  important  economic  and 
societal  challenges.  Those 
‘locomotives’  are 
developing  wide  ecosystems  by  involving  large 
number  of  SMEs.  For  example,  the  Wärtsilä-led 
collaboration  ecosystem  to  develop  balancing 
solutions  for  the  renewable  energy  transition 
involves  more  than  200  companies.  The  partners 
committed  to  together  investing  EUR 200  million 
in  the  research  by  2028.  As  highlighted  in  the 
OECD  Economic  Survey  2022,  business  R&D 
spending is concentrated among large firms (albeit 
to  a  lesser  extent  than  in  other  high-performing 
countries such as Sweden) and the weight of SMEs 
is  particularly  small  in  applied  research.  Further 
efforts to diversify Finland’s innovators base could 
thus  help  the  country  unleash  its  full  innovation 
potential. 

Finland is an  ‘innovation  leader’.  According  to 
the  2023  edition  of  the  European  Innovation 
Scoreboard (99),  its  innovation  performance  has 
been  among  the  top  three  in  the  EU,  behind 
Denmark  and  Sweden.  The  indicators  on  which 
there  was  most  progress  according  to  the  2023 
Scoreboard were Business process innovators and 
Sales  of  innovative  products,  while  indicators 
showing significant decline were Lifelong learning, 
Public-private 
Design 
co-publications, 
applications.  In  regional  comparison,  the  national 
high  innovation  performance  is  driven  by  the 
Helsinki-Uusimaa  region.  Three  regions  are  a 
strong 
is  a  moderate 
innovator. 

innovator  and  Åland 

and 

It 

is 

in  business  R&D 

Finland’s  R&D  intensity  stood  at  2.95%  in 
2022, down from 2.99% in 2021 and still far 
from the country’s ambitious target of 4% of 
GDP  to  be  invested  in  R&D  by  2030.  After 
dropping  to  2.72%  of  GDP  in  2016,  owing  to  a 
investment, 
strong  decline 
Finland’s  R&D  spending  started  recovering  as  of 
2017. At the end of 2022, the Parliament adopted 
a  law  aiming  at  an  increase  in  public  R&D 
spending with a view to reaching 1.2% of GDP by 
2030. 
to  be  matched  with  business 
investments  of  2.8%  of  GDP.  To  achieve  the  4% 
target,  the  government-appointed  Parliamentary 
Working  Group  on  Research,  Development  and 
Innovation  set  up  a  long-term  plan  for  R&D 
funding.  As  a  result,  the  Act  on  Research  and 
Development  Funding  was  adopted  at  the  end  of 
2022, foreseeing growth of the state R&D budget 
from € 2.4 billion in 2023 to € 4.3 billion in 2030. 
The  steady  annual  increase  of  relevant  budget 
allocations  allows  for  an  additional  EUR 280 
million  to  be  invested  in  R&D  each  year  between 
2024  and  2030.  Indeed,  in  the  2024  budget,  the 
EUR 280 million increase was followed through by 
the government. 

Reaching the 4% target will require boosting 
business R&D investment. Finland is still behind 

(99)  Available at 

https://ec.europa.eu/assets/rtd/eis/2023/ec_rtd_eis-country-
profile-fi.pdf. 

53 

00.511.522.53BelgiumSwedenAustriaGermanyFinland20102022 
 
 
     
 
Table A11.1:Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source: Eurostat, OECD, JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical Database), Invest Europe 

54 

R&D intensity (GERD as % of GDP)3.712.872.912.992.952.24Public expenditure on R&D as % of GDP1.10.940.940.910.930.73Business enterprise expenditure on R&D (BERD) as % of GDP2.581.911.952.052.011.48Scientific publications within the top 10% most cited publications worldwide as % of publications of the country 11.511.511.65 9.6Patent Cooperation Treaty (PCT)  patent applications per billion GDP (in PPS)9.97.87.53.4Public-private scientific co-publications as % of total publications13.112.712.112.511.97.6Public expenditure on R&D financed by business enterprise as % of GDP0.0760.0460.0360.0350.054New graduates in science & engineering per 1000 pop. aged 25-3423.817.818.417.516.9Total public sector support for BERD as % of GDP0.070.080.0890.204R&D tax incentives: foregone revenues as % of GDP0000.104Share of environment-related patents in applications filed under PCT (%)14.814.513.614.7Venture capital (market statistics) as % of GDP0.0620.0580.01340.2080.2060.085Employment share of high growth enterprises measured in employment (%)14.3115.63 12.51Human capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation Finance for innovation and economic renewal2022EU average (1)Key indicators Quality of the R&I systemAcademia-business cooperationFinland2010201520202021 
 
     
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

Finland  is  traditionally  a  good  environment 
for  doing  business  and  came  11th  in  the 
2023 International Institute for Management 
Development  (IMD)  world  competitiveness 
rankings (100).  This  was  a  drop  of  three  places 
compared  with  the  previous  year  and  was  due  to 
falls 
in  both  the  government  and  business 
efficiency  categories  (down  two  and  four  places 
respectively).  Despite  some  deterioration  because 
of  the  general  economic  climate,  Finnish  SMEs 
continued  to  benefit  from  favourable  financing 
conditions  (according  to  the  2023  Access  to 
Finance of Enterprises Survey (SAFE)  (101)). 

Productivity has stagnated in the face of an 
ageing  and  falling  working-age  population. 
For  more  than  a  decade  real  labour  productivity 
has  been  consistently below  both  the  EU  average 
and  the  averages  of  regional  neighbours.  Real 
labour  productivity  in  terms  of  GDP  per  person 
employed  fell  by  1.3%  in  2022,  which  was 
significantly  worse  than  the  EU  average  (+1.4%). 
For  industry,  real  labour  productivity  per  person 
decreased by 2.5% in 2023, again worse than the 
EU  performance  (-1.2%).  Total  factor  productivity 
growth has been fluctuating around zero in recent 
years (below both the EU-27 average and the euro 
area  average).  Explanations  for  this  poor  recent 
performance 
differences 
(professional  activities  and  manufacturing  have 
performed well but the construction sector, and to 
a  lesser  degree  industry  and  agriculture,  have 
performed  badly 
(see  Graph  A12.1).  Low 
investment  in  areas  that  support  productivity 
including 
growth 
(machinery  and  equipment, 
technology 
information 
equipment  and  intellectual  property  products)  is 
restraining growth.  

communication 

sectoral 

include 

and 

Access to commodities or raw materials and 
access  to  other  components,  semi-finished 
products,  services  or  equipment  were  two 
key  obstacles  to  Finnish  business  activity 
Investment 
according  to  the  2023  EIB 
Survey (102).  The  same  survey  found  that  the 
availability of skilled labour is the most significant 
investment  for  Finnish 
barrier 
companies  (82%  cite  this  as  an  obstacle  to 
investment). 

long-term 

to 

(100) World Competitiveness Rankings - IMD 

(101) Data and surveys - SAFE (europa.eu) 

Graph A12.1: Productivity by sector 

Source: Commission calculations 

Finland  remains  an  Innovation  Leader  (103). 
However,  R&D  intensity  decreased  to  2.95%  in 
2022  (2.99%  in  2021)  fell  far  short  of  Finland’s 
ambitious  target  of  4%  of  GDP  being  invested  in 
R&D by 2030. Reaching the 4% target will require 
increased business R&D investment, but Finland is 
behind some other EU Member States in this area 
and  business  R&D  spending  tends  to  come  from 
large  firms.  SMEs play  a particularly  small  role  in 
applied research.  

2022 

results 

(particularly 

the 
PISA 
increasing  share  of  15-year-olds  with 
insufficient basic skills) point to weaknesses 
in  the  education  system.  Underachievement  in 
basic  skills  has  been  growing  in  the  past  decade 
and  the  share  of  top  performers  has  been 
shrinking.  Underperformance  is  especially  high 
among  students  with  disadvantaged  and  migrant 
backgrounds  (see  Annex  15).  In  light  of  the 
demographic  situation,  the  quality  of  Finland’s 
future human capital seems particularly important 
for competitiveness.  

Finland’s  export  intensity  is  low  for  a  small 
open  economy  and 
levels  of  EU  trade 
integration are amongst the lowest in the EU. 
Finland’s  trade  integration  is  well  below  the  EU 
average,  expressed  as  a  percentage  ratio  of 
imports  and  exports  to  national  GDP (23.4% 
compared  with  an  EU  average  of  42.9%). 
According 
the  2022  Digital  Society  and 
Economy  Index  (DESI),  Finland  ranks  first  among 
the EU Member States for the integration of digital 
technology  by  business.  In  the  2023  edition  of 
DESI,  nearly  90%  of  Finnish  SMEs  had  at  least  a 
basic level of digital intensity (considerably above 
the EU average of 69%). SMEs’ use of digital tools 

to 

(102) EIB Investment Survey: European Union overview 

(103)  See Annex 11 on Innovation for more detail. 

55 

9095100105110115120125130135201820192020202120222023Agriculture, forestry and fishingIndustry (except construction)ConstructionWholesale and retail trade, transport, accommodation and food service activitiesInformation and communicationFinancial and insurance activitiesProfessional, scientific and technical activities; administrative and support service activities 
 
 
     
 
 
infringement  procedures  (the  EU  average  was 
26)  (106).  Finland solved 80% of SOLVIT cases (5) 
it  handled  as  lead  centre  (slightly  below  the  EU 
average of 88.3%).  

(OOTS) 

procedures 

administrative 

implementation  of  the  core 
In  Finland, 
components  needed  to connect to the  ‘once-
only’  technical  system 
is  well 
advanced. The system will enable the automated 
exchange  of  evidence  between  cross-border 
authorities. It is part of the Single Digital Gateway 
improves  online  access  to 
Regulation,  which 
and 
information, 
assistance  within the  EU. This  makes  it  easier  for 
citizens  and  businesses  to  navigate  the  single 
market.  Working  on  the  completion  of  a  national 
eIDAS-notified  eID  scheme  is  key  to  Finnish 
citizens  fully  benefiting  from  the  system  when 
moving abroad (as obtaining an eIDAS-notified eID 
scheme  would  be  for  legal  persons).  Finland 
should address obstacles such as the creation of a 
legal  basis 
for  cross-border  exchange.  The 
onboarding  of  competent  authorities  onto  the 
OOTS 
is  crucial  for  the  system  to  function 
smoothly and to reduce administrative burden. 

and  services  (e.g. e-commerce)  has  doubled  over 
the last couple of years. However, a relatively low 
share of Finnish SMEs sell online cross-border (8% 
versus the 9% average in the EU) according to the 
same  Index,  despite  Finland  being  among  the 
leaders  in  business  digitalisation.  Compared  to 
Nordic  peers,  and  to  the  EU,  a  low  proportion  of 
SMEs  are 
in  high-knowledge 
intensive  industries  (28%  vs  47%  in  Sweden  and 
in  2021)  (104).  Labour 
31.7% 
shortages risk becoming an obstacle to the further 
development  of  the  ICT  sector.  The  most  intense 
shortages  are  found  in  several  knowledge  areas, 
such  as  computers,  electronics  and  mathematical 
knowledge (see Annex 14 for more detail). 

in  Denmark 

concentrated 

Finnish  industrial  strategy  centres  on  the 
ambitious objectives for a green transition to 
climate  neutrality  and  Finland  is  a  leader  in 
climate  technology  innovation.  The  national 
strategy  (105)  focuses  on  developing  modern 
technologies and services with potential for global 
deployment  to  maximise  climate  benefits  and 
promote  Finland’s  economic  competitiveness. 
Thanks  to  nuclear  reactors  and  large  domestic 
production  of  renewable  energy  (forestry  solid 
biomass, hydro and wind), Finland has a low level 
of reliance on fossil fuels. However, the economy’s 
energy  intensity  remains  high  due  to  the  large 
heavy  industry  sector.  Notable  challenges  remain 
for an industrial sector that still relies on imported 
fossil fuels for energy supply (e.g. for transport).  

important 

the  Finnish  energy 
is  a 

Finland’s  REPowerEU  chapter  includes  one 
reform and three investments to support the clean 
system. 
transition  of 
Particularly 
the 
environmental permitting system to include a one-
stop-shop  and  a  single  national  authority  to 
process environmental permits from submission to 
eventual  decision. This is expected to significantly 
streamline  the  permitting  process  and  reduce  the 
time it takes to process permit applications.  

reform  of 

The  Single  Market  Scoreboard  indicates  that 
Finland  performs  well  in  transposing  and 
applying  EU law.  The  transposition  deficit  fell in 
2023 to 0.4% at the end of year (the EU average 
was  0.7%).  In  2023  there  were  11  ongoing 

(104) 2021/2022 Annual Report on European SMEs - June 2022 - 

LE Europe (le-europe.eu) 

(105) EK PowerPoint Title, IBM Plex Sans Light 48pt 

(climate2035.fi) 

(106)  Single Market Scoreboard 2023. 

56 

 
 
 
 
Table A12.1:Industry and the Single Market 

Source: (1) AMECO, (2) Eurostat, (3) Single Market Scoreboard, (4) OECD, (5) COMEXT and Commission calculations, (6) EIB 
Investment Survey, (7) Intrum Payment Report, (8) SAFE survey, (9) EIF SME Access to Finance Index.  
* Own Commission calculations for the EU27 average 

57 

POLICY AREAINDICATOR NAME20192020202120222023EU27 average*Net Private investment, level of private capital stock, net of depreciation, % GDP143.43.94.33.53.8Net Public investment, level of public capital stock, net of depreciation, % GDP10.81.20.60.60.41.2Real labour productivity per person in industry (% yoy)22.2-0.11.8-3.1-2.5-1.24Cost competitivenessNominal unit labour cost in industry (% yoy)2-1-0.45.17.24.19.83Single Market integrationEU Trade integration, % (Average intra-EU imports + average intra EU exports)/GDP222.220.022.226.023.442.9Transposition deficit, % of all directives not transposed30.10.60.80.90.40.7Conformity deficit, % of all directives transposed incorrectly31.11.21.11.311.1SOLVIT, % resolution rate per country350.081.890.983.380.088.3Number of pending infringement proceedings381215111125.9RestrictionsEEA Services Trade Restrictiveness Index40.050.050.050.050.050.05Single bids, % of total contractors3151414141528.6Direct Awards, %3233338.1Material Shortage (industry), firms facing constraints, %59.55.329.541.514.017.2Labour Shortage using survey data (industry), firms facing constraints, %516.99.016.124.416.823.3Vacancy rate, % of vacant posts to all available ones (vacant + occupied)22.4752.02.93.22.32.5Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials60.210.20.190.20.240.22Installed renewables electricity capacity, % of total electricity produced20.40.40.40.550Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle711.57.59.99.05.022.2Bankruptcies, Index (2015=100)2-----105.6Business registrations, Index (2015=100)2-----120.2Payment gap - corporates B2B, difference in days between offered and actual payment8-1713101415Payment gap - public sector, difference in days between offered and actual payment8-168121616Share of SMEs experiencing late payments in past 6 months, %948.245.243.542.145.648.7EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1100.340.440.400.40-0.49EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 110 0.310.320.370.34-0.17ECONOMIC STRUCTUREShortagesStrategic dependenciesBUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeFinlandHEADLINE INDICATORSEconomic StructureSINGLE MARKETCompliancePublic procurement  
 
 
     
 
ANNEX 13: PUBLIC ADMINISTRATION 

Finland’s  public  administration  is  essential 
for  the  economy’s  competitiveness  by,  in 
particular,  shaping  the  conditions  for  the 
twin  transition  and  creating  a  favourable 
business  environment.  Over  the  past  decade, 
the  Finnish  public  administration  has  consistently 
ranked among the most effective in the EU, with a 
slight decrease in recent years (Graph A13.1). The 
government  programme  for  2023-2027 (107)  aims 
to  improve  governance  by  updating  the  strategy 
for  public  governance  and  strengthening  the 
sustainability  of  public 
finances.  This  will 
complement  the  Finnish  recovery  and  resilience 
plan 
reforms  and 
investments  for  the  digitalisation  of  the  public 
administration  and  public  services.  The  RRP 
measure to build a mechanism to share data more 
systematically  between  the  public  administration 
and public companies is in progress. 

(RRP),  which 

includes 

Graph A13.1: Government effectiveness 

Average value over 2018-2022 and change over 2018-2022. 
The GDP per head bar shows the mean value of the 
government effectiveness indicator for the group of EU 
countries belonging to the same GDP per head cluster as 
Finland (EU countries are ranked in terms of their GDP per 
head and grouped into three equally sized clusters). 
Source: Worldwide Governance Indicators. 

Finland has a skilled civil service. The share of 
civil  servants  with  higher  education  remains  well 
above the EU average as does the share of those 

the 

skills  of  human 

in  adult  learning.  In  2023,  Finland  published  the 
end  report  of  the  human  resource  management 
programme (108)  which  focuses  on  improving  the 
attractiveness  of  the  public  administration  as  an 
employer. The programme paid special attention to 
resource 
developing 
professionals  and  Finland  will  incorporate  the 
outcomes  in  their  HRM  policies.  Moreover,  the 
Procurement  Finland  programme  promotes  public 
procurement  skills  for  public  sector  employees. 
Finland  is  among the top EU  countries  for  gender 
parity in senior civil service management positions. 
In  addition,  Finland  has  the  highest  proportion  of 
female ministers. 

is  proficient 

Finland’s  e-government  maturity 
ranks 
above  the  EU  average  (Graph  A13.2).  The 
in  overall  e-government 
country 
maturity,  digital  skills  and  online 
interaction 
between  government  authorities  and  the  public. 
97%  of  Finnish  internet  users  use  e-government 
services.  In  addition,  these  services  continue  to 
improve  their  focus  on  cybersecurity  and  risk 
management.  Finland  has  a  highly  skilled 
workforce  in  its  public  services.  According  to  the 
Finnish  strategy  for  digitalisation  and  information 
management in healthcare and social welfare (109) 
Finland  intends  to  improve  the  effectiveness  and 
governance  of  digital  services in  these  areas.  The 
country  will  streamline  transactions  related  to 
different life events and develop seamless service 
paths (Digital Compass). 

The 

The  justice  system  is  efficient  overall (110).  It 
has an average performance when it comes to the 
litigious  civil  and 
estimated  time  to  resolve 
commercial  cases,  which  keeps  increasing  (327 
days  at  first  instance  in  2022  vs  305  days  in 
of 
2021). 
resolving 
clearance 
instance  has 
administrative  cases  at 
increased  from  102  to  104%.  The  quality  of  the 
justice  system  is  good  overall,  and  the  level  of 
digitalisation 
rules 
enabling  digital  tools  are  largely  in  place.  These 
tools  are  widely  used  in  courts  and  include  an 
electronic  case  management  system,  technology 
for  distance  communication  and  a  secure  remote 
work  environment  for  judges  and  staff.  There  are 

is  advanced.  Procedural 

rate 
first 

(107) Finnish Government (2023), ‘A strong and committed Finland: 
Programme of Prime Minister Petteri Orpo’s Government’, 
https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/16
5044/Programme-of-Prime-Minister-Petteri-Orpos-
Government-20062023.pdf?sequence=4. 

(109) Strategy for digitalisation and information management in 
healthcare and social welfare - Valto (valtioneuvosto.fi) 

(110) For a more details, see the 2024 EU Justice Scoreboard and 

the 2024 Rule of Law Report (forthcoming). 

(108) Henkilöstöjohtamisen uudistusohjelma (vm.fi). 

58 

-0.50.00.51.01.52.02.5FIEU-27GDP perhead clusterChange 2018-2022Average 2018-2022 
 
   
 
 
 
Table A13.1:Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2023 value. If unavailable, the latest value available is 
shown. (3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: E-government activities of individuals via websites, Eurostat (# 1); E-government benchmark report (# 2); Open data 
maturity report (# 3); Labour Force Survey, Eurostat (# 4, 5, 7); European Institute for Gender Equality (# 6); Fiscal Governance 
Database (# 8, 9); OECD Indicators of Regulatory Policy and Governance (# 10). 

still  specific  challenges  in  initiating  and  following 
proceedings  in  civil  and  commercial  cases  online 
and  in  allocating  electronic  cases.  On  judicial 
independence, no systemic deficiencies have been 
reported. 

Graph A13.2: a) Use of public authorities’ websites or apps (left side); b) e-government maturity (centre); 
c) share of individuals with basic or above basic overall digital skills (right side) 

(1) 2023 data. Indicators a and c: % of people who used the internet in the last year. 
Source: Eurostat and e-government benchmark report. 

59 

20%40%60%80%100%Interacting withauthoritiesDownloading  /printing officialformsMaking anappointmentReceive officialcommunications / documentsSubmit onlinetax declarationRequestdocuments,benefitsa) E-government usersFIEU-270%10%20%30%40%50%60%70%80%90%FIEU-27c) Digital skills202320210102030405060708090100FIEU-27b) E-government benchmark score User centricityTransparencyKey enablersCross-border services2022FI20192020202120222023EU-27(2)1n/an/an/a97.097.675.02n/a84.784.586.088.075.830.80.90.90.80.80.8472.375.071.1 (b)68.870.452.9541.740.244.8 (b)33.632.017.962.411.012.64.68.49.271.41.51.6 (b)1.71.61.580.80.80.80.8n/a0.791.11.21.21.2n/a1.410n/an/a1.50n/an/a1.7Strength of fiscal rules indexEvidence-based policy makingRegulatory governanceMedium-term budgetary framework indexIndicator (1)E-government and open government dataShare of internet users within the last year that used a public authority website or appE-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with higher education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management  
 
   
 
     
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS 

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU.  This  Annex  provides  an  overview  of  Finland’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction. 

Table A14.1:Social Scoreboard for Finland 

to 

family  policies (111).  The 
labour  market 
distribution  of  care  work  within  the  household, 
which  is  still  unequal  compared  to  other  Nordic 
countries, is also a contributing factor (112).  

Labour  shortages  and  skills  mismatches 
remain  acute  in  the  social  and  healthcare 
sectors.  Overall,  the  number  of  vacancies  fell  in 
all  sectors  in  the  past  year,  with  the  job  vacancy 
rate  at  1.8%  (EU:  2.5%)  in  Q4-2023.  Middle-
income  occupations  (hourly  wage  less  than  EUR 
16) particularly lack staff in Finland (113), including 
a  shortage  of  about  6 000  kindergarten  teachers 
and  2 480  special  education  teachers,  mainly  in 
the  Helsinki  area (114).  Labour  shortages  remain 
most  pronounced  for  staff  in  social  welfare  and 
healthcare. 
regional 
are 
differences:  the  vacancy  rates  vary  from  1.9%  in 
Etelä-Karjala 
the  Pohjanmaa 
region (115). Finland has fewer professionally active 
doctors per capita than the EU average, and staff 
shortages  in  nursing  have  grown  dramatically  in 
recent years (see Annex 16). Also, the labour force 
is  reduced  by  the  ageing  population  and  outward 
labour  migration.  Together  with  demographic 
labour  and  skills  shortages  also 
challenges, 
undermine  Finland’s  potential  to 
its 
economic competitiveness. 

significant 

to  6.7% 

increase 

There 

in 

Update of 25 April 2024. Members States are categorised 
based on the Social Scoreboard according to a methodology 
agreed with the EMCO and SPC Committees. Please consult 
the Annex of the Joint Employment Report 2024 for details on 
the methodology 
Source: Eurostat. 

The labour market performance slowed down 
in  the  first  half  of  2023,  mainly  due  to  the 
decline  in  construction.  Even  with  weakening 
economic  conditions,  the  employment  rate  in 
Finland  is  still  high,  reaching  78.2%  in  2023.  The 
unemployment  rate  is,  however,  7.2%  (EU:  6.1%). 
The  rate  of  young  people  not  in  employment, 
education  or  training  (NEETs)  was  9.2%  in  2023, 
below the EU average of 11.2%. While the rate of 
early  leavers is  close to the  EU  average (9.6% vs 
9.5%),  figures  vary  considerably  depending  on 
geographic  location  and  gender  (see  Annex  15). 
The  gender  pay  gap  remains  well  above  the  EU 
average  (15.5%  vs  12.7%  in  2022)  and  has  not 
changed  significantly  in  recent  years.  The  main 
underlying reasons range from segregation of the 

Activating  under-represented  groups  and 
attracting  skilled  workers  from  outside  the 
EU  would  be  beneficial  for  Finland’s  labour 
market  performance.  The  difference  in  the 
employment  rates  of  workers  aged  20-64  born 
outside the EU and those born in Finland was 12.9 
percentage  points  (pps)  in  2023.  The  Finnish 
recovery  and  resilience  plan  (RRP)  promotes  the 

(111) STM 2023. Assessment of Equal Pay Programme and 

Government’s equal pay measures 2020–2023. Reports and 
Memorandums of the Ministry of Social Affairs and Health. 

(112) Including in Nordic comparison, cf. SAAGE Country report – 

Finland 2023. 

(113) Työvoiman saatavuus, työvoimapula ja kohtaanto-ongelmat 
vuonna 2022 -raportti summaa Työvoimatiekartta-hankkeen 
tulokset (valtioneuvosto.fi) 

(114) https://www.keva.fi/uutiset-ja-artikkelit/kuntien-

tyovoimaennuste-hoitajapula-kaksinkertaistui-kahdessa-
vuodessa/; 2023 Education and Training monitor. 

(115) Availability of workforce (Data base of the Ministry of 

Economic affairs and Employment ) 

60 

51.89.682.09.20.23.878.27.21.6108.016.314.949.8195.4406.5Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorEqual opportunities and access to the labour marketAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Early leavers from education and training(% of  the population aged 18-24, 2023)Share of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Young people not in employment, education or training(% of the population aged 15-29, 2023)Gender employment gap(percentage points, population aged 20-64, 2023)Income quintile ratio (S80/S20, 2022)Dynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2023)Unemployment rate(% of the active population aged 15-74, 2023)Long term unemployment(% of the active population aged 15-74, 2023)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2022)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2022)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2022)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2022)Disability employment gap (percentage points, population aged 20-64, 2022)Housing cost overburden (% of the total population, 2022)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2022)Self-reported unmet need for medical care (% of the population aged 16+, 2022)Better than averageBest performers 
 
 
 
   
 
 
 
employment of non-EU nationals and people from 
vulnerable groups. The reform on streamlining the 
work  and  education-based  immigration  process 
(2024)  is  expected  to  improve  opportunities  for 
students from outside the EU to find employment, 
and to increase the immigration of skilled workers. 
At the same time, the public employment services 
are  undergoing  a  major  reform  to  improve  the 
effectiveness  of  service  delivery:  from  1  January 
2025, the employment and economic development 
services  will  be  transferred  to  municipalities.  The 
European  Social  Fund  Plus 
(ESF+)  will  help 
unemployed  and  inactive  people,  for  example,  by 
the  efficiency  of  unemployment 
improving 
services  and 
cooperation  with 
businesses.  These  measures  are  expected  to 
national 
support 
employment rate target of 80% by 2030. 

stimulating 

progress 

towards 

the 

Finland performs well on adult learning. Adult 
participation in learning in the previous 12 months 
stood  at  51.8%  in  2022  (up  0.4  pps  from  2016), 
12.3  pps  above  the  EU  average.  The  rate  of 
tertiary  educational  attainment  among  people 
aged 25-34 years decreased from 40.7% in 2022 
to  39.2%  in  2023  and  is  below  the  EU  average 
(43.1%)  (see  Annex  15).  The  government  has 
earmarked approximately EUR 10 million more per 
year  until  2028  for  vocational  education  and 
general  upper  secondary  education.  The  adult 
education  allowance  will  be  abolished,  however, 
which  may  have  an  adverse  effect  on  adults’ 
participation in learning (116). The ESF+ will support 
upskilling,  reskilling  and  adult  learning  in  Finland 
with  approximately  EUR 182  million  in  funding  in 
2021-2027.  The  RRP  will  contribute  to  these 
objectives  with  reforms  and 
investments  for 
continuous  learning,  and  by  introducing  measures 
to  increase  the  number  of  places  in  higher 
education, all of which will contribute to achieving 
the  national  target  of  at  least  60%  of  all  adults 
participating in training every year by 2030. 

Table A14.2:Situation of Finland on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months, special extraction excl. guided on-the-job training. 
(2) Change in the number of persons at risk of poverty or 
social exclusion (AROPE), reference year 2019. 
Source: Eurostat, DG EMPL. 

The poverty rate remains low albeit showing 
an  upward  trend,  which  the  planned  cuts  to 
social  benefits  may  further  exacerbate.  The 
rate of people at risk of poverty or social exclusion 
(AROPE)  increased  from  14.2%  in  2021 to  16.3% 
in 2022, still well below the EU average of 21.6%. 
Likewise,  the  AROPE  rate  for  children  increased 
from  13.2%  to  14.9%  in  the  same  period  (EU: 
24.7%).  Planned  reductions  in  social  benefits (117) 
may  potentially  have  a  negative  impact  on  low-
income  households  and  it  is  estimated  that  they 
will  increase  poverty,  primarily  among  young 
adults,  single  parents  and  working-age  adults 
living alone, with 3% of the population losing more 
than  10%  of  their  income (118).  ESF+  investments 
support the reduction of child poverty, the reform 
of  child  protection  services  and  active  inclusion 
its 
measures.  This  will  help  Finland  achieve 
national target of 100 000 fewer people at risk of 
poverty  or  social  exclusion  by  2030,  of  which  at 
least  one  third  should  be  children,  but  additional 
efforts  are  still  needed.  Implementation  of  the 
European Child Guarantee is ongoing, as described 
in the Finnish progress report. 

Access  to  healthcare  services  remains  a 
critical  challenge.  The  provision  of  primary  and 
specialised care services for older people remains 
a  particular  issue.  Self-reported  unmet  medical 
the 
needs 
population in 2022, well above the EU average of 
2.2%.  Waiting  times  for  primary  and  specialised 
care are long, in particular due to the shortages of 

remain  high,  affecting  6.5%  of 

(117) Changes are planned to the housing allowance and earnings-
related unemployment benefits, among others. (Vahva ja 
välittävä Suomi : Pääministeri Petteri Orpon hallituksen 
ohjelma 20.6.2023 (valtioneuvosto.fi) 

(116) Vahva ja välittävä Suomi : Pääministeri Petteri Orpon 
hallituksen ohjelma 20.6.2023 (valtioneuvosto.fi) 

(118) Vuoden 2024 sosiaaliturvamuutosten yhteisvaikutusten 
arviointi - Sosiaali- ja terveysministeriö Helsinki 2023. 

61 

IndicatorsLatest dataTrend            (2016-2023)2030 targetEU target 78.2(2023)51.8(2022)78(2023)Poverty reduction2 (thousands)-100-15,000Employment (%)8078Adult learning1 (%)6060 
 
 
  
 
 
care and medical staff (119) (see Annex 16). Finland 
is implementing a comprehensive reform of health 
and  social  services,  which  aims  to  improve  the 
availability  and  quality  of  basic  public  healthcare 
services.  The  reform  is  supported  under  the  RRP. 
The new Regional Wellbeing Services Counties are 
yet to meet all of their reform objectives. 

(119) Organising of healthcare and social welfare in Finland: 
National Expert Assessment, autumn 2023 (julkari.fi) 

62 

 
 
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  of 
Finland’s  education  and  training  system 
based on the 2023 Education and Training Monitor 
and  the  2022  OECD  Programme  for  International 
Student Assessment (PISA) results. 

which represents an increase of 6.1 pps compared 
with PISA 2012. 

Graph A15.1: Underachievement rates by field, 
PISA 2012, 2018 and 2022 

in  basic 

the  proportion  of 

Underachievement 
skills  has 
substantially grown in the past decade, while 
the share of top performers is shrinking. PISA 
2022 (120) showed that the proportion of 15-year-
old underachieving students increased significantly 
since  2012  (by  12.6 pps  in  mathematics  (EU 
7.3 pps),  10.1 pps  in  reading  (EU  8.2 pps),  and 
10.6 pps  in  science  (EU  7.4 pps)).  This  represents 
one  of  the  most  notable  changes  at  EU  level.  In 
2018,  the  shares  of  15-year-olds  underachieving 
in PISA were still below the EU target of 15% in all 
three fields, but now all of them have exceeded it. 
Nevertheless,  the  rates  remain  below  the  EU 
average.  Similarly, 
top 
in  all  three 
performers  has  also  decreased 
domains  since  2012  but  remains  above  the  EU 
average. Further research is needed to identify the 
key  drivers  behind  the  performance  decline. 
Studies  show  that  the  pandemic  affected  the 
wellbeing,  support  needs,  social  competences  and 
learning  motivation.  At  the  same  time,  online 
education was especially challenging for speakers 
of  minority  languages  and  students  who  lacked 
sufficient 
The 
government is planning to boost the acquisition of 
basic  skills,  especially  in  primary  level.  For  that 
goal,  the  minimum  number  of  compulsory  lesson 
hours for reading, writing and numeracy in primary 
education  will  be 
in  2025.  The 
curriculum  will  not  expand  with  this  reform,  for 
which the government will invest EUR 200 million. 

increased 

parental 

learning 

support. 

students 

underachieved 

Underachievement  has  been  growing  across 
the  entire  socio-economic  distribution,  but 
the  increase  has  been  more  pronounced  for 
disadvantaged  students.  In  2022,  38.7%  of 
disadvantaged 
in 
mathematics,  compared  with  24.5%  in  2018  and 
19.9% in 2012. While this is a significant increase, 
the Finnish socio-economic gap remains one of the 
smallest  in  the  EU  (28.1 pps  vs  37.2 pps  at  EU 
level).  At  the  same  time,  underachievement  has 
also  become  more  frequent  among  the  most 
socio-economically  advantaged  students  with  a 
rate of 10.7% in 2022 (EU 10.9%) in mathematics, 

Source: OECD (2023). 

Foreign-born  students  are  also  much  more 
likely  to  underachieve  in  basic  skills.  In 
Finland,  as  in  most  other  EU  countries,  foreign-
born  students  perform  worse  than  native-born. 
Their  underachievement  rate  reached  57.2%  in 
leading  to  a  gap  of  35.2 pps  when 
2022, 
compared  with  native-born  students  without  a 
migration  background.  This  is  one  of  the  largest 
gaps  in  the  EU,  which  also  remains  significant,  at 
21.2 pps,  for  native-born  students  with  parents 
born abroad. The impact of migrant background is 
among  the  strongest  in  the  EU  with  a  gap  of  29 
score  points  after  accounting  for  socio-economic 
background  and  language  spoken  at  home.  In 
addition,  more  foreign-born  young  people  (16.3% 
in 2021 vs 13.4% in 2022) leave education early, 
while the rate of early leaving from education and 
training  remained  stable  for  native  young  people 
(7.6% vs 7.7%) (121). 

Teaching  continues  to  be  an  attractive 
profession  in  Finland,  but  shortages  affect 
several  areas.  Within  the  EU,  Finnish  teachers 
are  those  who  feel  most  valued  by  society;  they 
are  very  satisfied  with  their  work  and  only  a  few 
of  them  consider  leaving  the  teaching  profession. 
Yet  the  number  of  students  applying  as  a priority 
to  become  schoolteachers  decreased  between 
2015  and  2022  (from  4 675  to  3 280).  In  2021, 
the  proportion  of  students  enrolled  in  tertiary 
studies in the field of education was around 5.4% 
of the total, below the EU average of 7.4%. There 
are  also  regional  differences  in  the  availability  of 

(120) OECD (2023), PISA 2022 Results (Volume I): The State of 

Learning and Equity in Education. 

(121)Eurostat: edat_lfse_02. 

63 

05101520253035FIEUFIEUFIEUMathematicsReadingScience%2012201820222030 EU target 
 
 
   
 
 
Table A15.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Notes: b = break in time series; d = definition differs; e = estimated; p = provisional; u = low reliability; : = data not available. 
Source: 1,3,4,5,7,8,9,10,12=Eurostat; 11= Eurostat, Adult Education Survey; 2,6=OECD, PISA 

special  needs  teachers.  Shortages  have  also  been 
observed  in  the  teaching  of  Finnish  and  Swedish 
as  second 
in  Sámi-speaking 
teachers at all levels of education. 

languages,  and 

Finland aims to expand participation in early 
childhood  education  and  care  (ECEC),  among 
low-income  households.  ECEC  participation  has 
been  increasing  to  reach 90.6%  for  children  aged 
3  to  compulsory  schooling  age  (2021)  and  40% 
for  children  below  the  age  of  3  (2022).  These 
the  EU-level  target  of 
rates  remain  below 
96% (122)  and  the  Barcelona  target  of  45% 
respectively.  To  foster  ECEC  participation,  notably 
from  low-income  households,  the  government 
lowered  the  fees  for  ECEC.  Approximately  30 000 
families  will  be  entitled  to  free  ECEC.  While  ECEC 
services  are  generally  of  high  quality,  there  is  a 
lack  of  ECEC  teachers,  especially  in  the  Helsinki 
area (123).  To  address  the  shortage,  the  available 
student  places  in  ECEC  teacher  education  will  be 
increased in 2024-2025. 

Tertiary  educational  attainment  (TEA)  has 
been  stagnating  for  years.  In  2023,  TEA  rates 
were 39.2% (1.5 pps less than in 2022), below the 
EU average of 43.1% (124) and the EU-level target 
of (45%). The rate has been relatively stable over 
the  last  10  years  at  around  40%.  Regional 
differences  in  TEA  rates  remain  significant  (from 
34.6% to 44.7%) (125). The gap by country of birth 
is  significant  too (26.1% of  foreign-born  students 
vs  41.6%  of  native-born) (126).  The  TEA  rates 
gender  gap  in  2023  persists  in  favour  of  women 
(46.1%)  vs  men  (32.7%),  higher  gap  than  the  EU 
average (11.2 pps). 

to  Finland 

The number of international higher education 
increased 
students  moving 
significantly  in  2022.  More  than  7 000  new 
students from outside the EU had been granted to 
a  residence  permit  by  the  end  of  October  2022. 
The  number  of  study-based  residence  permits 
increased by 45% compared with 2021. 

(122) Eurostat: educ_uoe_enra21. 

(124) Eurostat: edat_lfse_03. 

(125) Eurostat: edat_lfse_04. 

(123) https://julkaisut.valtioneuvosto.fi/handle/10024/165044 

(126) Eurostat: edat_lfs_9912. 

64 

96%80.0%201391.8%201386.4%92.2%90.6%202192.5%2021,dReading< 15%11.3% 18.0%13.5% 22.5%21.4%202226.2%2022Mathematics< 15%12.3% 22.1%15.0%22.9%24.9%202229.5%2022Science< 15%7.7% 16.8%12.9%22.3%18.0%202224.2%2022< 9 %8.9% 12.6%8.3%10.5%9.6%9.5%Men9.8%14.5%9.2%12.1%11.9%11.3%Women8.1%10.6%7.4%8.7%7.3%7.7%Cities7.3%b11.2%6.7%9.4%6.2%8.6%Rural areas10.1%b14.0%10.4%11.0%15.1%9.9%5By country of birthNative8.7% 11.3%8.1%9.2%9.3%8.2%EU-born:u26.2%:u22.4%:u21.0%Non EU-born:u30.1%13.4%u23.0%:u21.6%6Socio-economic gap (percentage points)15.4:18.529.528.1202237.220227Exposure of VET graduates to work-based learning≥ 60% (2025) ::: :76.7% 64.5%45%39.7%34.1%40.3%38.7%39.2%43.1%Men30.8%29.1%32.6%33.3%32.7%37.6%Women49.2%39.2%48.5%44.2%46.1%48.8%Cities48.3%b43.5%49.3%49.0%46.0%53.3%Rural areas29.2%b24.8%27.0%27.7%28.4%31.7%Native40.6%35.4%42.2%39.7%41.6%44.2%EU-born34.1%29.3%23.5%36.7%25.7%u40.2%Non EU-born27.3%24.2%22.7%31.0%26.3%37.1%11Participation in adult learning (age 25-64)≥ 47% (2025) ::51.4%201637.4%201651.8%202239.5%202220.6%201322.7%201321.4%23.8%23.6%202124.5%2021Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth12Share of school teachers (ISCED 1-3) who are 55 years or over1Participation in early childhood education (age 3+)2Low-achieving 15-year-olds in:Early leavers from education and training(age 18-24)3Total3By gender4By degree of urbanisation201220182023IndicatorTargetFinlandEU-27FinlandEU-27FinlandEU-27 
 
 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Finland. 

Life expectancy in Finland is higher than the 
EU  average.  Its  upward  trend  was  disrupted  in 
2020 due to COVID-19. In the first 2 years of the 
pandemic  it  fell  only  slightly,  followed  by  a 
significant  drop  in  2022  (0.7 years  lower  than  in 
2021),  as  mortality  from  COVID-19  increased 
markedly (127).  In  2021,  the  leading  causes  of 
death  were  diseases  of  the  circulatory  system 
(‘cardiovascular diseases’) followed by cancer and 
Alzheimer’s disease and other forms of dementia. 
Treatable mortality in Finland is low, pointing to an 
overall effective health system. 

Graph A16.1: Life expectancy at birth, years 

In  2021,  spending  on  prevention  in  Finland 
amounted  to  8.3%  of  total  spending  on 
healthcare,  compared  to  6.0%  for  the  EU 
overall.  Between  2019  and  2021,  spending  on 
preventive  care  in  Finland  more  than  doubled, 
following  the  trend  across  the  EU.  Proportionally, 
budget  shares  for  prevention  across  the  EU 
increased  most  for  emergency  response,  disease 
In 
detection  and 
Finland, the main factor explaining the big increase 
in the spending on preventive care in 2021 is the 
massive  rise  in  spending  for  disease  detection 
programmes. 

immunisation  programmes. 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2024-2070 

Source: Eurostat 

current  health  spending  goes 

Health  expenditure  in  Finland  is  slightly 
lower  than  the  EU  average  and  79.3%  of  it 
was  publicly  funded  in  2021.  The  biggest  part 
of 
towards 
outpatient care. The other big spending categories 
are inpatient care, followed by long-term care and 
pharmaceuticals  and  medical  devices.  In  2021, 
total  healthcare  spending  increased  to  10.1%  of 
GDP, up from 9.6% in 2020. Provisional data (from 
the  OECD)  suggest  that  in  2022  total  healthcare 
spending fell back to 10.0% of GDP. Based on the 
age  profile  of  the  Finnish  population,  public 
expenditure  on  health  is  projected  to  increase  by 
0.6  percentage  points  of  GDP  by  2070,  the  same 
as  for  the  EU  overall  (see  Graph  16.2  and 
Annex 21). 

(127) Based on data provided directly by Member States to the 

European Centre for Disease Prevention and Control, under 
the European Surveillance System. 

Baseline scenario 
Source: European Commission / EPC (2024) 

Finland  faces  shortages  and  an  uneven 
distribution  of  health  sector  workers. 
Employment in healthcare fell by 5% between the 
first  quarter  of  2020  and  the  second  quarter  of 
2023  (while  it increased  in  the  EU  on  average by 
9%). The average number of doctors is lower than 
the EU average (3.6 vs 4.1 per 1 000 population in 
2021).  While 
the  number  of  nurses  per 
1 000 population  is  much  higher  than  the  EU 
average  (18.9  vs  7.9  in  2021),  rising  demand  for 
nursing  has  led  to  an  increasing  shortage  of 
nurses  in  recent  years.  Meanwhile,  the  role  of 
nurses  has  expanded  to 
(i)  patient 
include: 
consultations 
for  acute  and  chronic  health 
conditions; (ii) prescribing and care coordination in 
primary care; (iii) outpatient consultations; and (iv) 
advanced roles in operating theatres. According to 
the  Ministry  of  Social  Affairs  and  Health,  in  2023 
there  were  more  than  5 000  and  6 000 open 
vacancies  for  registered  and  practical  nurses 
respectively and almost 900 vacancies for doctors. 
The care guarantee and requirements for a higher 
nurse-to-patient  ratio  in  long-term  facilities  put 
extra  pressure  on  staffing  levels.  A  significant 
proportion of doctors (24.4%) and nurses (20.2%) 
are  aged  55  or  above,  raising  concerns  about  the 

65 

81,781,882,182,081,981,280,981,081,380,480,180,6201720182019202020212022FinlandEU6,66,20,60,602468EUFinland% of GDP20242070increase 
 
   
 
   
 
Table A16.1:Key health indicators 

Note: The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used. Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) and 
Slovakia (professionally active). Nurses’ density data refer to practising nurses in all countries except Ireland, France, Portugal, 
Slovakia (professionally active) and Greece (hospital only). 
Source: Eurostat Database; except: * OECD, ** Joint Questionnaire on non-monetary healthcare statistics, *** ECDC, **** Council 
Recommendation on stepping up EU actions to combat antimicrobial resistance in a One Health approach. 

long-term  accessibility  of  health  services.  Nurses’ 
pay  is  less  than  the  average  national  wage.  The 
difference  between  the two  is  among the  biggest 
in  the  EU.  Importantly,  in  October  2022,  a  long-
term agreement was reached on substantial raises 
in nurses’ pay. The uneven geographic distribution 
of  healthcare  resources  increases  disparities  in 
access to care in Finland. The density of doctors is 
greater  in  the  capital  region  of  Helsinki  and  in 
other  major  cities  than  in  remote  and  sparsely 
populated  regions.  In  general,  Finland  has  been 
working  to  address  its  workforce  shortages  for 
many years. Measures taken include, for example, 
expanding  enrolment  for  training 
in  medical 
schools, making a stronger commitment to recruit 
introducing  novel  skill-mix 
foreign  workers, 
solutions  to  increase  employment  in  nursing,  and 
improving 
to  boost 
workforce productivity and overcome geographical 
barriers. 

the  use  of 

technology 

the  RRP’s 

total  budget) 

Through  its  recovery  and  resilience  plan 
(RRP),  Finland  is  investing  EUR 371.8 million 
(19%  of 
in 
healthcare.  These  investments  aim  to  help  clear 
the  backlog  of  social  care  and  healthcare  cases 
due  to  COVID-19  and  to  foster  equal  access, 
strengthen  primary  healthcare,  overhaul  service 
delivery  models  and  increase  digitalisation  of  the 
health system. Work is underway to implement the 
health  and  social  services  reform.  Investment  in 
digital  health  will  be  complemented  by  further 
support  under  the  EU  cohesion  policy  funds  in 
2021-2027.  Finland  plans 
invest  around 
the  European  Regional 
EUR 15 million 

from 

to 

Development Fund in the development of e-health 
services and applications (128). 

(4.4%) 

in  2021 

is  higher  than 

The proportion of people in Finland reporting 
unmet needs for medical care is higher than 
the  EU  average.  In  2022,  6.5%  of  the  Finnish 
population  reported  unmet  medical  care  needs, 
(see 
which 
Annex 14).  By  far  the  main  reason  reported  is 
waiting  times.  The  proportion  of  people  reporting 
unmet  needs  for  medical  care  in  the  lowest 
income quintile is almost twice that in the highest 
income quintile. Occupational healthcare creates a 
parallel  system:  it  provides  quicker  and  free-of-
charge  access  to  services  for  the  employed 
population,  while  municipal  healthcare  users 
encounter  co-payments  and  waiting  times.  After 
many  years  of  development, 
in  June  2021 
Parliament adopted a major administrative reform 
improving  access  to  healthcare,  reducing 
for 
inequalities, 
improving  the  quality  of  health 
services, and addressing geographical imbalances. 
In 2021, 21 wellbeing service counties were set up 
with responsibility for organising health and social 
services from 2023. In parallel, in January 2023 a 
new law entered into force on tightening the care 
guarantee  on  non-urgent  primary  care  with 
reduced  waiting 
times,  which  was  however 
withdrawn  in  April  2024. The  reasons  were  partly 
economical  and  partly  linked  to  the  shortages  of 
health workforce.  

(128) The EU cohesion policy data reflect the status as of 13 May 

2024. 

66 

20182019202020212022EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)71,169,171,369,8NA93.3 (2021)Cancer mortality per 100 000 population212,8214,5211,4209,9NA235.4 (2021)Current expenditure on health, % GDP 9,09,29,610,1NA10.9 (2021)Public share of health expenditure, % of current health expenditure77,077,979,179,3NA81.1 (2021)Spending on prevention, % of current health expenditure 4,14,05,68,3NA6.0 (2021)Available hospital beds per 100 000 population361335283NANA525 (2021)Doctors per 1 000 population3,53.6*3.6*3.6*NA4.1 (2021)*Nurses per 1 000 population18.7**18.5**18.9**18.9**NA7.9 (2021)Total consumption of antibacterials for systemic use, daily defined dose per       1 000 inhabitants per day ***15,414,711,911,312,519.4 (2022) 
 
 
  
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Annex 17 showcases the economic and social 
regional  dynamics  in  Finland.  It  provides  an 
analysis  of  economic,  social  and 
territorial 
cohesion  in  the  Finnish  regions  and  assesses 
investment  and  subnational  reform 
emerging 
social 
needs 
development and competitiveness in the country. 

foster  economic  growth, 

to 

of 
Overview 
performance at regional level  

economic 

and 

social 

Graph A17.1: GDP per capita (2012) and average 
GDP per capita growth (2013-2022) in Finland 

Source: DG REGIO calculations based on JRC (ARDECO) and 
Eurostat data 

Finland’s average GDP per capita growth was 
lower  than  the  EU  average  in  2012-2022. 
Internal disparities between the capital region and 
the rest of the country remain but have decreased. 
In  2022,  Helsinki-Uusimaa's  GDP  per  capita  was 
140% of the EU-27 average at 27-44 percentage 
points  (pps)  higher  than  in  the  other  regions. 
Pohjois -ja Itä-Suomi had the lowest value at 95% 
of  the  EU-27  average.  Graph  A17.1  shows  how 
regional  disparities  and  convergence  trends  have 
changed over time.  

All  regions  have  declined  compared  to  the 
EU-27  average,  but  in  Pohjois-  ja  Itä-Suomi 
the  relative  loss  was  less  than  in  the  other 
regions.  The  decline  was  particularly  evident  in 
Åland, which had an average annual growth in real 
GDP  per  capita  of  -0.82%  in  2013-2022,  and  in 
Helsinki-Uusimaa,  Länsi-Suomi  and  Etelä-Suomi 
regions,  with  +0.5%,  +0.54%  and  +0.56% 
respectively  (while  the  EU  average  grew  by  an 
the 
annual  average  of  1.44%).  Therefore, 
reduction  in  the  country´s  internal  dispersion  of 
GDP  per  capita  was  partly  due  to  a  lack  of  or 
negative growth in the richest regions, rather than 

a  stronger  catching-up  process  in  the  poorest 
regions. Helsinki-Uusimaa and Åland have been in 
a  development  trap  in  2003-2021,  meaning  they 
have experienced persistent weak growth. 

Graph A17.2: Finland, Labour productivity 2000-
2022 

Source: ARDECO, DG REGIO elaboration 

in 

linked 

The  gap  in  GDP  per  capita  between  the 
capital  region  and  the  rest  of  the  country 
was 
labour 
to  disparities 
productivity. In 2022, national labour productivity 
measured  by  gross  value  added  per  worker  (in 
Purchasing Power Standard (PPS)) was 102.6% of 
the  EU-27  average  and  two  points  lower  than  in 
the  previous  year.  However,  it  was  much  lower 
than  in  the  mid-2000s  (before  the  2008-2009 
recession and the Nokia crisis). 

Regional  data  reveal  clear  disparities.  In 
2021, labour productivity ranged from 115.5% of 
the EU-27 average in Helsinki-Uusimaa to around 
100% in Etelä-Suomi, 98% in Länsi-Suomi, 96% in 
Pohjois  -ja  Itä-Suomi,  down  to  87%  in  Åland, 
which is a special case, given its insular nature and 
small size. Except for Åland Pohjois  -ja Itä-Suomi, 
all regions showed a decrease compared with the 
previous  year.  The  productivity  gap  between  the 
capital  region  and  the  rest  of  the  country  (Graph 
A17.2)  widened  during  the  2008-2010  recession 
and then narrowed to pre-crisis levels, mainly due 
to  a  deterioration  in  productivity  in  the  capital 
region,  especially  after  2011,  coinciding  with  the 
peak  of  the  Nokia  crisis.  The  gap  widened  again 
2016-2021, mainly due to improving performance 
in the capital region and declining performance in 
Åland but narrowed a little in 2022. 

Several  factors  (e.g.  human  capital  and 
specialisation  in  high  technology  sectors) 
explain  the  gap  between  the  regions.  At  the 
national level, the share of population aged 30-34 

67 

 
 
 
 
 
Table A17.1:Selected indicators at regional level in Finland 

Source: Eurostat, EDGAR database 

with a tertiary degree was slightly lower than the 
EU-27  average  in  2023.  However,  it  was  on 
average  more  than  6 pps  higher  in  the  capital 
region than in the other regions (48.5% compared 
to 42.3%, a higher difference than in the previous 
year).  None  of  the  Finnish  regions  are  in  a  talent 
development  trap (129).  However,  Pohjois-  ja  Itä-
Suomi  is  at  risk  of  falling  into  such  trap,  sharply 
affected by the departure of their population aged 
15-39  (a  reduction  of  -6.7  per  1  000  inhabitants 
on  average  per  year  in  2015-2019.  The  share  of 
employment  in  high  technology  sectors  and  R&D 
expenditure by the private sector were both above 
the EU-27 average at the national level, but again 
showed  a  highly  polarised  pattern,  being  at  least 
twice as high in Helsinki-Uusimaa as in the rest of 
the country. All those factors consistently point to 
a  comparatively  reduced  capacity  of  the  non-
in 
capital  regions  to  capture  growth  trends 
dynamic and advanced sectors.  

Finland's  regions  all  perform  relatively  well 
in  innovation.  The  capital  region  was  classed  as 
an  innovation  leader+  (2022  regional  innovation 
scoreboard).  Helsinki-Uusimaa  is  considered  the 
second  most  innovative  region  in  Europe.  For  the 
other three mainland regions the categorisation is 
strong 
regional 
competitiveness  index  ranks  all  Finnish  regions 
above the EU average. Helsinki-Uusimaa stood out 
from  the  rest.  Pohjois-  ja  Itä-Suomi  and  Åland, 
which  have  weaker 
less 
business sophistication, remain much closer to the 
EU  average.  An  overview  of  Finland´s  innovation 
system is presented in the Innovation Annex. 

infrastructure  and 

innovator+. 

2022 

The 

(129) Communication ‘Harnessing talent in Europe’s regions 

COM(2023) 32 final. 

rates 

The  greater  Helsinki  region  benefits  from  a 
higher  employment  rate  and  lower  at-risk-
the  non-capital 
than 
of-poverty 
regions.  Finland´s  employment  rate  of  78.2% 
was higher than the EU average (75.3%) in 2023. 
The  employment  rates  in  the  more  developed 
regions  were  the  highest  (84.3%  in  Åland  and 
79.7%  in  the  capital  region).  Finland's  at-risk-of-
poverty  rate  (AROPE,  16.3%)  was  better  in  2022 
than the EU average (21.6%). In the capital region 
the  rate  at  13.7%  was  3.6-3.9  pps  lower  than  in 
the other regions.  

However, 

population 

The  capital  region's  demographic  dynamics 
differ markedly from those in the rest of the 
country. Average annual population growth at the 
national level in 2013-2021 (2.5 people per 1 000 
inhabitants)  was  well  above  the  EU-27  average 
(1.9). 
growth  was 
concentrated in Helsinki-Uusimaa (+10 people per 
1  000  inhabitants  on  average)  while  Länsi-Suomi 
grew  at  a  rate  of  only  1.0  and  Etelä-Suomi  and 
Pohjois-  ja  Itä-Suomi  experienced  depopulation  (-
1.4 and -2.5 respectively). The small island region 
of  Åland  experienced  significant  growth.  Net 
migration  followed  a  similar  territorial  pattern.  In 
the  short  term,  depopulation  could  lead  to  a 
shortage  of  resources 
in 
relatively less developed regions. In the medium to 
long term, it could also affect their ability to take 
advantage of growth opportunities and to address 
wider socio-economic challenges. 

in  certain  sectors 

GDP per capita by NUTS3 region in Finland in 
2021  showed  a  more  nuanced  picture  of 
disparitities. Map A17.1 shows e.g. that all seven 
regions  of  Pohjois-  ja  Itä-Suomi  had  a  GDP  per 
capita  rate  below  EU  average,  whereas  Länsi-
Suomi  had  three  and  Etelä-Suomi  two  such 
regions. GDP per capita was less than 90% of EU 
average  in  three  Pohjois-  ja  Itä-Suomi’s  regions 

68 

GDP per head (PPS)Productivity (GVA (PPS) per person employed)Real productivity growthGDP growthGDP per head growthPopulation growthAt-risk-of-poverty or social exclusionEmployment rate, ages 20-64Population aged 30-34 with high educational attainmentInnovation performanceIndex, EU27 = 100 (2022)Index, EU27 = 100 (2022)Average % change on the preceding year (2013-2022)Average % change on the preceding year (2013-2022)Average % change on the preceding year (2013-2022)Average annual change per 1000 residents (2013-2021)% of population (2022)% of population aged 20-64 (2023)% of population aged 30-34 (2023)RIS regional performance group 2023European Union (27 MS)1001000.71.61.441.921.675.343.9Suomi/Finland110102.60.20.970.72.516.378.243.1Innovation leaderLänsi-Suomi9895.70.40.650.54117.678.242.3Strong innovator+Helsinki-Uusimaa140114.301.530.51013.779.70                             48.5Innovation leader+Etelä-Suomi9797.20.30.430.55-1.417.477.737.4Strong innovator+Pohjois- ja Itä-Suomi95960.40.791-2.517.30                  76.239.5Strong innovator+Åland11387-1.2-0.82-1.47717.684.3Moderate innovator-NUTS region name 
 
 
  
 
(Etelä-Savo,  Kainuu,  Pohjois-Karjala)  and  in  one 
region (Päijät-Häme) of Etelä-Suomi. 

Map A17.1:  Finland: GDP/head (PPS) by NUTS3 
region. 2021 

Fund Plus (ESF+) and the Just Transition Fund; and 
Åland´s  structural  funds  programme  with  the 
ERDF and ESF+. The division of Finland´s national 
allocation between the programmes is based on a 
stable  allocation  key.  In  the  mid-term  review  the 
flexibility  amounts  of  EUR  253  633  899 
(mainland) and EUR 836 397 (Åland), representing 
15% of the overall allocation for each programme 
will  be  definitively  allocated  to  the  programmes. 
flexibility  amounts  have  already  been 
The 
provisionally  allocated 
(with 
milestones defined).  

to  programmes 

long-term 

Implementation  of  the  priorities  agreed  in 
2022 has essentially begun in autumn 2023. 
The  programmes  are 
investment 
strategies. Stability for recently agreed priorities is 
important.  In  addition,  the  variety  in  the  types  of 
actions  under  the  specific  objectives  of  the 
priorities  enable  the  managing  authorities  to 
to  address  potential 
adjust 
changes  in  the  operational  environment  without 
programme amendment. The managing authorities 
did  not  raise  emerging  investment  needs  in  the 
annual performance review meetings of November 
2023.  

implementation 

Source: Eurostat, DG REGIO elaboration 

The  Russian  war  of  aggression  against 
Ukraine  has  the  potential  to  affect  the 
Finnish  regions,  particularly  the  NUTS3 
regions  bordering  Russia.  The  possible  impact 
of the war in the regions concerned was not visible 
in the main regional indicators used in the context 
of  European  semester  yet.  There  is  some  data 
showing  that  wood  imports  from  Russia  have 
stopped  and  that  border  crossings,  freight  traffic 
and travel have decreased. The data suggests that 
the  consequences  of  the  changed  geopolitical 
situation  are  the  most  severely  felt  in  the  two 
south-eastern NUTS3 regions of Etelä-Karjala and 
Kymenlaakso. 

Investment  and  subnational  reform  needs 
ahead 

Finland has two cohesion policy programmes. 
The  programme  ‘Innovation  and  skills  in  Finland 
2021-2027’ co-financed by the European Regional 
Development  Fund  (ERDF),  the  European  Social 

The  managing  authority  on  the  mainland 
plans  to  launch  three  studies  in  view  of  the 
mid-term review. The first on the changes in the 
operating  environment  of  the  programme,  the 
second  on  the  impact  of  the  programme  on  the 
implementation  of  national  energy  and  climate 
plan,  and 
the  visibility  of 
third  on 
communication. 

the 

The  Commission's  preliminary  view  confirms 
the investment priorities agreed in 2022 (130). 
This  will  provide  a  basis  for  discussion  on  the 
the 
managing  authorities'  assessments  on 
outcomes  of  the  mid-term  review  and  the 
proposals  for  the  allocation  of  the  flexibility 
amounts.  If  new  investment  needs  emerge  by 
then,  the  Commission  remains  open  to  discussing 
focused  proposals  that  are  properly  justified, 
where  relevant  and  sufficiently important.  Finland 
could,  for instance, benefit from the opportunities 
of the Strategic Technologies for Europe  Platform 
(STEP)  to  support  the  transformation  of  industry 
intelligence, 
i.e. 

the  areas  of  artificial 

in 

(130) In the case of JTF/MFF flexibility amount of EUR 30 585 636 
(there is no flexibility amount for JTF/NGEU), confirming the 
initial allocation to the JTF priority is the only feasible option.  

69 

 
 
 
 
 
cybersecurity  and  robotics;  energy  and  resource 
efficiency;  and  medical  technologies  vital  for 
health security.  

replace 

the  Centres 

The Finnish government will launch a reform 
of  regional  state  administration.  It  plans  to 
bring  environmental  permitting  procedures  under 
the  competence  of  a  new  cross-administrative 
for  Economic 
agency; 
Development, Transport and the Environment with 
new  Economic  Development  Centres,  and  in  this 
context  consider  the  already  decided  transfer  of 
employment  and  economic  development  services 
to  municipalities  in  2025.  For  the  managing 
authority, 
should  only  effect 
the 
administrative arrangements.  

reform 

70 

 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

Finland’s  financial  sector  is  dominated  by 
large banks and remains highly concentrated. 
The  ratio  of  total  banking-sector  assets  to  GDP 
stood  at  close  to  300%  at  the  end  of  2023, 
slightly  higher  than  the  European  average,  while 
the  top  five  lenders  hold  over  80%  of  aggregate 
sectoral  assets.  The  Finnish  banking  sector’s 
international  exposure  remains  confined  to  the 
Nordic  and  Baltic  regions,  with  a  deliberate 
absence  of  direct  engagement  with  Russia, 
Ukraine,  or  Belarus.  Overall,  domestic  lenders  are 
adequately  capitalised  and  well-equipped 
to 
endure  potential  macroeconomic  shocks.  The 
capital  adequacy  ratio  increased  on  an  annual 
basis  by  50  bps  to  21.1%  (Q3-2023),  some  150 
bps  higher  than  the  EU  average.  The  banking 
system  provides  a  solid  foundation  for  financing 
the  economy  and  remains  digitally  advanced. 
Despite its high level of concentration, the Finnish 
banking sector is also highly competitive. 

loan  losses  through  income  and  large  capital 
buffers. 

Graph A18.1: Credit growth 

Source: ECB. 

tensions, 

Strong  resilience  is  underpinned  by  robust 
financial-soundness  metrics,  but  higher 
interest  rates  pose  risks.  Despite  the  volatility 
in  global  financial  markets  in  the  spring  of  2023, 
higher  inflation,  the  economic  slowdown  and 
the  Finnish 
persistent  geopolitical 
financial system has held steady over the past 18 
months. The resilience and stability of the banking 
system  stem  from  high  solvency  levels,  good-
quality  balance  sheets,  and  appropriate  levels  of 
profitability.  The  overall  financial  performance  of 
the  banking  sector  in  2023  was  very  good.  The 
aggregate  return  on  equity  of  14.5%  (Q3-2023) 
stands  more  than  4  pps  above  the  European 
average.  However,  the  risks  in  the  operating 
environment  for  the  banking  sector  have  clearly 
risen. At this juncture, the main threats to Finland’s 
financial  stability  come  from  the  quick  and  sharp 
increase  in  interest  rates.  Higher  interest  rates 
have  on  the  one  hand  helped  to  lift  banks’ 
profitability  metrics  by  markedly  increasing  net 
interest  margins.  On  the  other  hand,  given  the 
prevalence  of  variable  interest  rates  in  lending 
level  of  private-sector 
books  and  the  high 
local 
households 
indebtedness, 
enterprises are feeling the pinch from rising loan-
servicing  expenses.  Nevertheless,  non-performing 
loans  remain  at  low  levels  (just  1%  in  Q3-2023, 
the  same  level  as  back  in  2022)  and  are  among 
the  lowest  in  the  EU.  Banks  have  the  capacity  to 
withstand  the  economic  slowdown  and  possible 

both 

and 

Along  with  cyclical  challenges,  the  sector’s 
structural weaknesses have not changed. The 
high indebtedness of local households, the above-
average  reliance  on  wholesale  funding,  and 
interconnectedness  with  neighbouring  Nordic 
markets remain the key weaknesses of the Finnish 
banking  system.  Household  debt  as  a  percentage 
of  disposable  income  remains  very  high  at  over 
130%  (as  of  mid-2023).  9  out  of  10  home  loans 
leaves  debtors 
rates,  which 
have  variable 
susceptible  to  changes  in  interest  rates.  The 
Finnish  banking  system’s  interconnectedness  with 
neighbouring  countries  and 
reliance  on 
wholesale  funding  continue  to  be  causes  for 
concern, as these could magnify economic shocks, 
particularly  if  investor  confidence  declines.  The 
the 
local 
pandemic  and  previously  also  through  the  global 
financial  crisis. 
its 
robustness even during major crises. Nevertheless, 
past  experiences  cannot  be  taken  as  a  guarantee 
that  this  model  will  not  fail  in  the  future. 
Consequently,  Finnish  banks  have  an  interest  in 
further  reducing  their  reliance  on  the  short-term 
part of their wholesale funding. 

funding  model  survived 

therefore  proved 

through 

It  has 

its 

Credit growth has slowed for corporates and 
come  to  a  halt  for  households  amid  high 
interest  rates  and  uncertainty.  Since  2022, 
borrowers  have  been  put  to  the  test  by  the  rapid 
rates.  As  bankruptcies  and 
rise 
local  firms 
restructuring  proceedings  among 

interest 

in 

71 

-10-505101520200920102011201220132014201520162017201820192020202120222023Total privateNFCHH% 
 
 
  
 
Table A18.1:Financial Soundness Indicators 

(1) Last data: Q3 2023. 
(2) Data is annualized. 
(3) Data available for EA countries only, EU average refers to EA area.  
Source: ECB, Eurostat. 

There  is  an  obvious  slowdown  in  the  Finnish 
real-estate  market.  The  property  market 
entered  a  correction  phase  in  2022,  primarily 
driven  by  higher  financing  costs.  Generally,  2023 
was  a  challenging  year  for  Finnish  real-estate 
investors.  Value-wise,  transactions  dropped  to  a 
about  a  third  of  those  recorded  in  2022.  The 
residential  real  estate  market  remained  active, 
although  demand  for  housing  loans  has  also 
dropped (Graph A18.2). The commercial real estate 
(CRE)  sector  has  had  a  very  uneven  growth  path 
since  the  pandemic  and  is  more  affected  by 
geopolitical  uncertainty,  more  difficult  financing 
conditions,  and  changing  work  patterns  that  are 
reflected  in  lower  demand  for  office  space  by 
firms.  Investors  in  the  CRE  market  have  become 
more 
on 
environmental, social and governance investments. 
The  market  has  been  characterised  by  an 
emphasis  on  environmentally  certified  assets  and 
prime 
recessionary 
amidst 
environment  and  uncertainty.  On  a  positive  note, 
Finland’s property market remains one with strong 
investors, 
fundamentals, 
from  other  Nordic  countries, 
predominantly 
account  for  a 
transactions. 
Additionally,  Finland’s  real  estate  market  is  less 
large  price  volatility.  This  can  be 
prone  to 
attributed  to  Finland’s  policies  in  the  sector  and 
the overall stable economic environment. 

large  share  of 

and  more 

locations 

selective 

focused 

foreign 

and 

the 

from  non-financial 

continued to soar over 2023, the demand for new 
loans 
corporations  also 
dropped  to  levels  last  seen  during  the  global 
financial  crisis  and  was  barely  positive  in  Q4-
2023.  The  stock  of  corporate  loans  contracted  by 
some  3%  (year-on-year)  in  October  2023  (Graph 
A18.1). Finnish households also remained reluctant 
to borrow, as the rise in both consumer prices and 
interest  rates  continued  to  put  a  strain  on  local 
families’  finances.  The  average  interest  rate  on 
new  mortgages  for  households  rose  to  about 
4.73% by October 2023, making mortgages more 
expensive than at any time in the past decade. Not 
surprisingly, the  stock  of mortgage  loans  dropped 
by almost 3% (year-on-year) in October 2023. 

Graph A18.2: House price index and mortgages 

Source: ECB. 

72 

-3-2-101234590951001051101152015201620162017201720182018201920192020202020212021202220222023House price index (lhs)Adjusted loans, lending for house purchase (rhs)yoy% change2015=1002017201820192020202120222023EUMedianTotal assets of the banking sector (% of GDP)199.7269.2271.9293.5285.4288.8255.3257.0184.6Share (total assets) of the five largest banks (%)73.581.680.480.180.082.0--69.6Share (total assets) of domestic credit institutions (%)146.089.288.086.587.287.584.6-62.9NFC credit growth (year-on-year % change)4.28.47.24.53.95.81.6-2.4HH credit growth (year-on-year % change)2.72.22.93.34.01.5-1.2-1.4Financial soundness indicators:1        - non-performing loans (% of total loans)1.21.51.41.51.21.01.11.81.8- capital adequacy ratio (%)23.420.921.321.221.420.621.119.620.1- return on equity (%)28.88.14.95.89.29.614.49.913.2Cost-to-income ratio (%)155.755.460.755.650.650.541.852.844.9Loan-to-deposit ratio (%)194.8133.2136.7127.7121.4120.2123.593.380.2Central bank liquidity as % of liabilities2.51.70.93.96.04.60.6-0.7Private sector debt (% of GDP)147.7143.9146.1152.7150.5144.7-133.0118.4Long-term interest rate spread versus Bund (basis points)23.126.632.029.128.054.560.3107.7104.2Market funding ratio (%)64.463.862.762.561.861.1-50.839.8Green bonds outstanding to all bonds (%)3---2.23.14.15.94.02.71-34-1011-1718-2424-27Colours indicate performance ranking among 27 EU Member States. 
   
 
 
 
  
 
ANNEX 19: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  Finland’s  tax  system.  It  includes 
information on the tax structure (the types of tax 
that Finland derives most of its revenue from), the 
tax  burden  on  workers,  and  the  progressivity  and 
redistributive  effects  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance.  

information  on 

Finland’s  tax  revenues  as  a  share  of  GDP  in 
2022  are  among  the  highest  in  the  EU.  As 
indicated  in  Table  A19.1,  Finland’s  tax  revenues 
from  most  sources  are  higher  than  those  of  the 
EU-27.  Taxes  on  labour  together  with  social 
security  contributions  were  the  largest  revenue 
source (49% of total tax revenues). 32% of the tax 
burden  falls  on  consumption  and  20%  of  the  tax 
burden  falls  on  capital  (Graph  A19.1).  Overall  tax 
revenues  as  a  share  of  GDP  have  declined  by 
0.2 pps,  which  is  entirely  due  to  the  reduction  in 
revenues  from  consumption.  A  number  of  recent 
reforms to the personal income tax, which entered 
into  force  in  January  2024,  have  reduced  the  tax 
burden on labour. Specifically, the basic allowance 
and  the  earned  income  tax  credit  have  been 
increased. In addition, the earned income tax-scale 
has been adapted to account for inflation. 

Finland is expected to increase tax revenues 
following  a  rise  in  the  VAT  rate.  Finland 
increases  the  standard  VAT  rate  from  24%  to 
25.5% from later in 2024, resulting in the second 

Table A19.1:Taxation indicators 

highest standard rate after Hungary. In addition to 
the  standard  rate  increase,  several  reduced  rates 
have  been  abandoned  or 
increased.  Further 
revenue  potential  could  possibly  lie  in  currently 
relatively  underused  tax  types,  such  as  recurrent 
property  taxes  or  some  further  tax  exemptions. 
The  reduction  of  the  preferential  treatment  of 
dividends  from  unlisted  companies  (75%  of  the 
first  EUR 150 000  is  tax  exempt)  could  realise 
additional  revenue.  Further  use  of  some  forms  of 
environmental taxation could also be explored.  

Some  forms  of  environmental  taxes  could 
play a more prominent role in Finland. Overall 
revenues  from  environmental  taxes  are  higher  in 
Finland  (5.7%  of  total  revenues)  than  for  the  EU 
as a whole (5% of the total, see Graph A19.1). This 
mostly  results  from  comparatively  high  revenues 
from  taxes  on  transport.  Pollution  and  resources 
taxes  only  account  for  0.8%  of  environmental 
taxes  (and  for  0.04%  of  total  revenues),  so  there 
could be potential to strengthen the application of 
the  ‘polluter  pays’  principle.  Finland  has  only 
implemented  two  of  the  six  main  types  of 
pollution  and  resources  taxes  (i.e.  taxes  on  waste 
landfilling  and  plastic  products).  There  remains 
scope  to  expand  waste  disposal  taxes,  (including 
incineration)  and  implement  the  four  other  types 
(i.e.  taxes  on  NOx  emissions,  waste  loadings  to 
water,  fertilisers  and  pesticides).  Finland  had 
previously  implemented  a  tax  on  fertilisers,  but 
this  was  subsequently  ended.  A  new  mining  tax 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2022, if available. For more details on the VAT gap, see European Commission, Directorate-General for 
Taxation and Customs Union, 2023, VAT gap in the EU, https://data.europa.eu/doi/10.2778/911698. 
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage, 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
Source: European Commission and OECD 

73 

FI2010202020212022202320102020202120222023Total taxes (including compulsory actual social contributions) (% of GDP)40.641.843.243.037.940.040.440.2Labour taxes (as % of GDP)21.120.621.021.020.021.320.720.3Consumption taxes (as % of GDP)12.913.913.813.610.810.711.211.0Capital taxes (as % of GDP)6.57.38.58.57.18.08.68.9Of which, on income of corporations (as % of GDP)2.42.12.73.02.42.53.03.4Total property taxes (as % of GDP)1.11.61.61.61.92.32.22.1Recurrent taxes on immovable property (as % of GDP)0.60.80.80.81.11.21.11.0Environmental taxes as % of GDP2.72.72.52.42.42.22.32.0Tax wedge at 50% of average wage (Single person) (*)33.531.032.532.532.533.931.732.131.831.7Tax wedge at 100% of average wage (Single person) (*)42.341.843.143.143.541.040.139.940.040.2Corporate income tax - effective average tax rates (1) (*)19.619.619.819.519.019.0Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)11.711.512.213.28.68.18.27.9Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)6.24.540.935.5VAT Gap (% of VAT total tax liability, VTTL)(**)8.92.30.42.09.75.4Tax structureProgressivity & fairnessTax administration & complianceFinlandEU-27 
 
 
 
       
 
Graph A19.1: Tax revenues from different tax types, % of total revenue 

Source: European Commission 

has been introduced in 2024.  

taxation 

in  Finland 

Labour 
is  more 
progressive  than  in  the  EU  on  average. 
Graph A19.2  shows  the  labour  tax  wedge  for 
Finland in 2023. Labour taxation in Finland is more 
progressive  than  in  the  EU,  since  the  ratio  of  the 
tax  wedge  of  high-  and  low-income  earners  (a 
measure  of  progressivity  of  labour  taxation)  is 
higher. Overall, the tax-benefit system contributes 
significantly  to  the  low  level  of  income  inequality 
in  Finland.  It  reduced  the  Gini  coefficient  (a 
measure  of  income  inequality)  by  13.2 pps  in 
2022, more than the average reduction in the EU 
of 7.9 pps (see Table A19.1). Challenges remain as 
regards  the  complexity  of  the  social  benefit 
system, which results in disincentives to work. 

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2023 

The second earner tax wedge assumes a first earner at 100% 
of the average wage and no children. For the methodology of 
the tax wedge for second earners, see OECD, 2016, Taxing 
Wages 2014-2015. 
Source: European Commission 

74 

Finland’s  Recovery  and  Resilience  Plan  (RRP) 
includes  several  tax  reforms  to  support  the 
green  transition.  The  reform  of  energy  taxation 
in  support  of  the  electrification  of  industrial 
processes  has  been 
the 
respective  milestone  has  been  assessed  as 
satisfactorily  fulfilled.  A  reform  of  transport 
taxation to incentivise the use of electric vehicles, 
public  transport  and  bicycles  for  employees  has 
been implemented. 

implemented  and 

Finland  has  implemented  a  number  of  tax 
reforms.  In  2023,  interest  payments  for  home 
loans  ceased  to  be  deductible  for  the  purpose  of 
income  taxation.  The  deduction  had  been  phased 
out  over  10  years.  2023  also  saw  a  number  of 
temporary  VAT  rate  reductions  for  passenger 
transport  and  electricity,  and  a  temporary  tax 
credit in case of high electricity  costs. In the field 
of  corporate  taxation,  Finland  has  introduced  a 
deduction  of  45%  on  additional  R&D  costs.  In 
addition,  a  temporary  accelerated  depreciation  of 
fixed assets for 2024-2025 has been introduced. 

tax  administration 

Finland  performs  well 
in  terms  of  tax 
compliance  and  tax  administration.  Finland’s 
is  well 
digitalisation  of 
underway.  The  VAT  compliance  gap  was  expected 
to  be  2.0%  in  2022  (it  was  0.4%  in  2021),  well 
below  the  EU-wide  gap  of  5.4%.  Finland  has 
‘happy  taxpayer’  campaign  which 
initiated  a 
encourages  a  positive  attitude  towards  paying 
taxes  and  increasing  compliance.  In  addition, 
Finland  has  a  national  incomes  register,  which 
contains  comprehensive  data  on  earned  income, 
pensions  and  benefits,  implementing  the  principle 
of  one-time  reporting.  Overall 
levels  of  tax 
compliance in Finland are considered to be high.  

32.537.143.549.937.1202530354045505550100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - FISingle earner - EU averageSecond earner -  FISecond earner -  EU average50.627.322.148.831.519.7Tax revenue shares in 2022, Finland (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital4.23.91.40.90.00.21.82.51.92.70123456Finland -environmentaltaxationEU -environmentaltaxationFinland -propertytaxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Finland and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
      
      
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1:Key economic and financial indicators 

(1) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) NIIP excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2024-5-17, where available; European Commission for forecast figures (Spring forecast 2024). 

75 

2004-072008-122013-2020212022202320242025Real GDP (y-o-y)4.0-0.70.92.81.3-1.00.01.4Potential growth (y-o-y).0.60.80.71.21.10.60.6Private consumption (y-o-y)3.61.00.63.21.80.40.51.4Public consumption (y-o-y)1.50.71.03.9-1.04.50.0-0.7Gross fixed capital formation (y-o-y)4.8-1.31.91.02.5-4.20.24.0Exports of goods and services (y-o-y)8.6-1.61.56.23.6-1.70.92.1Imports of goods and services (y-o-y) 8.30.51.86.18.4-7.11.22.5Contribution to GDP growth:Domestic demand (y-o-y)3.20.41.02.81.30.30.31.5Inventories (y-o-y)0.3-0.20.00.01.8-3.4-0.10.0Net exports (y-o-y)0.6-0.8-0.10.0-1.92.6-0.1-0.2Contribution to potential GDP growth:Total Labour (hours) (y-o-y).-0.10.20.20.80.70.30.1Capital accumulation (y-o-y).0.50.50.50.50.40.40.5Total factor productivity (y-o-y).0.10.10.0-0.1-0.10.00.0Output gap1.5-1.0-1.1-0.3-0.1-2.2-2.8-2.1Unemployment rate8.17.98.27.76.87.27.47.2GDP deflator (y-o-y)1.32.11.32.45.44.81.82.1Harmonised index of consumer prices (HICP, y-o-y)0.92.70.72.17.24.31.42.1HICP excluding energy and unprocessed food (y-o-y)0.62.40.91.44.45.01.92.2Nominal compensation per employee (y-o-y)3.32.90.84.22.53.42.63.5Labour productivity (real, hours worked, y-o-y)2.7-0.50.70.8-1.2-0.6-0.10.9Unit labour costs (ULC, whole economy, y-o-y)0.93.90.43.64.65.02.52.2Real unit labour costs (y-o-y)-0.41.7-1.01.2-0.70.20.70.1Real effective exchange rate (ULC, y-o-y)-0.51.6-1.13.41.1-1.4-2.1-0.1Real effective exchange rate (HICP, y-o-y)-0.4-0.20.0-0.6-2.40.9..Net savings rate of households (net saving as percentage of net disposable income)0.31.50.22.6-1.6-0.8..Private credit flow, consolidated (% of GDP)10.17.55.16.12.3...Private sector debt, consolidated (% of GDP)114.9141.9148.5150.6145.2...of which household debt, consolidated (% of GDP)45.857.564.968.065.6...of which non-financial corporate debt, consolidated (% of GDP)69.184.583.682.779.6...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)0.60.91.31.10.9...Corporations, net lending (+) or net borrowing (-) (% of GDP)4.13.63.84.31.53.74.44.7Corporations, gross operating surplus (% of GDP)27.724.424.224.725.025.424.925.4Households, net lending (+) or net borrowing (-) (% of GDP)-3.2-2.2-2.5-1.1-3.4-2.7-2.8-2.9Deflated house price index (y-o-y)6.00.2-0.12.3-4.7-9.5..Residential investment (% of GDP)6.46.26.76.97.36.6..Current account balance (% of GDP), balance of payments4.20.5-1.00.4-2.4-1.4-1.6-0.8Trade balance (% of GDP), balance of payments4.80.9-0.60.0-2.4-0.4..Terms of trade of goods and services (y-o-y)-2.2-1.10.7-0.2-0.7-1.5-0.30.2Capital account balance (% of GDP)0.10.10.10.10.1-0.1..Net international investment position (% of GDP)-24.27.50.41.0-2.25.2..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)19.54.16.018.35.93.3..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)178.4225.6228.7214.3227.8224.7..Export performance vs. advanced countries (% change over 5 years)..-9.18.11.3-5.0..Export market share, goods and services (y-o-y)-1.1-7.5-0.1-3.9-1.9-2.8-2.5-1.5Net FDI flows (% of GDP)-1.41.8-0.6-1.42.71.0..General government balance (% of GDP)3.5-0.8-2.2-2.8-0.4-2.7-3.4-2.8Structural budget balance (% of GDP)..-1.5-2.7-0.3-1.4-1.8-1.6General government gross debt (% of GDP)40.847.767.372.673.575.880.582.4forecast 
 
 
 
  
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks for Finland over the short, medium and 
long  term. 
It  follows  the  multi-dimensional 
approach  of  the  European  Commission’s  2023 
Debt Sustainability Monitor, updated based on the 
Commission 2024 spring forecast. 

1  –  Short-term  risks  to  fiscal  sustainability 
low.  The  Commission’s  early-detection 
are 
indicator  (S0)  does  not  point  to  any  major  short-
term  fiscal  risks  (Table A21.2) (131).  Government 
gross financing needs are expected to increase to 
around  15%  of  GDP  on  average  over  2024-2025 
(Table A21.1, Table 1). 
markets’ 
perceptions  of  sovereign  risk  have  remained 
stable, as confirmed by the rating agencies. 

Financial 

2  –  Medium-term  fiscal  sustainability  risks 
appear high.   

is 

to 

ratio 

expected 

The DSA baseline shows that the government 
debt 
increase 
significantly to relatively high levels of 96% 
of GDP in 2034 (Graph 1, Table 1) (132). This debt 
increase is due to the assumed structural primary 
deficit of 0.7% of GDP (excluding changes in cost 
of  ageing)  as  of  2025.  Compared  to  historical 
data, this assumption appears plausible, as 100% 
of  past  fiscal  positions  were  more  stringent  than 
the  one  assumed 
(Table 
in 
A21.2) (133).  The  debt 
increase  can  also  be 

the  baseline 

explained by a positive stock-flow adjustment (1.5 
pps. of GDP on average over the same period) due 
to  a  build-up  of  reserves  for  a  pension  reserve 
fund.  On  the  other  hand,  the  debt  increase  is 
mitigated  by  a  still  favourable  but  declining 
snowball  effect  (around  -0.9  pp.  of  GDP  annually 
on  average  over  2025--2034),  which  is  also 
supported by the impact of Next Generation EU.  

the 

four 

interest-growth 

The  baseline  projections  are  stress-tested 
against 
deterministic 
alternative 
scenarios to assess the impact of changes in 
key  assumptions  relative  to  the  baseline 
(Graph 1).  Under  the  historical  structural  primary 
balance  (SPB)  scenario  (i.e.  the  SPB  returns  to  its 
historical  15-year  average  of  0.1%  of  GDP)  the 
debt ratio would be lower than under the baseline 
by  about  4 pps.  in  2034.  However,  under  the 
adverse  interest-growth  rate  differential  scenario 
(i.e. 
differential 
deteriorates by 1 pp. compared with the baseline), 
the  debt  ratio  would  be  higher  than  under  the 
baseline  by  around  7 pps.  in  2034.  Under  the 
financial  stress  scenario 
rates 
temporarily  increase  by  1 pp.  compared  with  the 
baseline)  the  government  debt  ratio  would  be 
higher by around 1 pp. in 2034. Finally, under the 
lower  structural  primary  balance  scenario  (i.e.  the 
projected cumulative improvement in the SPB over 
2023-2024  is  halved)  the  debt  ratio  would  be 
higher than under the baseline by about 2 pps. in 
2034. 

interest 

rate 

(i.e. 

(131) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of fiscal and financial-
competitiveness indicators that have proven to be a good 
predictor of emerging fiscal stress in the past.  

(132) The assumptions underlying the Commission’s ‘no-fiscal 

policy change’ baseline include in particular: (i) a structural 
primary defict, before ageing costs, of 0.5% of GDP from 
2024 onwards; (ii) inflation converging linearly towards the 
10-year forward inflation-linked swap rate 10 years ahead 
(which refers to the 10-year inflation expectations 10 years 
ahead); (iii) the nominal short- and long-term interest rates 
on new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10; (iv) 
real GDP growth rates from the Commission 2024 spring 
forecast until 2025, followed by the EPC/OGWG ‘T+10 
methodology projections between T+3 and T+10 (average of 
0.9%); (v) ageing costs in line with the 2024 Ageing Report 
(European Commission, Institutional Paper 279, April 2024). 
For information on the methodology, see the 2023 Debt 
Sustainability Monitor (European Commission, Institutional 
Paper 271, March 2024). 

(133) This assessment is based on the fiscal consolidation space 

indicator, which measures the frequency with which a tighter 
fiscal position than assumed in a given scenario has been 
observed in the past. Technically, this consists in looking at 
the percentile rank of the projected SPB within the 

stochastic 

plausible 

to 
These 

The stochastic projections indicate high risks, 
pointing  to  the  high  sensitivity  of  these 
unforeseen 
projections 
events  (134). 
simulations 
indicate  a 87% probability that the debt ratio will 
be  higher  in  2028  than  in  2023,  implying  high 
risks given the current high debt level. At the same 
time,  the  uncertainty  surrounding  the  baseline 
debt  projections  (as  measured  by  the  difference 
between  the  10th  and  90th  debt  distribution 
percentiles,  reaching  around  24%  of  GDP  in  five 
years’ time) is low (Graph 2).  

distribution of SPBs observed in the past in the country, 
taking into account all available data from 1980 to 2023. 

(134) The stochastic projections show the joint impact on debt of 

10,000 different shocks affecting the government’s 
budgetary position, economic growth, interest rates and 
exchange rates. This covers 80% of all the simulated debt 
paths and therefore excludes tail events. 

76 

 
 
 
 
 
 
 
age-related public spending (0.5 pp.) and the debt 
requirement (0.4 pp.) (Table A21.1, Table 2).  

4  –  Finally,  several  additional  risk  factors 
need to be considered in the assessment.  On 
the one hand, risk-increasing factors are related to 
the recent increase in interest rates, and risks from 
the  real  estate  and  the  housing  markets.  On  the 
other  hand,  risk-mitigating  factors  include  the 
lengthening  of  debt  maturity  in  recent  years, 
relatively  stable 
(with  a 
diversified  and  large  investor  base)  and  the 
currency denomination of debt. 

financing  sources 

3  –  Long-term  fiscal  sustainability  risks 
appear  overall  medium.  This  assessment  is 
based  on  the  combination  of  two  fiscal  gap 
indicators,  capturing  the  required  fiscal  effort  to 
stabilise debt over the long term (S2 indicator) and 
to  bring  debt  to  60%  of  GDP  by  2070  (S1 
indicator) (135). This assessment is mainly driven by 
the projected rise in ageing costs, but also by the 
initial  budgetary  position  These 
unfavourable 
results are conditional on the country maintaining 
a sizeable SPB over the long term. 

The  S2  indicator  points  to  medium  fiscal 
sustainability  risks.  The  indicator  shows  that, 
relative  to  the  baseline,  the  SPB  would  need  to 
improve by 2.7 pps. of GDP in 2025 to ensure debt 
stabilisation  over  the  long  term.  This  result  is 
underpinned  by  the  projected  increase  in  ageing-
related  costs  (contribution  of  2.2 pps.)  and  the 
unfavourable  initial  budgetary  position  (0.5 pp.). 
Ageing costs’ developments are primarily driven by 
a projected increase in long-term care (+1.8 pps.), 
pensions (0.7 pp.) and health care (0.6 pp.), which 
is  only  partly  offset  by  a  projected  decrease  in 
(Table  A21.1, 
education  spending 
Table 2). A number of investments and reforms (in 
particular  the  ongoing  SOTE  reform)  in  the  RRP 
contribute  to  supporting  the  efficiency  of  the 
Finnish  long-term  care  system,  so  it  will  be 
important 
their 
to 
implementation. 

carefully  monitor 

(-1.0 pp.) 

indicator  points  to 

The  S1 
low  fiscal 
sustainability risks. The indicator shows that the 
country does need to improve its fiscal position by 
1.5 pps. of GDP in 2025 to reduce its debt to 60% 
of  GDP  by  2070.  This  result  is  driven  by  the 
current  unfavourable  initial  budgetary  position 
(contribution  of  0.6 pp.),  the  projected  increase  in 

(135)The S2 fiscal sustainability indicator measures the 

permanent SPB adjustment in 2025 that would be required 
to stabilise public debt over an infinite horizon It is 
complemented by the S1 indicator, which measures the 
permanent SPB adjustment in 2025 to bring the debt ratio to 
60% by 2070. The impact of the drivers of S1 and S2 may 
differ due to the infinite horizon component considered in the 
S2 indicator. For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 % of GDP, 
‘medium risk’ if it is between 2% and 6% of GDP, and ‘low 
risk’ if the effort is negative or below 2% of GDP. The overall 
long-term risk classification combines the risk categories 
derived from S1 and S2. S1 may notch up the risk category 
derived from S2 if it signals a higher risk than S2. See the 
2023 Debt Sustainability Monitor for further details. 

77 

 
 
 
Table A21.1:Debt sustainability analysis - Finland 

Source: Commission services. 

Table A21.2:Heat map of fiscal sustainability risks - Finland 

Source: Commission services. 

78