COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Finland
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Finland, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  SWD(2025) 226 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Finland {COM(2025) 226 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

On the road to a muted recovery 

household 

Falling interest rates  are paving the way 
to economic recovery. The Finnish economy 
remained in a shallow recession in 2024, even 
though  the  economy  expanded  in  quarterly 
terms  throughout  the  year.  Market  interest 
rates  began  to  fall  in  2024,  helping  improve 
overall  economic  sentiment  and  translating 
into expanding output, a positive trend likely to 
have  continued  in  early  2025 (1).  Declining 
debt servicing costs are set to reduce pressure 
on 
high 
budgets, 
unemployment  is  expected  to  keep  weighing 
on  private  consumption.  In  the  last quarter  of 
2024, gross fixed capital formation stabilised, 
with  non-residential 
increasing 
since  the  second  quarter  of  2024.  Exports  of 
services,  especially  to  the  US, 
increased 
significantly  in  2024.  Provided  the  positive 
economic  momentum  withstands  the  impact 
of  exacerbating  trade  tensions,  the  Finnish 
economy is expected to grow by close to 1.0% 
in 2025 and slightly more in 2026. 

investment 

though 

The  labour  market  is  set  to  respond  to 
revived  economic  activity  with  a  lag.  In 
2024,  the  unemployment  rate  increased  to 
8.4%  and  neared  9%  at  the  beginning  of 
2025.  This  situation  is  in  stark  contrast  to 
falling  joblessness  observed  in  most  other 
euro  area  countries  and  can  be  attributed 
mostly to  the persistent  impact  of the  overall 
weak economic environment. The deterioration 
of the labour market situation is also reflected 
in  a  declining  number  of  vacancies  and  the 
decline  in  the  employment  rate  that  dropped 
to  77%  in  2024 (2).  However,  the  economic 

(1)  Statistics Finland, Tend indicator of output. 

(2)  People  with  low  education  levels  and  in  the  Eastern 

border regions are particularly affected. 

to 

recovery  is  projected  to  slowly  bring  some 
relief 
the 
unemployment  rate  expected  to  fall  to  about 
8.3% by the end of 2026. 

labour  market,  with 

the 

Ageing and persistent demand 
shocks limit productivity growth 

The  share  of  the  population  aged 
65 years  and  over  rose  at  one  of  the 
fastest  rates  in  the  EU.  The  old-age 
dependency  ratio  increased  from  28.9%  in 
2013 to 37.8% in 2024, among the highest in 
the  EU.  The  total  fertility  rate  has  been  in 
interruption  since 
decline  almost  without 
2010. 
the  working-age 
population (ages 15-64) has been shrinking (3). 
However, net migration increased from 23 000 
persons  in  2021  to  48 500  persons  in  2024, 
largely due to an influx of Ukrainian refugees. 
Recent estimates suggest that a net inflow of 
27 000 persons annually would be needed for 
an  average  real  GDP  growth  of  1.8%  by  the 
2030s (4). 

Consequently, 

Finland’s  economic  growth  has  been 
relatively  modest  since  the  2010s.  This 
reflects  the  impact  of  persistent  demand 
shocks  related  to  the  great  financial  crisis  of 
2008/2009 and the collapse of the electronics 
sector,  notably  the  Nokia  crisis (5).  Over  time, 

(3)  The  capital  region’s  (Helsinki-Uusimaa)  demographic 
dynamics differ markedly from those in the rest of the 
country with northern and eastern regions experiencing 
lower levels of growth or depopulation in some cases. 

(4)  Kokkinen,  A. 

(2025),  Finnish  economy’s 

long-term 
growth  outlook  squeezed  by  a  shrinking  working-age 
population  and  weak  productivity,  Bank  of  Finland 
Bulletin, 26 February 2025. 

(5)  OECD  (2023),  The  slowdown  in  Finnish  productivity 
growth.  Causes  and  consequences,  OECD  Science, 

2 

 
 
 
 
 
the  economy's  centre  of  activity  has  shifted 
services,  where  productivity 
towards 
is 
lower.  The  remaining  traditional 
generally 
manufacturing 
sectors  primarily  produce 
intermediate  products,  for  which  demand  is 
either  stagnant  or  declining.  Additionally,  the 
complexity  of  these  goods  is  medium  to 
low (6),  suggesting  limited  economic  potential. 
On  the  positive  side,  the  ICT  sector  has 
provided  a  significant  boost  to  the  growth  of 
service exports since 2019. 

Cost-competitiveness  depends  on  wage 
restraint  amid  low  productivity  growth. 
The competitiveness pact agreed in 2016 and 
effective  until  2019  helped  contain  wage 
growth  and  added  unpaid  work  hours.  This 
resulted  in  negligible  unit  labour  cost  growth 
in  Finland’s  cost-
and  an 
improvement 
competitiveness  during 
that  period.  The 
current  wage  bargaining  system  consists  of 
two tiers - sectoral agreements and company-
level  bargaining  -  and  continues  to  help 
moderate wage growth. 

Graph 1.1: Unit labour costs 

Source: European Commission 

However, a spike in inflation due to the energy 
crisis led to significantly faster wage growth in 
2022 and 2023 exceeding labour productivity. 
From 2021 to 2023, annual wage growth was 
three  to  four  times  higher  than  the  average 
growth  recorded  between  2016  and  2020, 
reflected in rising unit labour costs (Graph 1.1). 
In 2024, unit labour cost stagnated. 

Sustaining  competitiveness 
fostering  productivity  and 

lies  with 
innovation. 

jobs. 

Furthermore, 

Labour  productivity  has  been  declining  for 
some time, which can also be attributed to the 
less efficient allocation of the labour force (i.e. 
a  shift  to  the  service  sector).  Total  hours 
worked  have  been  stagnating,  although 
employment  grew  before  2023.  This  reflects 
the  fact  that  more  people  tend  to  take  up 
part-time 
some 
specialisations like engineering, the number of 
higher  education  graduates  has  been  too  low 
to provide a sufficient supply of skilled labour 
(see  Annex  12).  The  lack  of  skilled  labour  is 
cited  by  businesses  as  a  significant barrier  to 
investment  (see  also  Box  1  and  Section  4). 
Finland  also  faces  difficulties  in  turning  its 
innovation potential into viable business ideas, 
even  though  there  are  efforts  to  boost  R&D 
spending (see Section 2). 

in 

Geopolitical headwinds add to 
long-standing domestic challenges 

to 

traded  with 

The collapse of trade with Russia has had 
a tangible effect on the Finnish economy. 
Geographical  location  and  intensive  trade  ties 
exposed 
the 
the  Finnish  economy 
repercussions  of  Russia’s  war  of  aggression 
against  Ukraine.  Some  Finnish  exporters  that 
have 
previously 
successfully found new markets and suppliers 
of  raw  materials (7).  However,  service  exports 
have  been  negatively  affected  by  the  loss  of 
inflows  from  the  East.  Moreover, 
tourist 
because of Russia´s war of aggression against 
Ukraine,  the  economic  development  for  some 
sectors in the southeastern border regions has 
been  weaker  than  in  the  rest  of  the  country 
(see also Annex 17). 

Russia 

The  Finnish  economy’s  exposure  to  US 
import  tariffs  has  been  compounded  by 
further  rise  in  trade  policy  uncertainty. 
Amid  a 
trend  of  falling  export  market 
shares (8),  the  US  has  become  the  most 

Technology and Industry Policy Papers No 139, February 
2023. 

(6)  The Growth Lab at Harvard University (2025), Export 

complexity in 2022, Finland. 

(7)  Simola, H. (2024), The collapse of trade with Russia has 
had a limited effect on Finnish manufacturing, Bank of 
Finland Bulletin, 5 July 2024. 

(8)  European Commission (2024), Alert Mechanism Report 
2025 and Mäki-Fränti, P. (2024), Finland struggling to 

3 

-4-2024681020042006200820102012201420162018202020222024y-o-y  change, %FinlandEU-27 
        
 
 
 
important  trading  partner  for  Finland  outside 
the EU with a share of 23% of extra-EU goods 
exports  in  2024  (9.7%  of  total  exports  of 
goods).  Tariffs  would, 
therefore,  dampen 
Finland’s goods exports, according to the Bank 
of  Finland.  The  impact  of  US  import  tariffs 
would  be  even  more  detrimental  if  unilateral 
tariffs  turn  into  mutually  escalating  trade 
restrictions. The combined effect of retaliatory 
tariffs,  a  general  expansion  of  barriers  to 
international  trade  and  a  general  increase  in 
trade 
then 
significantly  shrink  exports  and  corporate 
investment and, therefore, growth (9). 

uncertainty  would 

policy 

Worsening fiscal situation requires 
substantial fiscal consolidation 

The  general  government  deficit  rose  to 
4.4%  in  2024.  A  weak  economic  situation 
reduced  revenues,  while  spending  on  social 
benefits  increased.  The  reductions  in  social 
security contribution rates, higher public wages 
and  debt  servicing  costs  put  further  pressure 
on  expenditure.  Finland  has  also  allocated 
funds to strengthen border security, in addition 
to  previously  decided  investments  in  military 
equipment.  The  general  government  deficit  is, 
therefore,  unlikely  to  fall  below  3%  of  GDP 
before  2027.  Consequently,  the  general  debt-
to-GDP  rate  is  set  to  climb  above  87%  by 
2026, compared to 77.1% in 2023. 

Net expenditure complies with the Council 
recommendation. 
net 
expenditure(10)  in  Finland  grew  by  3.1%  (see 

2024, 

In 

growth 

the  maximum 

Annex  1).  This  increase  is  mainly  driven  by 
sustained  growth  in  social  benefits  payments 
(due to pension and unemployment payments) 
and  public 
in  R&D  and 
investment  (e.g. 
defence).  In  2025,  net expenditure  is  forecast 
by the Commission to grow by 1.3%, which is 
below 
rate 
(11).  The 
recommended  by 
cumulative  growth  rate  of  net  expenditure  in 
2024 and 2025 taken together is projected at 
4.4%,  which  is  below  the  maximum  rate 
recommended  by  the  Council.  Taking  into 
account the information provided by Finland in 
its  Annual  Progress  Report,  the  reforms  and 
investments  underpinning  an  extension  of  the 
fiscal adjustment to 7 years (12) that were due 
by 30 April have been implemented.  

the  Council 

The  Finnish  government  adopted  two 
consolidation  packages  since  2023.  The 
total  consolidation  effort  of 
announced 
EUR 9 billion  (or  approximately  3%  of  GDP) 
comprises  both  expenditure  and 
revenue 
measures.  It  includes  cuts  in  unemployment 
benefits  and  an  increase  in  the  standard  VAT 
rate from 24% to 25.5%, already implemented 
in September 2024 (see Annex 2). At the same 
time,  out  of  EUR  9 billion,  EUR 2  billion  in 
additional  tax  revenues  are  expected  from 
higher  employment  due  to  improved  work 
incentives.  However, 
the 
in  personal 
government  announced  cuts 
income tax to be implemented from 2026 and 
a  reduction  in  corporate  income  tax  from 
2027,  both  of  which  are  set  to  reduce  tax 
receipts.  

in  April  2025, 

More  selective 
increases  could 
tax 
strengthen revenues in a growth-friendly 
manner. For example, the excise duty rate (i.e. 

defend its market share in goods exports, Bank of 
Finland Bulletin, 5 July 2024. 

(9)  Juvonen P. at al. (2025), Import tariffs and trade policy 
uncertainty will dampen economic growth, Bank of 
Finland Bulletin, 4 February 2025. 

(11)  Council Recommendation of 21 January 2025 

endorsing the national medium-term fiscal-structural 
plan of Finland (OJ C, C/2025/656, 10.2.2025, ELI: 
http://data.europa.eu/eli/C/2025/656/oj). 

(12)  According 

to 

the 

the  Regulation, 

required  fiscal 
adjustment (in particular, to put or keep the government 
debt ratio on a plausible downward path by the end of 
the adjustment period or keep it at prudent levels below 
60% of GDP and to bring or maintain the deficit below 
3% of GDP over the medium term) should be completed 
in four years but may be extended over a period to up 
seven years if the Member State commits to a relevant 
set of reforms and investments. 

expenditure, 

(10)  Net expenditure is defined in Article 2(2) of Regulation 
(EU)  2024/1263  as  government  expenditure  net  of  (i) 
revenue 
(ii) 
interest 
measures, (iii) expenditure on programmes of the Union 
fully  matched  by  revenue  from  Union  funds,  (iv) 
national  expenditure  on  co-financing  of  programmes 
funded  by 
(v)  cyclical  elements  of 
unemployment  benefit  expenditure,  and  (vi)  one-off 
and other temporary measures. 

discretionary 

the  Union, 

4 

 
 
 
increases. 

Simultaneously, 

decline  gradually  as  the  recipient’s  labour 
income 
the 
government  aims  to  reform  the  provision  of 
basic  social  assistance  by  making 
the 
conditions  more  transparent  and  encouraging 
participation 
labour  market.  These 
efforts are expected to increase labour supply 
and  support 
the  sustainability  of  public 
finances. 

in  the 

is  set 

to  put  forward  a  proposal 

The  reform  to  the  earnings-related 
pension  system 
to  enhance 
sustainability. The government tasked social 
partners 
to 
strengthen the sustainability and adequacy of 
the  pension  system.  The  proposal  that  will 
legislative  process  aims  to 
underpin  the 
increase investment returns of pension assets 
by  changing  the  investment  regulations  that 
apply  to  private  earnings-related  pension 
providers;  keeping  the  contribution  rate  of 
24.4%  for  private  sector  earnings-related 
pensions 
(statutory  employment  pension 
insurance,  also  known  as  'TyEL')  unchanged 
until 2030 and including an inflation stabiliser 
that  curbs  pension  indexation  if  consumer 
prices rise faster than wages over a two-year 
period.  Conversely,  the  proposed  reform  does 
not  intend  to  change  the  retirement  age  or 
pension accrual  rates. The proposed reform is 
set to increase investment risk in a sustainable 
manner. 

to 

revised 

leading 

recently, 

energy  content  tax)  on  motor  fuel  has  not 
been 
lower 
effective  taxation  when  fuel  prices  increase, 
and  especially  in  the  context  of  increasing 
income  level.  Recurrent  property  taxation  also 
seems to be lower than the aggregate level of 
the EU. In addition, the taxation of dividends of 
unlisted  companies  is  lower  than  those  of 
listed ones. Finally, spending reviews could be 
integrated 
framework 
the 
permanently to enhance spending efficiency. 

fiscal 

into 

Reforms of social security and 
health care are set to alleviate 
fiscal pressure 

has 

generated 

in  2023, 

The wellbeing services counties are set to 
improve cost efficiency to rein in deficits. 
In  2023,  the  wellbeing  services  counties’ 
deficit  was  0.7%  of  GDP  compared  to  the 
planned  0.2%.  Since  this  new  level  of  local 
government  was  set  up 
its 
functioning 
larger-than-
anticipated  deficits,  partly  due  to  expensive 
outsourcing  of  healthcare  services.  The 
wellbeing services counties are expected to set 
up plans to improve their use of premises and 
their  use  of 
service  networks,  expand 
improve 
and 
procurements, 
centralised 
competition in public procurement (13).  Though 
the  current  legal  basis  requires  the  wellbeing 
services  counties  to  cover  their  deficits  by 
2026,  some  entities  may  not  be  able  to 
achieve  this  target  and  might 
jeopardise 
attempts  to  put  the  general  government 
deficit on a steeper declining path. 

Finland  is  planning  to  overhaul  its  social 
security system. In 2025, the government is 
set  to  prepare  legislation  to  streamline  social 
protection by moving towards a general social 
security benefit. This reform will be carried out 
in stages, and it is planned to cover their living 
and  housing  costs,  as  well  as  other  expenses. 
The  general  social  security  benefit  is  set  to 

(13)  These commitments also underpin the prolongation of 

the fiscal adjustment period, see Council 
Recommendation of 21 January 2025 endorsing the 
national medium-term fiscal-structural plan of Finland. 

5 

 
 
Box 1: 

Barriers to private and public investment 

Finland’s total investment as a share of GDP has declined slightly since 2018 (24.6% in 
2018  vs  23.2%  in  2023)  but  remained  above  the  EU  and  euro  area  aggregates.  The  business 
investment ratio to GDP stood at 13.3% in 2023, approximately 1 percentage point lower than 
the peak in 2008 and just above the EU and euro area aggregates. 

Despite a tense fiscal situation, Finland’s public investment remains above the EU and 
euro area levels. Public investment peaked in 2020, when the ratio reached 4.9% of GDP as 
part  of  the  government’s  efforts  to  support  the  economic  situation  during  the  COVID-19 
pandemic. In 2023 it stabilised at 4.1%. 

Finnish businesses highlighted the following main barriers to private investments: 

•  Uncertainty about the future. This have been indicated as a barrier to investment by 81% 
of Finnish business which  participated in the European Investment Bank's 2024 investment 
survey.  This  is  higher  than  the  EU  average  of  79%.  The  weak  economic  situation  in  recent 
years and overall geopolitical tensions make Finnish business rethink their investment plans 
and focus more on replacement investments rather than on expanding their capacities. 

•  Lack of demand for products or services. Domestic demand declined in 2022 and 2024, 
while  economies  of  major  trade  partners  have  been  struggling  recently.  This  discourages 
companies from investing to expand their operational capacities. 

•  Labour and skills shortages. The needs and expectations of the employers and the skills 
of the workers do not consistently align, which contributes to high structural unemployment. 

The  implementation  of  Finland’s  RRP  is  well  underway.  At  present,  Finland  has  fulfilled 
33% of the milestones and targets in its RRP.  

It  remains  important  to  accelerate  the  implementation  of  cohesion  policy  programmes.  The 
mid-term  review  offers  opportunities  to  speed  up  progress  and  better  address  EU  strategic 
priorities related to competitiveness, defence, housing, water resilience and the energy transition. 

Finland  has  not  yet  taken  advantage  of  the  opportunities  provided  by  the  Strategic 
Technologies for Europe Platform under Cohesion Policy to reallocate resources towards this 
priority. However, it can still support the development or manufacturing of critical technologies in 
the  areas  of  digital  and  deep  tech,  clean  and  resource  efficient  technologies,  and 
biotechnologies.   

Box 2: 

UN Sustainable Development Goals (SDGs) 

While Finland performs above the EU average on SDGs related to productivity (SDG 4, 8 and 9), 
is moving away from targets in quality education (SDG 4) and decent work and economic growth 
(SDG 8).  These trends are underlined by an increase in the unemployment rate and lower GDP 
per  capita,  as  well  as  worsening  education  outcomes.  Finland  is  overall  improving  in  SDGs 
related to environmental sustainability and performing well in SDGs related to fairness, with high 
scores and progress in clean water and sanitation (SDG 6) and climate action (SDG 13). 

Out of the 17 indicators, only 5 SDGs remain below the EU average. These relate to good health 
and  wellbeing  (SDG 3),  environmental  sustainability  (SDGs  7,  12  and  14)  and  macroeconomic 
stability (SDG 17).  

6 

 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

Finland has a sizeable potential 
for innovation-driven growth 

Finland  ranks  among  the  EU’s  leading 
innovation  performers.  According  to  the 
innovation  scoreboard,  Finland’s 
European 
innovation  performance  was  128%  of  the  EU 
average in 2024 (14). Notably, Finland is the EU 
country  with 
the  highest  proportion  of 
introducing  new  products  or 
companies 
services  onto  the  national  or  international 
market.  This  innovation  capacity  is  supported 
by a high degree of digitalisation, with Finland 
being  above  the  EU  average  in  most  of  the 
Digital Decade key performance indicators (15), 
notably  in  digital  skills  of  individuals  and 
SMEs. Moreover, Finland has a robust research 
base  in  science,  electrical  engineering  and 
forestry (see Annex 3). 

Finland’s 

is  well  placed  to  seize  the 
Finland 
opportunities  emerging  from  artificial 
intelligence (16). 
reliable 
infrastructure and high-quality research makes 
it  a  natural  destination  for  national  and  EU-
wide  research  hubs.  The  second  European 
Laboratory  For  Learning  And 
Intelligent 
Systems  (ELLIS  Institute)  was  established  in 
Finland  in  2025  to  promote  top  AI  research, 
large-scale  R&D  collaboration,  and  ethical  AI 
development  across  Finnish  universities. 
Finland was selected to host an AI Factory and 
the  European  high-performance 
will  use 
computing  joint  undertaking  supercomputer 
LUMI  in  Kajaani  to  launch  its  operations. 

(14)  European Commission, 2024, European Innovation 

Scoreboard 2024. 

(15)  European Commission, 2024, Report on the State of the 

Digital Decade 2024. 

(16)  For example, Tortoise media, 2024, The Global AI Index, 

tortoisemedia.com. 

LUMI’s  successor,  a  new  LUMI+  AI-optimised 
supercomputer,  will 
computing 
capacity  required  for  training  and  fine-tuning 
AI models.  

provide 

they  have  been 

The share of private investment in the AI 
sector is still relatively low.  This is due to 
the  dominant  role  of  public  funding  in  the 
early  project  stages  and  to  unfavourable 
market  conditions.  AI-startups  have  the  same 
access to public funding as other startups and 
have  been  successfully  in  raising  early-stage 
less 
funding.  However, 
successful  in  larger  growth-funding  rounds, 
innovative 
which 
inhibited 
businesses  from  scaling  up.  While 
is 
it 
estimated  that  some  20%  of  the  working 
population  in  Finland  have  professions  whose 
content  can  be  substituted  by  AI  up  to  50%, 
generative  AI  has  thus  far  had  a  positive 
impact  on  employment  in  Finland,  increasing 
labour  demand  and  salaries  in  AI-affected 
sectors (17). 

some 

has 

Finland has a relatively high level of R&D 
spending, and the ambition to increase it 
further.  In  2023,  Finland’s  R&D  spending 
amounted to 3.1% of GDP, compared to 2.2% 
of  the  EU  average.  The  Finnish  government 
has set the target of increasing R&D spending 
to  4%  of  GDP  by  2030,  with  central 
government R&D funding accounting for 1.2% 
of  GDP.  To  support  this  target,  a  series  of 
measures  have  been  introduced  to  incentivise 
private  R&D,  such  as  tax  incentives  (see 
Annex 3)  and  funding  promoting  cooperation 
between  the  private  and  public  sector (18). 
However,  public  support  for  R&D  could  be 
more  targeted  to  companies  with  the  highest 

(17)  Etla, 2024, Generatiivinen tekoäly lisännyt työn 

kysyntää Suomessa, palkat nousseet eniten tekoälylle 
altistuneissa ammateissa, etla.fi. 

(18)  OECD, 2025, STIP Compass: Innovation in firms and 
innovative entrepreneurship in Finland, stip.oecd.org. 

7 

 
 
 
 
possibly 

promoting 
innovative  potential, 
cooperation  between  businesses  and  higher 
education. Further measures to de-risk private 
investment could also be introduced. 

the non-financial sector, with only 6% of firms 
reporting  obstacles  when  seeking  bank  loans. 
The  country  features  a  predominant  equity 
culture,  with  capital  market 
instruments 
accounting for 68% of corporate financing. 

Finland  is  aiming  to  significantly  expand 
its  cybersecurity  capabilities.  In  recent 
years, Finnish businesses have experienced an 
(see 
increasing  amount  of  cyberattacks 
Annex 4).  The  importance  of  cybersecurity  is 
recognised  by  Finland’s  Digital  Compass (19). 
Measures  already  taken include  strengthening 
higher  education  in  cybersecurity  and  setting 
up  a  dedicated  agency  to  enhance  SMEs' 
cybersecurity  capabilities (20).  In  2024,  the 
government  published  Finland’s  cybersecurity 
developing 
strategy, 
competencies, (ii) increasing preparedness, (iii) 
boosting  cooperation  between  public,  private 
and  international  actors,  and  (iv)  putting  in 
place appropriate countermeasures (21). 

focused 

on 

(i) 

The business environment is 
overall conducive to innovation 

institutional 

Finland’s competitiveness benefits from a 
stable 
framework  and 
advanced  digitalisation.  Finland  has  stable 
and transparent public institutions and reliable 
infrastructure. Moreover, Finland is one of the 
world leaders in public electronic services:  the 
availability of digital public services to citizens 
scores  well  above  the  EU  average,  while  the 
availability  to  businesses  has  reached  the 
Digital Decade 2030 target (Annex 6). 

Businesses  benefit  from  easy  access  to 
both  equity  and  debt  financing.  Finland  is 
characterised by a stable banking system, high 
financial  literacy,  and  an  efficient  capital 
market.  Internal  financing,  listed  equities,  and 
bank loans are the main sources of funding for 

(19)  Finnish Government, 2022, Government report: 
Finland’s Digital Compass, valtioneuvosto.fi. 

(20)  European Commission, 2024, Report on the State of the 

financing,  due 

later  stages  of 

Access  to  venture  and  growth  capital  is 
more  limited.  This  is  particularly  an  issue  in 
to 
the 
conservative  participation  by 
institutional 
investors  like  pension  funds.  Therefore,  small 
productive  firms  may  struggle  to  find  the 
funding to scale up beyond the startup phase. 
The taxation system could be adapted to make 
it more supportive of venture capital financing 
and investing (22). 

Regulation  does  not  hinder  investment, 
but room for improvement remains. Some 
46%  of  Finnish  companies  consider  business 
regulations  and  some  49%  consider  labour 
regulations  an  obstacle  to  investment,  lower 
rates  than  their  EU  peers.  However,  the 
licensing  system  could  be  further  improved 
and  the  regulatory  burden  could  be  further 
reduced (23) (Annex 4). For example, regulators 
are  not  currently  required  to  identify  any 
substantial compliance costs or administrative 
burden  that  new  regulations  would  entail 
(Annex 6). 

Innovation does not translate into 
higher productivity 

in  annualised  term 

Despite  the  strong  innovation  activity, 
labour  productivity  stagnated  over  the 
last  decade.  Labour  productivity  per  hours 
worked  declined  by  0.4%  in  2024,  and  by 
0.6% 
in  2020-2024. 
Similarly,  total  factor  productivity  (i.e.  the 
efficiency  with  which  inputs,  such  as  labour 
and  capital,  are  used  together  during  the 
production  process)  in  Finland  has  generally 
hardly  grown  or  even  stagnated  in  recent 
years.  While  the  level  of  labour  productivity 

Digital Decade 2024. 

(22)  IMF, 2025, Finland: Staff Report for the 2025 Article IV 

(21)  Prime Minister’s Office, 2024, Finland’s Cyber Security 

Consultation. 

Strategy 2024-2035, valtioneuvosto.fi. 

(23)  OECD, 2024, Product market regulation indicators. 

8 

 
 
 
significantly 

remains above the EU aggregate, the gap has 
narrowed 
(see  Graph  2.1). 
Starting at nearly 120% of the EU in terms of 
GDP  per  hours  worked  in  the  early  2000s,  it 
decreased to 105% by 2023. 

Graph 2.1: Labour Productivity 

Structural  factors  explain  the  long-term 
trends  in  labour  productivity.  The  collapse 
of  the  electronics  sector  had  long-lasting 
consequences  on  the  Finnish  economy.  For 
most  of  the  2000s,  the  electronic  sector 
accounted  on  average  for  more  than  6%  of 
gross value added, but by 2012 it reached the 
low of 1.5% of gross value added and hovered 
at around 2% of GDP afterward. With no other 
sector  filling  the  void  left by  electronics, total 
gross  value  added  recovered  its  pre-2008 
levels  only  around  2018  and  has  only  grown 
modestly  since.  The  decline  in  gross  value 
added  due  to  the  collapse  of  the  electronic 
labour 
sector 
productivity,  given  that  employment  did  not 
decline as much. The collapse also meant that 
the less-productive service sector increased its 
share  in  total  employment,  slowing  down 
productivity  growth.  A  low  level  of  capital  per 
worker  has  also  reduced  labour  productivity 
sector. 
growth 
Furthermore,  evidence  shows  that  the  most 
productive companies in Finland account for a 
relatively  small  share  of  employment,  and 
the 
therefore  cannot  significantly  boost 
aggregate  level  of  productivity (24).  Indeed,  In 
Finland,  the  dynamic  of  productivity  has  been 
driven  by  laggard  firms (25),  with  sluggish 
productivity performance (26). 

the  manufacturing 

consequently 

reduced 

in 

Source: European Commission 

Finnish firms do not reap the full 
benefits of the single market 

Finnish 

high-growth 

High-growth  enterprises (27)  represent  a 
relatively  high  share  of  employment.  In 
2022, 
enterprises 
accounted  for  15.8%  of  employees  in  active 
firms  with  more  than  10  employees,  more 
than  the  EU  average  (1.2%),  comparable  to 
the figure in Denmark (15.7%) and lower than 
that in Sweden (23.6%). Moreover, young high-
growth  enterprises  (‘gazelles’)  accounted  for 
2%  of  employees  in  active  firms  with  more 
than 10 employees, a share higher than in the 
EU,  Denmark  or  Sweden. While  these  gazelles 
have higher productivity than larger incumbent 
firms,  a  recent  analysis  using  a  definition  of 
gazelles  based  on  turnover  growth  showed 
that  (i)  the  birth  rate  of  gazelles  is  lower  in 
Finland than in the EU overall, and  (ii)  Finnish 
gazelles are under-leveraged compared to the 
EU average (28).  

Finland’s SMEs have a relatively low level 
of  goods  trade  integration  within  the  EU 
single market. Trade statistics show that the 
size of Finnish firms involved in intra-EU goods 
exports  is  comparable  to  the  EU  average. 
However,  the  value  of  intra-EU  goods  exports 

(24)  IMF, 2025, Finland: Staff Report for the 2025 Article IV 

Consultation. 

(25)  Defined as the bottom 90% least productive firms, 
whereas frontier firms are defined as the top 10% 
productive firms. 

(26)  IMF, 2025, Finland: Staff Report for the 2025 Article IV 

Consultation. 

(27)  Eurostat defines high-growth enterprises as having at 
least 10 employees in the beginning of their growth, 
and the number of their employees growing by more 
than 10% per year, over a three-year period. 

(28)  IMF, 2025, Finland: 2025 Article IV Consultation-Press 
Release; Staff Report; and Statement by the Executive 
Director for Finland. 

9 

104106108110112114116118120-5-4-3-2-1012345Index, EU = 100y-o-y change, %Real GDP per hours worked - FI, (lhs)Real GDP per hours worked - EU-27, (lhs)Real GDP per hours worked - EA, (lhs)GDP (PPS) per hours worked - FI (EU-27=100) (rhs) 
 
      
 
shows  that  SMEs  (i.e.  firms  with  fewer  than 
250 employees) accounted for a smaller share 
of  intra-EU  goods  trade  (36%)  compared  to 
the  EU  average  (41%),  Denmark  (52%)  and 
Sweden  (42%)  in  2022 (29).  In  contrast,  SMEs 
accounted for 57% of intra-EU goods imports, 
more than the EU average (51%) in the same 
year. These figures suggest that there may be 
scope for Finnish SMEs to further benefit from 
the EU single market by expanding their goods 
exports  to  other  EU  countries  (see  Annex  4). 
Reducing regulatory barriers between Member 
States  could  help  Finnish  exporters  integrate 
into the single market, as they flag more often 
than  their  EU  peers  that  they  need  to  comply 
with  differing  standards  and  consumer 
protection  rules  across  EU  countries  (70%  vs 
EU 60%, see Annex 4). 

Finnish SMEs show a relatively high level 
of  services  trade  integration  within  the 
In  Finland,  SMEs 
EU  single  market. 
accounted  for  37%  of 
intra-EU  services 
exports  in  2022,  more  than  the  EU  average 
(28%)  and  Denmark  (26%),  and  similar  to 
Sweden  (40%) (30),  while  they  accounted  for 
25%  of  intra-EU  services  imports,  similar  to 
the EU average. 

Shortages of skilled labour risk 
slowing down Finland’s long-term 
growth 

The  availability  of  specific  skills  is  vital 
to  reach  Finland’s 
innovation  goals. 
Finnish companies cite the lack of a workforce 
with  specific  skills  as  one  of  their  main 
investment (31). 
Boosting 
obstacles 
to 
competitiveness 
increased  R&D 
through 
investment  means  a  growing  need  for  highly 
educated  and  specialised  knowledge  workers, 
as investments cannot be effectively exploited 
without  an  adequate  pool  of  skilled  labour. 
requires 
Commercialising 

innovations  also 

(29)  Eurostat, ext_tec01. 

(30)  Eurostat, ext_stec01. 

entrepreneurial  and  business  skills  and 
effective  cooperation  between  academia  and 
businesses.  As  Finland  has  ambitious  green 
transition  goals,  skills  shortages  are  expected 
in  certain  clean  transition  fields,  such  as 
energy  efficiency,  energy  supply,  construction 
and transport (32). The skills shortages not only 
slow down competitiveness and growth in the 
sector  but  may  also  limit  progress  towards 
Finland’s climate target of carbon neutrality by 
2035.  In  addition,  lack  of  adequate  labour 
supply with specific skills can hinder R&D and 
growth  driven  by  digital  technologies.  A 
digitalisation and technological transformation 
boost  depends  on  the  increasing  supply  of 
specialised profiles (e.g. ICT), including in fast-
has 
developing 
cybersecurity (33) 
experience, 
(Annex 4). 

areas  where 
such 

Finland 

as 

to 

Modernising  the  educational  system  is 
key to addressing skills shortages. Finland 
has been a leader in education but has slipped 
in  PISA  rankings  measuring  basic  education 
outcomes  (Annex  12).  The  challenges  of  the 
education system in Finland include the overall 
strain  on  public  finances,  teacher  shortages, 
and  the  growing  share  of  underachieving 
students.  Finland  plans 
significantly 
increase  its  higher  education  levels,  as  the 
higher  education  attainment  has  fallen  below 
the EU average (Section 4). More study places 
should  be  made  available  for  first-time 
university  students,  and  more  PhD  students 
should be trained, possibly in cooperation with 
companies and SMEs (34). As new fast-growing 
economic  sectors  develop,  flexible  allocation 
of  study  places  reflecting  demand  is  needed. 
In  addition,  enhancing  cooperation,  building 
knowledge  clusters,  and  attracting  foreign 
talent 
work-based 
immigration (35)  could  help  develop  people's 
skills. 

promoting 

and 

(32)  Prime Minister’s Office, 2023, Vihreän siirtymän 

osaamis- ja koulutustarpeet, vnk.fi. 

(33)  Eurostat, 2023, ICT security in enterprises. 

(34)  OECD, 2025, Economic Survey of Finland 2025. 

(31)  EIB, 2025, EIB Investment Survey 2024: Finland 

(35)  Etla, 2023, Tools to promote productivity in Finland, 

overview, eib.org. 

etla.fi. 

10 

 
 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

Finland’s ambition towards carbon 
neutrality faces increasing 
challenges 

industry, 

Finland’s  target  for  carbon-neutrality  by 
2035  is  the  most  ambitious  climate 
target  in  the  EU.  The  revised  Climate  Act 
includes  this  carbon  neutrality  target  as  well 
as  the  medium  and  long-term  targets  for 
emissions  reductions  by  2030,  2040  and 
2050. Efforts are ongoing in each of the main 
sectors  contributing  to  overall  emissions, 
transport  and 
including  energy, 
buildings. These efforts all seek to reduce the 
country’s  emissions  in  order  to  meet  its 
climate targets. An uncertain economic outlook 
(see  Section  1),  supply-chain  bottlenecks, 
increased  raw  materials  prices  and  higher 
market  interest  rates  have  contributed  to 
delays in the delivery of investment projects in 
industry  sectors,  posing 
the  energy  and 
challenges  to  the  progress  towards  carbon 
neutrality.  Finland  remains  one  of  the  most 
energy-intensive  economies  in  the  EU,  partly 
due to its cold climate and the long distances 
between population centres. 

comprehensive 

Finland’s  climate  is  warming  faster  than 
the  global  average (36).  The  country  has  a 
long-standing 
climate 
adaptation  strategy,  but  climate  change  is 
accelerating.  In  2024,  Finland  faced  record 
temperatures.  The  annual  average 
high 
temperature  was 
Celsius, 
1.1 degrees  above  the  1991-2020  average. 
Northern  Lapland  saw  the  most  pronounced 
warming, with temperatures rising 1.7 degrees 
above  the  average.  This  creates  country-

4.0 degrees 

specific  risks,  including  degradation  of  soil 
quality,  increased  emissions  from  peatlands, 
threats to biodiversity, increasing wildfire risks 
as  well  as  effects  on  natural  ecosystems, 
tourism and agriculture. 

The reduction of the carbon sink 
puts climate progress at risk 

Finland’s forests are a key element of its 
climate  strategy.  Increased  logging  rates 
have turned the carbon sink into a net source 
of  emissions  since  2021.  The  significant 
decrease of the carbon sink negatively affects 
the  country’s  ability  to  meet 
its  carbon 
neutrality  goals.  In  2023,  forests  contributed 
1.12 Mtonnes of CO2 equivalent emissions (37). 
Soils have also become a source of emissions 
since  2021.  Excluding  the  land  use,  land-use 
change and forestry sector, Finland reduced its 
carbon  emissions  by  43%  between  1990  and 
2023. While this is above the EU average, net 
emissions  are  exceeding  its  2035  target  by 
between  16  and  33 Mtonnes  of  CO2-
equivalent,  depending  on  the  scenario.  The 
sector’s  net  emissions  therefore  jeopardise 
much  of  the  progress  made  since  1990.  In 
2022,  imports  of  timber  from  Russia  were 
reduced  to  zero.  Moreover,  the  energy-use  of 
wood 
taxed,  which  may  further 
incentivise  unsustainable  harvesting.  Forest 
growth rates have stagnated since 2013 after 
decades  of  increasing  growth  rates  due  to 
reasons  including  droughts  and  age  structure 
of the forests.  

is  not 

(36)  Finnish Meteorological Institute (2025): 2024 warmer 

than usual in Finland. 

(37)  LUKE (2025): Preliminary greenhouse gas inventory 
results for 2023. Forest land has turned into an 
emission source because the carbon sink of trees no 
longer cover emissions from forest soil. . 

11 

 
 
 
 
Finland’s  agriculture  is  still  a  major 
source  of  greenhouse  gas  emissions,  in 
particular from peatlands. While  only 11% 
of agricultural land is on peat soil, farming on 
peat soil accounts for over half of agricultural 
emissions. Finland is taking steps to phase out 
the use of peat for energy purposes. Reducing 
the  use  of  peat  has  an  impact  on  local 
economies  and  employment  because  peat 
extraction  is  geographically  concentrated  in 
economically 
small 
communities 
disadvantaged  areas.  Targeted 
investment, 
such  as  through  the  Just  Transition  Fund, 
contributes to ensuring a smooth transition. 

in 

Progress is uneven among the 
main emitting sectors 

The  energy  sector  is  decarbonising  at  a 
steady  pace.  Some  95%  of  all  electricity  in 
Finland  is  generated  either  by  renewable 
energy sources or nuclear energy. Finland has 
legislated a ban on the use of coal for energy 
as  of  May  2029  and  no  coal-fired  power 
plants  are  in  operation  any  longer.  The  share 
of  district  heat  produced  from  renewable 
energy  was  48%  in  2024.  An  additional  16% 
is  produced  from  heat  recovery  and  4%  from 
electric  boilers.  Finland's  energy  mix  has  the 
EU's  second  highest  share  of  renewables  at 
42%  of  total  energy  consumption  in  2023, 
followed  by  nuclear  (24%),  oil  (24%),  solid 
fossil  fuels  (5%)  and  natural  gas  (4%).  In 
December  2024,  Finland  approved  an  Act  on 
Offshore  Wind  Power 
the  Exclusive 
Economic  Zone,  which  is  expected  to  lead  to 
increased  investment  in  offshore  wind  power 
generation in the medium term. The ambitious 
overhaul  of  the  environmental  permitting 
system will enter into force on 1 January 2026 
and  is  expected  to  further  facilitate  and 
accelerate investment in renewables. 

in 

As more renewable energy is added to the 
energy  mix,  the  electricity  grid  will  need 
increased  capacity  and  modernisation.  As 
a  relatively 
is 
generated  in  the  west  and  north  of  Finland 
while  consumption  is  concentrated  in  the 
south, there is a need to increase transmission 

large  share  of  electricity 

capacity. Moreover, advancing electrification is 
expected  to  significantly  increase  electricity 
consumption  in  the  future.  Finland  is  nearly 
self-sufficient as a producer and consumer of 
electricity.  Its  energy  security  is  strong,  with 
covering  98%  of 
domestic  production 
in  2023.  Moreover, 
electricity  demand 
Finland's 
Estonia, 
interconnections  with 
Sweden and Norway make it well-connected to 
neighbouring  countries.  Its  level  of  electricity 
interconnectivity  was  15.5%  in  2024,  already 
exceeding  the  2030  target  of  at  least  15%. 
Finland  continues  to  closely  monitor  the 
security of critical infrastructure, especially by 
enhancing  surveillance  and  repair  capacity,  in 
light  of  recent  incidents  related  to  critical 
infrastructure in the Baltic Sea. 

Finland. 

emissions 

A diligent implementation of the national 
roadmap  for  fossil-free  transport  is  key. 
Transport  accounts  for  approximately  20%  of 
total 
Timely 
in 
implementation of the measures linked to the 
roadmap is necessary to achieve the country’s 
objective of reducing emissions from transport 
by 50% by 2030 compared to 2005. Finland is 
preparing its social climate plan to ensure that 
the  transition  is  fair  to  vulnerable  groups, 
including by providing supporting measures for 
households  experiencing  energy  or  transport 
In  2024,  nearly  50%  of  new 
poverty. 
registered  were  battery-
passenger  cars 
electric  or  plug-in  hybrid  electric  vehicles (38). 
However,  these  vehicles  still  represent  only 
10.3%  of  the  car  fleet.  Long  distances 
between  population  centres  and  sparsely 
populated  areas  in  some  regions  may  prove 
limiting  factors 
the  electrification  of 
passenger  transport.  Other  areas  of  the 
transport  sector,  including  long-haul  transport 
and  improved  public  transport  connections 
within  and  between  urban  areas,  could 
contribute  to  speeding  up the  decarbonisation 
of transport. 

to 

(38)  European Commission (2025), Finland: 10% of Finland's 
car stock now being rechargeable since 2024, European 
Alternative Fuels Observatory. 

12 

 
 
both  focusing  on  decarbonising  industry.  The 
new  emissions  trading  system  for  buildings, 
road  transport  and  additional  sectors 
is 
estimated  to  cover  about  50%  of  the  total 
emissions  from  the  effort-sharing  sector. 
Finland  is  unilaterally  expanding  the  scope  of 
this  system  to  cover  emissions  from  fuel 
combustion  from  agriculture  and  forestry  as 
well as non-commercial navigation. 

rather 

to  products 

Finland  is  taking  steps  to  replace  the 
Waste Act by a new Circular Economy Act. 
The Waste Act was originally adopted in 2011 
and  has  been  amended  several  times  since 
then.  The  new  Circular  Economy  Act  aims  to 
consolidate  and  clarify  the  rules  applicable  to 
the waste  sector. Moreover, it will take a life-
cycle  approach 
than 
focusing  exclusively  on  waste.  More  action  to 
promote  the  circular  economy  is  necessary  to 
low  municipal  waste 
address  Finland's 
recycling  and  high  waste  incineration  rates. 
Both  the  circular  material  use  rate  and 
resource productivity are among the lowest in 
the  EU.  The  low  rate  of  re-use  of  materials 
could  impact  the  competitiveness  of  industry 
as  the  availability  and  affordability  of  critical 
raw  materials  becomes  more  and  more 
leveraging 
uncertain. 
domestic 
resources 
local  extraction  and 
processing  of  critical  raw  materials,  increased 
action  on  re-use  of  key  materials  could 
contribute to the autonomy and productivity of 
Finland’s industry. 

Beyond 
through 

Investing in net-zero technologies 
is important for Finland’s business 
model 

Investing in the green economy, including 
in  skills,  is  crucial  for  competitiveness. 
Significant  investment  volumes  are  allocated 
to frontier technologies in green tech, including 
wind  power  and  green  research,  development 
and innovation. An improved circular materials 
use  rate  could  reduce  the  dependence  on 
imports of key materials and other inputs into 
the  industrial  process.  Decarbonisation  and 
for 
electrification  are  potential  sources 
industries. 
efficiency 
Technologies 
reduced  carbon 
intensity  in  these  industries  create  potential 
for scaling up similar processes in other types 
of  production.  Finland  will  need  to  address 
shortages of skilled workers as well if it wants 
these 
to  grow.  Sector-specific 
shortages  of  skilled  labour  exist  notably  in 
construction,  energy  renovations  and  battery 
production (see Section 4). 

in 
that  have 

traditional 

sectors 

is  progress  on  decarbonising 
There 
industry, but efforts could be stepped up. 
Electricity prices for non-household consumers 
in Finland are the lowest in the EU (39)(40). The 
abundant  supply  of  affordable  renewable 
energy thus presents a unique opportunity for 
the  electrification  of 
industrial  processes. 
While  some  major  investments  are  at  risk  of 
postponement  or  cancellation (41),  including 
those along the hydrogen value chain, several 
major  investments  are  still  in  the  pipeline 
including  those  financed  by  the  Recovery  and 
Resilience Facility. Finland is implementing two 
State  aid  programmes  based  on  the  EU’s 
temporary  crisis  and  transition  framework, 

(39)  Eurostat (2024), Electricity Price Statistics, October 

2024. 

(40)  However, the share of vulnerable households with 

arrears on utility bills reached 7.4% in 2023 (compared 
to 6.9% in the EU, see Annex 11), which represents an 
increase of 1.7 percentage points since 2022. 

(41)  The SSAB steel plant, which is the largest individual 

emitter of carbon emissions (7% of the country’s total 
emissions), is investing first in its factory in Sweden and 
has postponed investing in Finland. 

13 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

low-income  groups  and  students  with  a 
the  gap 
migrant  background.  Moreover, 
between  the  highest-  and 
lowest-scoring 
students  has  widened. Overall,  this  negative 
trend jeopardises Finland’s long-term potential 
for growth and innovation. 

Graph 4.1: Underachievement rates by field, 
PISA 2012, 2018, 2022 (%) 

Source: OECD 2012, 2018, and 2022 

rate 
for 

The  share  of  tertiary  graduates  has 
fallen  below  the  EU  average,  39.1%  vs. 
44.2% in  2024, and  Finland is lagging behind 
the  national  goal  of  a  50%  tertiary education 
2030.  University 
attainment 
by 
admissions 
students  are 
first-time 
frequently  delayed,  as  senior  students  and 
graduates tend to enrol for additional degrees. 
A revised funding model for  higher education, 
in  force  from 
the  beginning  of  2025, 
encourages prioritising admission of first-time 
students  and  provides  incentives  to  complete 
studies  on  time.  Better  coordination  between 
education providers,  public  administration  and 
industry would also help ensure that skills and 
qualifications  meet  current  and  future  labour 
market demand. 

While  Finland  compares  well  in  adult 
learning,  progress  towards  the  national 
target  of  60%  in  2030  remains  limited. 
learning  significantly  contributes  to 
Adult 
mitigating  skills  shortages  (see  Annex  12), 
highlighting 
reskilling  and 
upskilling in response to the changing needs of 

the  need  for 

Improving educational attainment 
and retaining foreign talent are 
key to address skills shortages 

The worsening labour market situation is 
particularly  affecting  vulnerable  groups. 
The  employment  rate  fell  to  77.0%  in  2024, 
jeopardising  Finland’s  national  target  of  80% 
by  2030.  The  downturn  is  hitting  hardest 
people  without  formal  qualifications  beyond 
primary education. Jobs are also scarce in the 
sparsely  populated  areas, 
the 
eastern  border  regions  where  trade  and 
tourism  with  Russia  has  collapsed  due  to 
Russia’s war of aggression against Ukraine. 

including 

Labour  and  skills  shortages  persist  and 
are  set  to  exacerbate  with  the  recovery. 
Sectors particularly affected by skill shortages 
are IT, construction, energy renovation, battery 
production,  education  and  healthcare.  Finland 
has made some progress in responding to the 
growing  demand  for  ICT  professionals  and 
green  skills  through  educational  reforms, 
training  programmes  and  the  promotion  of 
skilled  immigration  (see  Annex  12).  Teachers 
are 
in  early 
childhood  education  and  care.  The  number  of 
in  early  childhood 
children  participating 
education  has increased, while  the  number  of 
graduates in the relevant fields dropped.  

in  short  supply,  especially 

Education  outcomes  have  declined  over 
the past decade. While Finland still performs 
better  than  the  EU  average,  the  share  of  15-
year-old  students  underachieving 
in  basic 
skills  (see  Graph  4.1)  has  been  increasing 
average (42). 
more 
Underachievement is more pronounced among 

than 

the 

EU 

(42)  OECD, 2022, PISA 2022 Results (Volume V): Learning 

Strategies and Attitudes for Life, oecd.org. 

14 

05101520253035FIEUFIEUFIEUMathematicsReadingScience%2012201820222030 EU target 
 
 
   
the  job  market.  The  recovery  and  resilience 
plan  supports  several  projects  coordinated  by 
the  Service  Centre  for  Continuous  Learning 
and Employment. These include a  2025-2026 
pilot  project  on  studying  alongside  work  in 
sectors  suffering  from 
labour  shortages. 
However,  the  adult  education  allowance  was 
abolished  in  2024,  which  is  expected  to 
dampen the demand for adult learning. 

An  ageing  society  depends  on  foreign 
talent to meet demand for skilled labour. 
The talent boost programme supported by the 
Recovery  and  Resilience  Facility  encourages 
people to move to Finland to work or study by 
streamlining  of  work  and  study  permit 
talent  and 
procedures,  attracting  foreign 
supporting 
integration.  While  net 
their 
migration  in  2024  remained  high  at  48 500 
persons, there was  a decrease in  requests for 
is 
work  permits.  Study-based 
rising,  but  Finland  could  further  promote  the 
employment of foreign graduates by reducing 
bureaucratic hurdles and language barriers. 

immigration 

Reform of social safety net to 
strike balance between incentives 
to work and social protection 

The share of population at risk of poverty 
or  social  exclusion  remains  low  but  is 
increasing.  Reaching  the  2030  target  of 
reducing this number by 100 000 compared to 
2019  is  challenging  as  it  increased  by  117 
000  in  2024  (see  Annex  11).  Homelessness 
rose  for  the  first  time  in  a  decade,  to  3 806 
persons in 2024. This was driven mainly by a 
lack of affordable and small apartments, by a 
high  cost  of 
in  social 
benefits (43),  which  reduced  the  rental  ceilings 
for housing supported through benefits. 

living  and  cuts 

Reforms  to  the  social  security  system 
aim  to  reduce  complexity  and  improve 
incentives  to  work.  In  2024,  the  indexation 

(43)  Centre for State-Subsidised Housing Construction, 
2025, Asunnottomuus kasvoi ensi kertaa yli 
kymmeneen vuoteen, varke.fi. 

time. 

unemployment 
and 

benefits  was 
the 

for  several  social  benefits  was  frozen  until 
the  monthly  earned-income 
2027  and 
exemption 
(EUR 300)  was  removed  from 
unemployment  benefits.  The  child  supplement 
also 
to 
discontinued 
earnings-related 
unemployment  benefit  was  revised  to  taper 
over 
In  parallel,  a  comprehensive 
overhaul  of  the  social  security  system  is 
planned  with  the  introduction  of  a  general 
social  security  benefit  to  simplify  access  to 
social protection.  In addition, last-resort social 
assistance  is  set  to  be  reformed  by  clarifying 
the obligations for social assistance recipients, 
which  could  involve  requirements  such  as 
active  search 
job  or 
participation in rehabilitative services. The new 
system would still need to allow flexibility for 
those  with  partial  work  ability  to  better 
combine  different  benefits  and  services,  thus 
supporting  their  integration  into  working  life. 
Employment  and  distributional  impacts  will 
need  to  be  monitored,  especially  for  low-
income and low-work-intensity households. 

full-time 

for  a 

A  mix  of  incentives  and  support  aim  to 
help the jobless and inactive to find work. 
Services  such  as  the  Ohjaamo  one-stop 
guidance centres (part-funded by the Recovery 
and  Resilience  Facility)  for  those  under  30 
years old, the introduction of the Nordic model 
of  employment  services  with  new  job  search 
obligations,  and  personal  support 
from 
employment  services  aim  to  engage  the 
inactive  working-age  population.  In  January 
2025,  public  employment  services  were 
transferred  to  the  municipalities  to  provide 
better  services  to  jobseekers  (including  the 
long-term  unemployed,  persons  with  partial 
work  ability  or  low  education  levels,  migrant 
women,  and  older  persons).  The  effectiveness 
of these initiatives relies on good coordination 
among  public  services,  close  participation  of 
targeted 
the  business 
programmes for marginalised groups. 

community  and 

The social and healthcare services 
reform proves challenging 

Needs 
for  healthcare  services  are 
increasingly  not  met.  The  share  of  people 

15 

 
 
The  reduction  of  statutory  requirements 
dampens labour demand in the social and 
healthcare  sector  in  the  short  term. 
Clearing  the  high  deficits  accumulated  by  the 
wellbeing  services  counties  by  2026  requires 
reducing the service network, employing more 
digital solutions, increasing customer fees, and 
tightening  care  criteria,  among  other  things. 
Most  notably,  the  legal  requirements  for  the 
maximum  waiting  time  allowed  for  access  to 
non-urgent care was relaxed  from 14  days to 
three months  for people older than 23. These 
changes  effectively  eased  labour  demand  in 
the  social  and  healthcare  sector  but  may 
challenge the goal of shorter waiting times. 

Population ageing puts pressure 
on long-term care 

Population  ageing  increases  the  demand 
and  costs  for  long-term  care.  Between 
2014 and 2024, Finland’s population share of 
increased  by 
those  aged  65  and  over 
4.0 percentage  points,  and 
the  old-age 
dependency  ratio  increased  from  33.2%  to 
41.6%,  remaining  well  above  the  EU  average. 
The  costs  of  ageing-related  healthcare,  social 
protection  and  in  particular  the  projected 
higher  spending  on  long-term  care  will  have 
implications  for  fiscal  sustainability 
(see 
Section 1 and Annex 11). 

Rising demand and costs require changes 
to  the  structure  of  old-age  care.  In 
January 2025, the staff-to-patient ratio of 24-
hour  long-term  care  services  (those  that  are 
suitable  for  care  recipients  with  the  highest 
levels of need) was reduced from 0.65 to 0.6. 
Similarly,  the  wellbeing  services  counties  are 
aiming to reduce the 24-hour care provision by 
substituting  it  with  communal  living,  suitable 
for those in need of  care with lower disability 
needs.  However,  resetting  the  services  for 
older people will need to carefully consider the 
types  of  care  needed,  to  effectively  address 
the different levels of disability. 

self-reporting  unmet  needs  for  medical  care 
has  increased  from  7.9%  in  2023  to  8.5%  in 
2024,  compared  to  the  EU  average  of  2.5%. 
The  main  reason  is  long  waiting  times  (see 
Annex  14).  Demand  for  healthcare  services  is 
set  to  increase  further,  driven  by  the  rising 
share of older people. 

at 

regional 

level (44). 

The social and healthcare services reform 
faces 
implementation  challenges.  The 
Finnish  social  and  healthcare  system  was 
fundamentally  restructured  in  2023,  when  21 
wellbeing  services  counties  were  established 
to  provide  social,  healthcare  and  rescue 
services 
This 
restructuring,  supported  by  the  Recovery  and 
Resilience Facility, aimed to ensure more equal 
access  to  services  and  to  enhance  efficiency. 
Two  years  on,  the  wellbeing  services  counties 
are in different stages of reform, with regional 
disparities  in  access  to  social,  healthcare  and 
long-term 
Inflation, 
remaining  inefficiencies,  rising  demand  and 
labour shortages requiring recourse to private-
sector  providers 
to  sizeable  budget 
led 
overruns of the wellbeing services counties. 

services (45). 

care 

Improvements  in  efficiency  are  taking 
more  time  to  emerge.  The  reform  of  social 
and  healthcare  services  has  tightened  the 
monitoring  and  financial  steering  of  the 
wellbeing services counties. It has also started 
to  improve  the  data  available  on  clients, 
services  and  unit  costs.  Together  with  the 
rapid  increase  in  the  availability  of  digital 
services and tools, this raises expectations for 
productivity and efficiency gains, which will be 
fundamental for ensuring the sustainability of 
the  social  and  healthcare  services  in  the  long 
run.  The  increase  and  efficient  use  of  data 
from  the  wellbeing  services  counties  could 
help  steer  the  reform  on  a  sustainable  path, 
while improving access to care in the long run. 

(44)  The organisation of social, health and rescue services 
was transferred from municipalities to 21 ‘wellbeing 
services counties’, the City of Helsinki, Åland and the 
Helsinki-Uusimaa joint healthcare authority (HUS 
group). 

(45)  National Institute for Health and Welfare, (THL), 

(3/2025), Tilannekuvia hyvinvointialueilta: muutokset 
palvelujärjestelmässä sote-uudistuksen alkuvuosina, 
julkari.fi. 

16 

 
 
KEY FINDINGS 

To  boost  competitiveness,  sustainability  and 
social fairness, Finland would benefit from: 

• 

implementing  the  RRP, 
including  the 
REPowerEU  chapter;  swiftly  implementing 
cohesion  policy,  taking  advantage  of  the 
opportunities  under  the  mid-term  review 
and making optimal use of EU instruments, 
including  InvestEU  and  STEP,  to  improve 
competitiveness; 

• 

improving  the  efficiency  of  public 
spending by factoring in the results of 
the spending reviews, thus gaining fiscal 
space for public investment; 

•  widening  the  sources  of  financing  for 
start-ups  and  firms  to  scale  up, 
including  by  making  the  taxation  system 
more 
capital 
financing; 

supportive  of 

venture 

•  supporting 

commercialisation 

of 
innovation,  through  applied  research  and 
joint  industry-academic  projects  and  by 
strengthening  researchers’  entrepreneurial 
skills; 

•  crowding  in  private  R&D  investments 
and  backing  up  their  critical  and  risky 
elements  through  measures  such  as  tax 
cooperation 
incentives  and  promoting 
between  the  private  and  public  sector  to 
develop 
the  highest 
knowledge spillover; 

innovations  with 

•  reducing  emissions  from  the  land  use, 
land-use change and forestry sector to 
strengthen the carbon sink by taking action 
to  increase  forest  growth  and  limit  soil 
emissions; 

•  making 

further 

to 
decarbonise  industry  and  transport, 
in 
including  by  promoting 

investment 

progress 

electrification  and  decarbonisation  as  well 
as in green technologies to meet the 2035 
target for carbon neutrality; 

•  speeding  up  the  circular  economy 
transition  by  ensuring  sufficient  ambition 
for  the  Circular  Economy  Act  and  taking 
action  to  reduce  waste  and  promote 
recycling and reuse; 

•  ensuring that the reform of healthcare 
and  social  services  enhances  cost 
efficiency,  while  guaranteeing  access 
and  quality,  including  in  long-term  care, 
by improving collection and use of data and 
and 
more 
efficient 
the 
administrative  management 
wellbeing service counties; 

budgetary 

of 

•  ensuring  that  the  ongoing  reform  of 
social  protection  reduces  complexity 
and  improves  incentives  to  work  with 
particular  attention  to  vulnerable  groups 
and  interactions  with  public  employment 
services  including  active  labour  market 
policies; 

•  tackling 

the 

structural  unemployment, 
supporting 
labour  market 
transformation and  addressing  skills 
in  R&D,  the  green 
shortages, notably 
the  health  and 
transition, 
education  sectors,  by  increasing  higher 
education  participation  and  attainment, 
encouraging  reskilling  and  upskilling,  and 
better attracting and retaining talent; 

ICT,  and 

•  addressing  persistent  negative  trends 
in  basic  education,  notably  the  increase 
in  the  underachievement  rate,  taking  into 
account  the  performance of  students  from 
less advantaged backgrounds. 

17 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Horizontal 

A15.  Sustainable development goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the recommendation 
Defence expenditure and the national escape clause 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
RRF – Grants 
Implementation of reforms and investments underpinning an extension 

21 

23 

23 

32 

35 

35 

39 

45 

52 

57 

57 

64 

70 

76 

76 

81 

86 

90 

91 

94 

94 

96 

103 

24 
24 
25 
25 
26 
26 
27 
27 
29 

 
 
 
A1.10.  Projected change in age-related expenditure in 2024-2040 and 2024-2070 
A1.11.  Fiscal Governance Database Indicators 
A2.1. 
Taxation indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making Business Easier: indicators. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A8.1. 
A9.1. 
A13.1.  Social Scoreboard for Finland 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level in Finland 

Financial indicators 
Finland. Selected indicators on administrative burden reduction and simplification 
Digital Decade targets monitored through the Digital Economy and Society Index 
Key clean industry and climate mitigation indicators: Finland 
Key Energy Indicators 
Key indicators tracking progress on climate adaptation, resilience and environment 

LIST OF GRAPHS 

Tax wedge for single and second earners, % of total labour costs, 2024 
Tax revenue shares in 2023 
Gross domestic R&D expenditure as a percentage of GDP 
Business R&D intensity 

A2.1. 
A2.2. 
A3.1. 
A3.2. 
A4.1.  Making Business Easier: selected indicators. 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediaries 
A5.4. 
Composition of NFC funding as % of GDP 
A5.5. 
Composition of household financial assets per capita and as % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A6.3. 
Participation rate of 25-64 year olds in adult learning (%) by occupation 
A7.1. 
GHG emission intensity of manu-facturing and energy-intensive sectors, 2022 
A7.2.  Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023 
A7.3. 
A7.4.  Municipal waste treatment 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3. 
A9.1. 

Finland's installed renewable capacity (left) and electricity generation mix (right) 
Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 in the 
European Union 
Investment needs and gaps in EUR million, in 2022 constant prices 

Retail energy price components for household and non-household consumers, 2024 

Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 

A9.2. 
A10.1.  Employment and unemployment, FI and EU 
A11.1.  Change in equivalised disposable incomes due to General Housing Allowance reform, by household type 
A12.1.  Underachievement rates by field 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Finland 
A16.1.  Distribution of RRF funding in Finland by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Finland 
A17.1.  Average annual real GDP per head growth versus GDP per head in 2013 
A17.2.  Labour productivity per hour in Finland 

LIST OF MAPS 

A17.1.  GDP per head (in purchasing power standard PPS), 2023 

22 

30 
31 
33 
38 
44 
50 
53 
54 
63 
69 
75 
90 
99 
100 
104 

32 
32 
35 
36 
41 
45 
46 
46 
48 
49 
52 
52 
54 
59 
60 
60 
61 
64 
65 
66 

72 
73 
76 
84 
86 
91 
91 
94 
97 
97 
103 
103 

106 

 
 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Finland, 
including  how  Finland  is  responding  to  Council  recommendations  issued  under  the  reformed  Economic 
Governance Framework. 

The  reformed  framework,  which  entered  into  force  on  30  April  2024(46),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for 
fiscal surveillance.  

Finland submitted its plan on  10 October 2024. The plan covers the period until  2028, and presents an 
extended fiscal adjustment over seven years, which is underpinned by a set of reforms and investments 
to which Finland committed  with the aim of improving potential  growth and fiscal  sustainability. On  21 
January 2025, the Council adopted the Recommendation endorsing Finland’s plan.(47)  

The  assessment  of  the  implementation  of  the  Council  Recommendation  endorsing  the  Finland’s  plan  is 
carried  out  on  the  basis  of  outturn  data  from  Eurostat  and  the  Commission  Spring  2025  Forecast  and 
taking  into  account  the  Annual  Progress  Report  (APR),  that  Finland  submitted  on  30  April  2025. 
Furthermore, given Finland’s request to activate the National Escape Clause(48) following the Commission 
Communication  of  19  March  2025(49),  the  assessment  also  considers,  as  appropriate,  the  projected 
increase in defence expenditure based on the Commission Spring 2025 Forecast.  

The Annex is organised as follows. First, developments in  government deficit and debt are presented 
based  on  the  figures  reported  in  Table  A1.1.  Then,  the  assessment  of  the  implementation  of  the 
Council  Recommendation  endorsing  the  plan  follows,  based  on  the  relevant  figures  presented  in 
Tables  A1.2  to  A1.8,  including  data  on  defence  expenditure.  Further  on,  the  progress  made  in  the 
implementation  of  the  set  of  reforms  and  investments  underpinning  the  extension  of  the  fiscal 
adjustment period(50) is assessed, taking into account the information presented in Table A1.9. 

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024.(51) 

(46)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies 
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(47)  OJ C, C/2025/656, 10.02.2025, ELI: http://data.europa.eu/eli/C/2025/656/oj 

(48)  On 30 April 2025, Finland requested to the Commission and to the Council the activation of the National Escape Clause. On this 
basis, the Commission adopted a Recommendation for a Council Recommendation allowing Finland to deviate from, and exceed, 
the net expenditure path set by the Council COM(2025)606. 

(49)  Communication  from  the  Commission  accommodating  increased  defence  expenditure  within  the  Stability  and  Growth  Pact of  19 

March 2025, C(2025) 2000 final. 

(50)  According to the Regulation., the required fiscal adjustment (in particular to put or keep the government debt ratio on a plausible 
downward path by the end of the adjustment period or keep it at prudent levels below 60% of GDP; and to bring or maintain the 
deficit below 3% of GDP over the medium term) should be completed in four years but may be extended over a period to up seven 
years  if  the  Member  State  commits  to  a  relevant  set  of  reforms  and  investments.  The  adjustment  period  of  Finland  has  been 
extended to seven years based on the set of reforms and investments laid out in detail in Annex II of the Council recommendation 
endorsing the plan of Finland. 

(51)  European Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

23 

 
 
 
 
 
Developments in government deficit and debt  

Finland’s government deficit amounted to 4.4% of GDP in 2024. Based on the Commission Spring 2025 
Forecast, it is projected to decrease to 3.7% of GDP in 2025. The government debt-to-GDP ratio amounted 
to 82.1% at the end of 2024 and, according to the Commission, it is projected to increase to 85.6% end-
2025. 

Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Developments in net expenditure  

The  net  expenditure(52)  growth  of  Finland  in  2025  is  forecast  by  the  Commission(53)  to  be  below  the 
recommended  maximum.  Considering  2024  and  2025  together,  the  cumulative  growth  rate  of  net 
expenditure is also projected below the recommended maximum cumulative growth rate.  

Table A1.2:  Net expenditure growth 

* The cumulative growth rates are calculated by reference to the base year of 2023. 
Source: Council Recommendation endorsing the national medium-term fiscal-structural plan of Finland (Rec.), Annual Progress 
Report (APR) and Commission's calculations based on Commission Spring 2025 Forecast (COM).  

General government defence expenditure in Finland amounted to 1.2% of GDP in 2021, 1.2% of GDP in 
2022 and 1.4% of GDP in 2023(54). According to the Commission 2025 Spring Forecast,  expenditure on 
defence is projected at 1.5% of GDP in 2024 and 2.1% of GDP in 2025. 

(52)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(53)  European Commission Spring 2025 Forecast, European Economy-Institutional paper 318, May 2025. 

(54) Eurostat, government expenditure by classification of functions of government (COFOG).  

24 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-4.4-3.8-3.7n.a.-3.42General government gross debt% GDP82.185.385.6n.a.87.5Variables20252026RECAPRCOMRECAPRCOM2024n.a.3.2%3.1%n.a.n.a.n.a.20251.6%1.6%1.3%5.3%4.9%4.4%20261.9%n.a.1.5%7.4%n.a.6.0%AnnualCumulative*Growth rates 
 
                     
 
 
                     
 
 
 
 
Table A1.3:  Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the 
recommendation 

* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when 
setting the net expenditure path is year 2023.  
Source: Commission Spring 2025 Forecast and Commission's calculation  

Table A1.4:  Defence expenditure and the national escape clause 

Source:  Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation 

25 

2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC152.6159.2163.3167.12Interest expenditurebn NAC3.24.34.35.03Cyclical unemployment expenditurebn NAC0.20.80.90.74Expenditure funded by transfers from the EUbn NAC1.01.51.71.75National co-financing of EU programmesbn NAC0.60.60.70.76One-off expenditure (levels, excl. EU funded)bn NAC0.00.00.00.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC147.5151.9155.8159.08Change in net nationally financed primary expenditure (before DRM)bn NAC4.43.93.29DRM (excl. one-off revenue, incremental impact)bn NAC-0.22.00.810=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC4.61.92.411Outturn / forecast net expenditure growth% change3.1%1.3%1.5%12Recommended net expenditure growth*% change3.7%1.6%1.9%13=(11-12) x 7Annual deviationbn NAC-0.9-0.5-0.614 (cumulated from 13)Cumulated deviationbn NAC-0.9-1.4-2.015=13/17Annual balance% GDP-0.3-0.2-0.216=14/17Cumulated balance% GDP-0.3-0.5-0.717p.m. Nominal GDP  bn NAC272.8276.2283.9292.4Variables2021202220232024202520261Rec. net expenditure growth after removing safeguards% change2.6%2.7%2Flexibility from removing the safeguardsbn NAC1.51.23Flexibility from removing the safeguards% GDP0.50.44Total defence expenditure% GDP1.21.21.41.52.12.05of which: gross fixed capital formation% GDP0.10.20.10.10.70.66Flexibility from increases in defence expenditure% GDP0.90.87Cumulated balance after flexibility% GDP-1.9-1.9 
 
                     
 
 
 
       
 
 
Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

26 

2024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change-0.11.31.0n.a.1.32Private consumption% change-0.11.20.5n.a.1.63Government consumption expenditure% change0.7-0.3-0.2n.a.-0.14Gross fixed capital formation% change-7.16.53.5n.a.3.05Exports of goods and services% change0.12.92.5n.a.2.46Imports of goods and services% change-2.43.92.6n.a.2.9Contributions to real GDP growth 7- Final domestic demandpps-1.51.91.0n.a.1.58- Change in inventoriespps0.6-0.10.0n.a.0.09- Net exportspps1.1-0.40.0n.a.-0.210Output gap% pot GDP-2.9-2.2-2.5n.a.-1.711Employment % change-0.60.20.2n.a.0.512Unemployment rate%8.48.88.6n.a.8.313Labour productivity% change0.41.20.8n.a.0.714HICP % change1.01.91.7n.a.1.515GDP deflator% change1.42.21.8n.a.1.716Compensation of employees per head% change0.53.92.3n.a.2.317Net lending/borrowing vis-à-vis the rest of the world% GDP-0.9n.a.-0.8n.a.-0.820252026Variables2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue53.253.353.8n.a.53.7of which:2- Taxes on production and imports13.914.214.2n.a.14.53- Current taxes on income, wealth, etc.16.015.816.2n.a.16.14- Social contributions11.812.112.0n.a.11.85- Other (residual)11.411.211.5n.a.11.38=9+16Expenditure 57.657.157.5n.a.57.2of which:9- Primary expenditure56.155.656.0n.a.55.4of which:10- Compensation of employees 13.413.413.5n.a.13.511- Intermediate consumption11.611.411.3n.a.11.012- Social payments22.422.122.2n.a.22.013- Subsidies1.21.21.2n.a.1.214- Gross fixed capital formation4.44.84.9n.a.4.815- Other3.02.72.9n.a.2.916- Interest expenditure1.61.51.5n.a.1.718=1-8General government balance-4.4-3.8-3.7n.a.-3.419=1-9Primary balance-2.8-2.3-2.2n.a.-1.720Cyclically adjusted balance-2.7n.a.-2.3n.a.-2.521One-offs0.00.00.0n.a.0.022=20-21Structural balance-2.7-2.5-2.3n.a.-2.523=22+16Structural primary balance-1.1-1.0-0.8n.a.-0.7Variables (% GDP)20252026 
 
                     
 
 
 
                     
 
 
 
Table A1.7:  Debt developments 

* End of period. 
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects. 
Source: Commission Spring 2025 Forecast and Commission's calculation (COM), Annual Progress Report (APR) 

Table A1.8:  RRF – Grants 

Source: Annual Progress Report 

Implementation of the set of reforms and investments underpinning the 
extension of the adjustment period  

Table  A1.9  includes  information  on  progress  towards  implementation  of  the  set  of  reforms  and 
investments underpinning the extension of the adjustment period that Finland committed to deliver in its 
medium-term fiscal-structural plan as endorsed by the Council. 

Taking  into  account  the  information  provided  by  Finland  in  its  Annual  Progress  Report,  the  Commission 
finds that the set of reforms and investments underpinning the extension that were due by 30 April 2025 
has been implemented. (for details, see Table A1.9).  

27 

2024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)82.185.385.6n.a.87.52=3+4+8Change in the ratio (pps. of GDP)4.53.33.5n.a.1.9Contributions**3Primary balance2.82.32.2n.a.1.74≈5+6+7'Snow-ball' effect0.6-1.3-0.7n.a.-0.8of which:5- Interest expenditure1.61.51.5n.a.1.76- Real growth effect0.1-1.1-0.8n.a.-1.17- Inflation effect-1.1-1.8-1.5n.a.-1.48'Stock-flow' adjustment1.12.32.0n.a.1.020252026VariablesRevenue from RRF grants (% of GDP)20202021202220232024202520261RRF grants as included in the revenue projectionsn.a.0.00.00.10.10.20.22Cash disbursements of RRF grants from EUn.a.0.00.10.00.10.20.320202021202220232024202520263Total current expenditure0.00.00.00.10.10.20.24Gross fixed capital formation0.00.00.00.00.00.00.05Capital transfers0.00.00.00.00.00.10.16=4+5Total capital expenditure0.00.00.00.00.00.10.120202021202220232024202520267Reduction in tax revenue0.00.00.00.00.00.00.08Other costs with impact on revenue0.00.00.00.00.00.00.09Financial transactions0.00.00.00.00.00.00.0Expenditure financed by RRF grants (% of GDP)Other costs financed by RRF grants (% of GDP) 
 
                     
 
 
 
                     
 
 
 
The R&I underpinning an extension  of the adjustment period include the reform introducing the general 
social  security  benefit  and  the  reform  of  social  assistance,  the  adjustments  to  the  functions  and 
procedures of the established Wellbeing Services Counties, as well as several measures from the Finnish 
RRP related to labour markets, healthcare, innovation and the green transition. The reform introducing the 
general  social  security  benefit  aims  to  clarify  and  simplify  the  system  of  social  security  benefits  and 
better identify persons qualifying for support. The reform of social assistance aims to improve incentives 
to work among social assistance recipients by linking the conditionality of social assistance more clearly 
with the conditions attached to unemployment security. The adjustments to the functions and procedures 
of the established Wellbeing Services Counties are a set of measures aimed at ensuring the appropriate 
provision of services while safeguarding sound financial management.  

The reform introducing the general social security benefit and the reform of social assistance are on track 
to  reach  their  objectives  according  to  the  APR,  namely  to  produce  impact  assessments  by  Q3  2025,  to 
hold stakeholder consultations by Q3 2025, and to vote the relevant legislation by Q4 2025. 

The  adjustments  to  the  functions  and  procedures  of  the  established  Wellbeing  Services  Counties  has 
achieved two of its objectives, namely holding stakeholder consultations by Q2 2024, and the entry into 
force  of  relevant  legislative  amendments  concerning  minimum  staffing  requirements  and  client  fees  by 
Q4 2025. According to the APR, counties are also on track to prepare plans to reduce costs and improve 
efficiencies by Q4 2025. Regarding the objective to correct the deficit incurred by the Wellbeing Services 
Counties and streamline their range of services in specialised medical care by Q4 2026, the APR highlights 
that the government monitors the situation and is prepared to increase its steering of the counties if they 
appear unable to correct their deficits. 

28 

 
 
Table A1.9:  Implementation of reforms and investments underpinning an extension 

The progress of each backward-looking key step (i.e., those scheduled for completion by 30 April 2025) is classified as either 
‘completed’ or ‘not completed’. The status of forward-looking key steps not yet completed remains blank, as these will be 
assessed by the Commission in future APRs. 
* These key steps correspond to milestones/targets 3, 6, 16, 22, 77, 100 and 133 of Finland’s RRP, which has been assessed as 
fulfilled as part of a payment request under the RRF. 
** These key steps correspond to milestones/targets 4, 7, 18, 23, 101, 78, 79, 80 and 134 of Finland’s RRP, whose assessment is 
still pending in the context of a payment request under the RRF and the table does not prejudge its assessment. 
Source: Finland's Annual Progress Report and Commission's assessment 

29 

Entry into force of the Act on Public Employment and Business ServicesQ2 2022Completed *Increase in the annual number of job search interviewsQ4 2023Completed **Digital functionalities integratedQ4 2023Completed **Removal of additional days of unemployment allowanceEntry into forceQ2 2023Completed **Entry into force of the initial legal framework Q3 2021Completed *Entry into force of the additional legal frameworkQ1 2023Completed **Operationalisation of regional welfare areas Q2 2023Completed **Introducing digital innovation in social and healthcareIncrease of the share of population using social welfare and health care e-services Q4 2025Publication of the first call for applications Q4 2021Completed *Award of all grantsQ4 2023Completed **Completion of at least 4 supported projects Q2 2026First national call for applicationsQ4 2021Completed *Implementing Agreement Q4 2025Ministry has completed the investment Q2 2026Legal agreements signed Q2 2026Completed **Transfer of 127 MEUR to Business Finlandas Q2 2026First call for applications Q4 2021Completed *Award of all grants Q4 2023Completed **Completion of 10 supported projects Q2 2026Publication of a call for applications Q2 2022Completed *Award of 5 grants Q4 2023Completed **90% of projects completed Q4 2025Publication of the first call for applications Q4 2021Completed *Award of all grants Q4 2024Completed **Completion of at least 4 projects Q2 2026Stakeholder consultations Q2 2024CompletedSetting up of plans Q4 2025Entry into force of relevant legislative amendments Q4 2025CompletedCorrection of the deficits Q4 2026Impact assessment Q3 2025Stakeholders consultation Q3 2025Legislation voted Q4 2025Impact assessment Q3 2025Stakeholders consultation Q3 2025Legislation voted  Q4 2025RDIfundingpackagepromotingthegreentransition–LeadingcompaniesEnergy infrastructure investmentsAdjustmentstothefunctionsandproceduresoftheestablishedwellbeing services counties Comprehensive reform of social assistance Comprehensivereformofsocialsecurityandthegeneralbenefitmodel Key stepsRecommended implementation dateStatus(COM's assessment)Introduction of the Nordic model of employment servicesInvestments in new energy technologiesLow-carbon hydrogen and carbon capture and utilisationRe-use and recycling of key materials and industrial side streamPreparationofthesocialwelfareandhealthcarereforminsupportofimplementing the care guaranteeMeasure 
 
      
Cost of ageing  

Total age-related spending in Finland is projected to rise from about 27% of GDP in 2024 to 
29% in 2070 (see Table A1.100). The overall increase by 2070 is due to rising spending on long-term 
care and, to a lesser extent, higher pension and healthcare expenditure. Compared to 2024, the pension 
expenditure-to-GDP ratio would fall by 0.6 pps of GDP in 2040. Thereafter, an increase is expected, with 
spending  0.8 pps  of  GDP  higher  by  2070  compared  with  2024.  At  about  14%  of  GDP  in  2070,  Finland 
would be among the Member States with the highest pension outlays. 

Public healthcare (55) expenditure is projected at 6.2% of GDP in 2024 (below the EU average 
of 6.6%) and is expected to increase by 0.3 pps by 2040 and by a further 0.3 pps by 2070.  

Public  expenditure  on  long-term  care  is  projected  at  2.1%  of  GDP  in  2024  (above  the  EU 
average  of  1.7%)  and  is  expected  to  increase  by  0.9 pps  of  GDP  by  2040  and  by  a  further 
0.9 pps  of  GDP  by  2070 (56).  This  increase  in  long-term  care  expenditure  contributes  to  fiscal 
sustainability risks. The policy measures implemented to improve efficiency by the Finnish Authorities and 
the further scope for improvements are described in detail in the ‘Skills, Quality Jobs And Social Fairness’ 
section. 

Table A1.10:Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report (EC/EPC). 

National fiscal framework 

The  Finnish  Independent  Fiscal  Institution  (IFI)  has  a  relatively  narrow  mandate  focusing  on 
monitoring  compliance  with  fiscal  rules.  Despite  being  a  euro  area  Member  State,  the  NAOF  only 
assesses  the  government forecasts  and  does  not  produce  forecasts  of its  own.  It  is  embedded into the 
Audit Office, which provides horizontal services. The staffing and resources seem to be sufficient for its 
current tasks and no serious information access issues have been reported, but the internal allocation of 
funds from the NAOF budget to the IFI function is not planned to change in nominal terms over the 2025-
2028 period, despite new tasks being assigned to IFIs in the EU legislation. The NAOF is keeping a fairly 
low media profile and government reactions to IFI recommendations are not well publicised.  

(55)  Key performance characteristics, recent reforms and investments are discussed in Annex 11 ‘Health and health systems’ 

(56)  The quality and the accessibility of the long-term care system are covered in Annex 9 ‘Social policies’. 

30 

FI26.8-0.60.30.9-0.7-0.126.7FIEU24.30.50.30.4-0.30.925.2EUFI26.80.80.61.8-1.02.329.0FIEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal 
 
 
 
     
 
 
Table A1.11:Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governance Database 

31 

2023FinlandEU AverageCountry Fiscal Rule Strength Index (C-FRSI)13.8014.52Medium-Term Budgetary Framework Index (MTBFI)0.830.73 
 
        
 
 
 
ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Finland’s  tax  system.  It  includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  and  (iii) 
tax collection and compliance. 

Finland’s  tax  revenues  as  a  share  of  GDP  in 
2023  are  among  the  highest  in  the  EU, 
although  on  a  declining  trend.  Finland’s  tax 
revenues as share of GDP are higher than those of 
the EU-27 for most revenue sources. As shown in 
Table A2.1,  the  overall  tax  burden  in  Finland  was 
42.6%  in  2023  (-0.8 pp),  compared  with  39%  in 
the  EU-27.  The  overall  tax  burden  has  been 
declining for the third consecutive year, although it 
is still higher than in 2010. 

Graph A2.1: Tax wedge for single and second 
earners, % of total labour costs, 2024 

revenues  from  personal  income  taxation  by  up  to 
19% or 2.4% of GDP (57). 

Labour  taxation  in  Finland  is  on  average 
more progressive than in the EU. This is due to 
its  higher  tax  wedge  ratio  between  high  and  low-
income earners (a measure of the progressivity of 
labour 
tax-benefit 
system contributes significantly to the low level of 
income  inequality  in  Finland.  In  2023,  it  reduced 
the  Gini  coefficient 
income 
inequality)  by  11.3 pps,  compared  to  an  EU 
average reduction of 7.7 pps (see Table A2.1).  

taxation) (58).  Overall, 

(a  measure  of 

the 

Graph A2.2: Tax revenue shares in 2023 

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

Finland’s labour-tax burden is close to the EU 
average for low-wage earners but above the 
EU  average  for  median  and  high-income 
earners.  Graph A2.1  shows  the  labour tax  wedge 
for  Finland  in  2024.  The  labour  tax  wedge  for 
Finland  in  2024  was  around  the  EU  average  for 
single  people  earning  50%  of  the  average  wage 
(30.5% vs 31.8% for the EU-27) but above the EU 
average  for  single  people  earning  100%  of  the 
average  wage  (41.9%  vs  40.3%  for  the  EU-27) 
and  those  earning  167%  of  the  average  wage 
(48.5%  vs  44%  for  the  EU-27).  Aggregate  tax 
expenditures  make  up  a  significant  share  of 
personal  income  tax  revenue  in  Finland.  A  recent 
study  shows  that  simulated  tax  expenditures  in 
areas  such  as  employment,  housing,  education, 
health  and  family  could  reduce  government 

Source: Taxation Trends Data, DG TAXUD 

Recent  tax  reforms  have  further  shifted  the 
tax  burden  from  labour  to  consumption. 
Several  recent  minor  reforms  of  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 adjusted for 
inflation.  In  September  2024,  the  standard  VAT 
rate was increased by 1.5 pp to 25.5%, one of the 
highest standard rates in the EU. From 2025, most 
goods and services currently subject to a reduced 
VAT rate of 10% will in the future be subject to a 
reduced VAT rate of 14%. Revenues from VAT are 

(57)  Turrini, A., Guigue, J., Kiss, A., Leodolter, A., Van Herck, K., 
Neher, F., Leventi, C., Papini, A., Picos, F., Ricci, M. and 
F. Lanterna (2024). Tax Expenditures in the EU: Recent Trends 
& New Policy Challenges. Discussion Paper 212, European 
Commission 

(58)  The tax wedge is defined as the sum of personal income 

taxes and employee and employer social-security 
contributions net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

32 

30.535.241.948.535.22025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - FISingle earner - EU averageSecond earner -  FISecond earner -  EU average51.226.921.950.930.718.4Tax revenue shares in 2023, Finland (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital 
 
     
     
 
 
Table A2.1:  Taxation indicators 

(1) Forward-looking effective tax rate (KPMG).       
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2023. For more details on the VAT gap, see European Commission, Directorate-General for Taxation and 
Customs Union, VAT gap in the EU - 2024 report,  https://data.europa.eu/doi/10.2778/2476549 
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, OECD 

thus  expected  to  increase.  Consumption  is  the 
largest  tax  base  in  Finland  accounting  for  30.7% 
of  all  tax  revenues  in  2023.  As  shown  in  Graph 
A2.2,  this  is  considerably  more  than  the  EU 
average of 26.9% for consumption tax revenues. 

Tax 

revenues 

emissions. 

While  revenues  from  environmental  taxes 
are  declining,  Finland  is  robustly  pricing 
carbon 
from 
environmental  taxes  further  declined  in  2023  to 
2.3%  of  GDP.  However,  revenues  remain  higher 
than  in  the  EU  (2.0%  of  GDP),  where  a  similar 
declining trend can be observed. Excise duty rates 
on  energy  are  set  at  specific  nominal  values 
without being indexed to the general price level. As 
a result, the tax burden and revenues in real terms 
decrease  over  time.  Finland  still  prices  carbon 
effectively,  with  one  of  the  highest  effective 
carbon rates in the EU at EUR 94.37 per tonne of 
CO2-equivalent  compared  with  the  EU  average  of 
EUR 75.87. 

taxation 
and 

system 
innovative 

supports  a 
Finland’s 
competitive 
business 
environment. The statutory corporate income tax 
rate  was  20%  in  2023  (EU  average  21.2%).  The 
effective  tax  rate  was  19.4%  in  2023.  The  small 
difference  between  the  statutory  and  effective 
rates indicates a transparent tax environment with 

33 

limited exemptions, resulting in a tax system with 
limited  distortions  and  administrative  complexity. 
It  is  thus  no  surprise  that  Finland  has  one  of  the 
least complex tax systems in the EU (fourth place 
in the tax complexity index). Finland ranked 11th in 
the IMD 2023 World Competitiveness Ranking and, 
according to the EIB investment survey, only 9.5% 
of  businesses  see  regulation  and  taxation  as  a 
major  investment  obstacle.  This  is  one  of  lowest 
values  in  the  EU,  where  the  average  is  25.1%.  In 
2023, Finland ranked among the top 5 EU Member 
States  in  total  R&D  expenditure  with  3.09%  of 
GDP,  compared  with  an  EU  average  of  2.25%. 
Direct  public  financing  made  up  most  of  the 
support  for  business  R&D  expenditure  in  Finland. 
Support 
incentives  was 
negligible at 0.0004% of GDP. In 2025 Finland has  
introduced  a  tax  credit  for  investments  that 
support  green  transition,  in  line  with  Finland’s 
commitment to carbon neutrality by 2035. 

in  the  form  of  tax 

tax 

Finnish 

administration 

is 
The 
characterised  by  high  efficiency,  extensive 
use  of  digital  services  and  effective 
strategies  to  ensure  compliance  and  reduce 
the  shadow  economy.  These  efforts  contribute 
to  a  robust  and  transparent  tax  system  with high 
levels  of  compliance.  Finland’s  tax  compliance 
costs  as  a  percentage  of  turnover  are  relatively 

FIMedian (EU-27)2010202120222023202420102021202220232024Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)40.643.543.442.637.840.239.739.0Taxes on labour (% of GDP)21.121.121.521.719.820.520.120.0of which, social security contributions (SSC, % of GDP)12.012.112.012.412.913.012.712.7Taxes on consumption (% of GDP)12.913.913.713.110.911.210.910.5of which, value added taxes (VAT, % of GDP)8.39.59.49.26.87.37.47.1Taxes on capital (% of GDP)6.58.58.27.97.18.58.78.5Personal income taxes (PIT, % of GDP)12.013.013.012.78.69.69.49.3Corporate income taxes (CIT, % of GDP)2.42.83.02.82.22.93.23.2Total property taxes (% of GDP)1.11.71.61.51.92.22.11.9Recurrent taxes on immovable property (% of GDP)0.60.80.80.81.11.11.00.9Environmental taxes (% of GDP)2.72.52.52.32.52.42.12.0Effective carbon rate in EUR per tonne of CO2 equivalentsNA93.5NA94.4NA86.0NA84.8Tax wedge at 50% of average wage (single person) (*)33.532.532.532.430.533.931.831.531.531.8Tax wedge at 100% of average wage (single person) (*)42.343.143.143.441.940.939.939.940.240.3Corporate income tax - effective average tax rates (1) (*)24.819.419.419.421.319.319.118.9Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)11.712.213.211.38.68.27.97.7Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)4.54.335.532.6VAT gap (% of VAT total tax liability, VTTL) (**)3.05.26.06.67.0FinlandEU-27Progressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
  
 
low, ranking 8th in the EU. On tax compliance costs 
as  a  percentage  of  tax  revenue  collected,  Finland 
performs  even  better,  ranking  3rd  in  the  EU.  The 
VAT compliance gap increased by 0.8 pps to 6% in 
2023, well below the EU-wide gap of 7.0% (2022 
latest data). According to the 2024 VAT gap report, 
the  VAT  compliance  gap  in  Finland  has  remained 
one of the lowest and most stable in the EU. 

34 

 
 
 
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

Finland is an innovation leader in the EU but 
needs  to  increase  R&D  investments  and 
foster  the  competitiveness  of  its  economy 
amidst  growing  global  competition.  According 
to  the  2024  edition  of  the  European  Innovation 
Scoreboard (59),  Finland’s  innovation  performance 
stood  at  127.8%,  well  above  the  EU  average  but 
behind  Denmark  and  Sweden.  A  good  uptake  of 
advanced  technologies  by  enterprises  paves  the 
way  for  business 
innovation.  Finland’s  R&D 
intensity stood at 3.09% of GDP in 2023, up from 
2.98%  in  2022,  but  still  well  below  the  country’s 
ambitious target of spending 4% of GDP on R&D. 
In  addition 
public  R&D 
investments,  meeting  this  target  will  require 
stimulating  greater  business  R&D 
efforts, 
supported  by  strengthened  academia-business 
cooperation. 

strengthened 

to 

Graph A3.1: Gross domestic R&D expenditure as a 
percentage of GDP 

Science and innovative ecosystems 

Finland  can  count  on  a  robust  science  base, 
supported  by  well-established  programmes 
In  2021, 
fostering  scientific  excellence. 
Finnish-authored  scientific  publications  within  the 
top  10%  most-cited  worldwide  stood  at  11.7%, 
above  the  EU  average  but  behind  other  EU 
leaders  such  as  the  Netherlands, 
innovation 
Denmark  and  Sweden.  The  main  fields  of 
publication  have 
ICT  and 
electrical  engineering,  in  addition  to  forestry. 
is  supported  mainly  by 
Scientific  excellence 
programmes managed by the Research Council of 
Finland, a governmental funding agency under the 
Ministry  of  Education  and  Culture.  In  2023,  it 
managed  EUR 511 million  of  competitive  funding, 
largely for basic research. 

traditionally  been 

To nurture its science base and meet its own 
4%  of  GDP  target  for  R&D  investment, 
Finland  has  committed  to  increasing  public 
R&D  funding  in  a  steady  and  predictable 
manner  until  2030.  The  Act  on  R&D  funding, 
which entered into force in January 2023, provides 
for  increasing  public  R&D  expenditure  every  year 
until  2030,  with  a  view  to  reaching  a  target  of 
1.2%  of  GDP.  According  to  current  estimates,  the 
national R&D budget is expected to reach EUR 4.3 
billion  by  2030,  i.e.  an  increase  of  EUR 1.9  billion 
over  seven  years.  With  a  strong  legal  basis  and 
the 
specific 
Government, Finland has key elements in place to 
make tangible progress towards its ambitious R&D 
expenditure  target  and  the  broader  objective  of 
putting R&I at the service of competitiveness. 

commitments 

financial 

by 

Source: Eurostat 

(59)  2024 European Innovation Scoreboard, country profile: 
Finland in 2024 European Innovation Scoreboard. The 
scoreboard provides a comparative analysis of innovation 
performance in EU countries, including the relative strengths 
and weaknesses of their national innovation systems (also 
compared to the EU average). 

Business innovation 

Finland  has  the  highest  proportion in the  EU 
of  innovative  firms  launching  new  products 
or services on the national or global market. 
The  proportion  of  companies  reporting  such 
innovations  was  26%  in  Finland,  followed  by 
Denmark at 23%, as compared to the EU average 

35 

2.72.82.933.13.23.33.43.53.620172020202120222023FinlandDenmarkSwedenAustria 
 
 
   
 
 
of  9% (60).  Another  indicator  of  the  innovative 
attitude  of  Finnish  enterprises  is  that  they  see 
opportunities  in  the  transition  to  a  net  zero 
emission  economy.  Only  15%  mainly  saw  risks 
(the  lowest  score  in  the  EU,  with  an  average  of 
34%). 

(i.e.  artificial 

technologies 
intelligence,  cloud 
computing  and  data  analytics).  Uptake  of  cloud 
computing (73%) and artificial intelligence (24.4%) 
is  almost  double  the  EU  average. The  size  of  the 
ICT sector in terms of gross value added is slightly 
above the EU average (5.8% vs 5.2% in 2020). 

intensity  needs 

Business  R&D 
to  be 
increased. In 2023, business R&D intensity stood 
at 2.09%. This was well above the EU  average of 
1.49%,  but  below  the  investment  levels  of  other 
top  R&I  performers  in  the  EU  and  international 
competitors such as the US (see graph A3.2). 

Graph A3.2: Business R&D intensity 

Source: Eurostat 

The  ICT  sector  has  traditionally  been  by  far  the 
includes  the  banking 
largest  contributor;  this 
sector, which invests in digital and mobile banking. 
To reach the national target of 4% of GDP for R&D 
investment,  business  R&D  expenditure  needs  to 
increase by over 5% a year on average until 2030. 
This 
requires 
continuous  and  cross-cutting  efforts,  including  in 
incentivising  stronger  business  R&D 
particular 
efforts through a well-designed policy mix. 

is  an  ambitious 

task  which 

The  uptake  of  digital  technologies  by 
for 
enterprises  offers  good  conditions 
innovation.  Finland  has  a  significantly  higher 
level  of  basic  digital  intensity  for  SMEs  than  the 
EU  average  (92.5%  vs  72.9%).  The  same  is  true 
for the share of enterprises with advanced digital 

including 

innovation, 

Finland  is  strengthening  public  support  to 
through 
business 
enhanced  tax incentive  schemes,  but further 
efforts  are  needed.  The  level  of  public  support 
for  business  R&D  remains  modest,  amounting  to 
0.081%  of  GDP  in  2022,  well  below  the  EU 
average (0.204%). For many years Finland did not 
provide any R&D tax incentives for companies, but 
in  recent  years  it  has  been  introducing  and 
progressively strengthening this type of support to 
business  R&D.  In  2021,  a  temporary  50%  tax 
deduction  was  introduced  for  businesses’  R&D 
expenses  on  projects  carried  out  in  collaboration 
institutions.  The 
with  universities  or  research 
deduction  was  increased  to  150  %  in  2022.  In 
2023,  a  further  tax  incentive  for  R&D  activities 
was  introduced,  consisting  of  a  general  deduction 
based on the amount of R&D expenses and, from 
2024, a 45% additional deduction on any increase 
in  R&D  activities  compared  to  the  previous  year. 
Going  forward,  assessing  the  efficiency  of  these 
instruments will be key. 

innovation 

The innovation support programme should be 
further  strengthened.  Business  Finland  has  in 
recent years provided business innovation support 
for  large-scale  collaboration  projects  under  the 
‘Veturi’ (‘Locomotive’) programme. The programme 
investments  by  various 
supports 
thematic  ecosystems,  each 
large 
led  by  a 
company, including EUR 100 million in grants from 
the Finnish recovery and resilience plan funded by 
the  EU.  The  annual  (e.g.  grant  and  loan)  funding 
volume  of  Business  Finland  was  EUR 726 million 
in 2023, EUR 599million of which was directed to 
companies (56% of which were SMEs). The Veturi 
instrument  helps  stimulate  and  de-risk  private 
R&D 
investments,  while  creating  ecosystems 
around  clear  strategic  goals.  However,  a  recent 
evaluation  of 
the  scheme  highlights  some 
weaknesses, in part linked to the dominant role of 
the 
creates 
transparency issues) (61). 

companies’ 

‘leading 

(which 

(60)  EIB Investment Survey 2024 pages 15, 22. 

Instruments 

(61)  Business Finland: Evaluation of Ecosystem Funding 

36 

0123U.S.SwedenAustriaBelgiumFinland20232017 
   
 
 
Innovative talent 

The  shortage  of  skilled  workers  in  the  ICT 
sector  negatively  affects  Finnish  innovation 
and  research  capacity.  There  is  a  particularly 
high  demand  for  ICT  workers,  but  the  number  of 
new  graduates  in  science  and  engineering  has 
stagnated. In 2022, there were 17.7 graduates per 
thousand population aged 25-34, as compared to 
the EU average of 17.5. 

Entrepreneurship  education  is  implemented 
at  all  levels  of  the  Finish  education  system, 
however there is still room for improvement 
in  its  systematic  monitoring.  Entrepreneurship 
education  has  been  embedded  in  the  National 
Core Curricula as a transversal and cross-curricular 
competence  and  it  has  been  developed  at  the 
higher  education  level  as  well.  Additionally,  there 
are  also  successful  nationwide  programmes 
aiming  at  developing  entrepreneurship  skills  from 
an early age. While in 2019 almost 30% of young 
people  reported  that  they  would  like  to  try 
entrepreneurship at some stage in their career, the 
impacts  of  entrepreneurship  education  on 
students’ motivations and actions are unknown, as 
assessment for the development of these skills is 
missing. 

collaboration, 

Reinvigorating  science-business  cooperation 
will  be  key  to  foster  innovation  and  boost 
competitiveness.  Although  most  current  R&I 
funding  instruments  either  encourage  or  require 
the  number  of 
public-private 
companies  cooperating  with  higher  education 
establishments or research institutes decreased in 
2018-2020 compared to 2016-2018 (62). Reviving 
and  stimulating  academia-business  collaboration 
has  thus  been  identified  as  key  priority  by  the 
Finnish  authorities.  An  ongoing  Horizon  Europe 
policy support facility project, launched in 2024 at 
the  request  of  Finland,  will  help  identify  any 
barriers to public-private collaboration in Finland’s 
R&I ecosystem and provide a set  of concrete and 
actionable  recommendations  to  address  this  key 
challenge (63). 

Financing innovation 

there  are 

Better  access  to  local  venture  capital  could 
provide  further  opportunities  for  growth. 
Finland has long been present on the international 
start-up stage, producing many globally successful 
firms.  Nevertheless,  while 
funds 
available for start-ups, the international expansion 
of  firms  is  hampered  by the  modest  size  of  local 
venture-  capital  funds.  Moreover,  cross-border 
barriers still deter foreign investment inflows, and 
taxation  holds  back  the  development  of  venture 
capital  financing.  Broadening  retail  investors’  and 
pension  funds’  access  to  private  equity  could 
invigorate  the  market,  democratise  investment 
and  expand  the  capital  base  for  scale-ups. 
Strategic  reforms  addressing  these  challenges 
could  significantly  enhance  Finland’s  innovation 
ecosystem,  propelling  economic  growth  and 
technological advancement. 

(62)  Kimmo Halme ‘Support to Finland on improving R&D 

collaboration between research organisations and the private 
sector: Background report’, European Commission 2024. 

(63)  https://projects.research-and-

innovation.ec.europa.eu/en/statistics/policy-support-
facility/psf-country/support-finland-reforming-cooperation-
framework-universities-and-research-institutions-business.  

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data 
Source:  Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

38 

R&D intensity (gross domestic expenditure on R&D as % of GDP)3,412,752,933,012,983,09:2,243,45Public expenditure on R&D as % of GDP1,050,930,940,920,930,98:0,720,64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 11,411,511,811,7:::9,612,3Researchers (FTEs) employed by public sector (Gov+HEI) per 1000 active population6,46,26,36,06,46,7:4,2:International co-publications as % of total number of publications51,060,164,165,564,864,3:55,939,3Business enterprise expenditure on R&D (BERD) as % of GDP2,341,791,962,072,032,09:1,492,7Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0,510,620,720,730,64::0,400,30Researchers employed by business per thousand active population8,87,99,410,110,010,2:5,7:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)10,48,07,57,66,1::2,8:Employment share of high-growth enterprises measured in employment (%):19,2315,63::::12,51:SMEs with at least a basic level of digital intensity % SMEs (EU Digital Decade target by 2030: 90%)::::89,49:92,5172,91:Data analytics adoption % enterprises (EU target by 2030: 75%):::::40,55:33,17:Cloud adoption % enterprises (EU target by 2030: 75%):::66,28:72,99:38,86:Artificial intelligence adoption % enterprises (EU target by 2030: 75%):::15,79:15,1024,3713,48:Public-private scientific co-publications as % of total number of publications12,412,412,112,512,111,8:7,78,9Public expenditure on R&D financed by business enterprise (national) as % of GDP0,0680,0390,0360,0360,035::0,0500,020Total public sector support for BERD as % of GDP0,0820,0750,0930,0890,081::0,2040,251R&D tax incentives: foregone revenues as % of GDP0,0000,0000,0000,0000,0010,013:0,1020,141BERD financed by the public sector (national and abroad) as % of GDP0,0820,0750,0930,0880,080::0,1000,110Venture capital as a % of GDP (calculated as a 3-year moving average)0,0460,0590,1300,1480,1530,112:0,074:Seed stage funding share (% of total venture capital) 5,410,16,67,910,215,5:7,3:Start-up stage funding share (% of total venture capital)65,457,336,535,338,645,6:44,0:Later stage funding share (% of total venture capital)29,232,656,956,851,238,9:48,7:New graduates in science and engineering per thousand population aged 25-3421,416,718,417,517,7::17,5:Graduates in the field of computing per thousand population aged 25-342,325,026,746,416,68::3,62:Headline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesPublic support for business innovationInnovation outputsDigitalisation of businessesAcademia-business collaborationFinancing innovationInnovative talentFinland2012201720202023USAEU average202220212024 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            
 
ANNEX 4: MAKING BUSINESS EASIER 

in 

faces  a 

infrastructure, 

Finland 
challenging  economic 
environment but has a solid base to build on, 
excelling 
regulatory 
framework and basic skills. Finland is generally 
considered  to  be  a  competitive  place  to  do 
business.  However,  a  low  level  of  EU  trade 
integration  limits  the  opportunities  of  Finnish 
companies  while 
the 
labour  and  demand 
availability  of  skilled 
challenges  affect  competitiveness  and  private 
investment  as  a  proportion  of  GDP  continues  to 
decrease. 

investment  uncertainty, 

Economic framework conditions 

The  weak  economic  situation  in  Finland  is 
putting  a  strain  on  businesses.  Real  GDP 
contracted  in  2024,  and  Finland  has  one  of  the 
lowest  private and public investment rates (NFCF) 
(64)  of  any  EU  Member  State.  Private  investment 
and  exports  remained  weak  in  2024.  SMEs  in 
particular  estimate  they  will  need  to  reduce 
investment (65)  despite  an  overall  increase  in  the 
proportion of firms that have invested in the past 
year  and  that  expect  to  invest  in  future (66). 
Uncertainty  about  the  future  was  reported  as  the 
biggest  obstacle 
the  EIB 
Investment  Survey  2024,  with  demand  for 
products and services also seen as an obstacle (67). 
In fact, 65% of Finnish companies saw demand as 
an  obstacle  to  investment  and  26%  considered  it 
to be a major obstacle, both above EU average (68). 
Inward foreign direct investment in relation to GDP 
has  been  quite  static  at  around  30%  (29.9%  in 
2023)  for 
is 
significantly lower than the EU average (84.1% in 
2023) (69). 

three  years,  which 

investment 

the  past 

to 

in 

compared  to  16.7%  in  2023 (70).  Finland  also 
outperforms  most  EU  countries,  having  the  sixth 
lowest  labour  shortage  percentage  within  the  EU. 
However, the vacancy rate has decreased to 1.9% 
from last year’s 2.3% (71) with the unemployment 
rate  forecasted  to  increase  to  8.4%  in  2024, 
revealing the challenging business environment in 
Finland [see the Labour Market Annex]. 

Despite a fall in labour shortage constraints, 
the  availability  of  skilled  labour  is  still 
reported  as  a  key  obstacle  to  investment  in 
Finland.  In  2024,  72%  of  companies  reported  it 
as  an  investment  obstacle,  lower  than  both  the 
previous year and the EU average (72), with 23% of 
companies calling it a major obstacle, again lower 
(73).  Nevertheless,  the 
than  the  EU  average 
availability  of  skilled labour  is  the  second  highest 
investment  barrier  in  Finland  (74)  and  return  to 
economic  growth  is  likely to  worsen  the  situation. 
The  availability  of  skilled  labour  and  experienced 
managers  has  been  highlighted  as  the  biggest 
challenge  also  for  Finnish  SMEs.  Beyond  the 
availability of skilled labour, production and labour 
cost  were  identified  as  prominent  issues  for 
SMEs (75). 

The  shortage  of  skilled  labour  can  also 
impact  innovation  in  Finland.  Companies  face 
increasing  international  competition  to  attract 
highly  skilled  employees  capable  of  developing 
new  technologies.  The  shortages  could  affect  the 
effectiveness  of  Finland’s  target  to  increase  R&D 
expenditure  to  4%  of  GDP (76).  While  public  R&D 
spending  has  been  at  a  good  level,  Finland  has 
to 
been  underperforming 
business  research  and  innovation.  Despite  this, 
Finnish  business  R&D  spending  is  quite  high 
compared  to  other  EU  countries  (136.7  of  EU 
average) (77)  and 
incentive  schemes  for 

in  public  support 

tax 

Fewer  companies  than  before  are  actively 
constrained  by  labour  shortages  in  Finland. 
Only  9.2%  of  Finnish  companies  reported  being 
in  2024 
constrained  by 

labour  shortages 

(64)  AMECO. 

(70)  ECFIN BCS. 

(71)  Eurostat 

(72)  EIB Investment Survey 2024: European Union overview 

(73)  EIB Investment Survey 2024 Country Overview: Finland 

(74)  EIB Investment Survey 2024 Country Overview: Finland 

(65)  Suomen Yrittäjät PK-yritysbarometri Syksy 2024 

(75)  SME Performance Review 2023/2024 

(66)  EIB Investment Survey 2024 Country Overview: Finland 

(67)  EIB Investment Survey 2024: European Union overview 

(68)  EIB Investment Survey 2024 Country Overview: Finland 

(76)  Finnish Productivity Board - Productivity growth in a new 

environment : How will the green transition and geopolitics 
affect productivity? 

(77)  European Innovation Scoreboard 2024 Country profile 

(69)  Eurostat 

Finland 

39 

 
 
 
 
 
investment,  which  did  see  a  drop 

research  and  innovation  activity  should  further 
in 
boost 
2024 (78)  [see  the  Innovation  to  Business  Annex]. 
Finland  is  behind  its  regional  peer  Sweden,  in 
investment  in  intangible  assets (79).  Finnish  firms 
reported  that  an  average  of  33%  of  their 
investment  went  to  intangible  assets  in  2023, 
lower  than  the  EU  average  of  38%.  Finnish  firms 
also  expect  to  prioritise  replacement  investments 
over  capacity  expansion  and  new  products  and 
services,  even  more  so  than  the  EU  average. 
Investment in Finland is largely financed internally 
(80)  [see  Capital  Markets,  Financial  Stability  and 
Access to Finance Annex].  

Finland has a high degree of basic skills that 
are  key  to  economic  development  and 
productivity,  but  continued  focus  on  higher 
education  is  needed.  The  country  was  the 
highest  ranked  in  a  recent  OECD  survey  on  adult 
skills in all three categories: literacy, numeracy and 
adaptive  problem  solving.  Finland  is  among  the 
few countries to have improved literacy during the 
past decade in this survey (81). Financial literacy is 
in  the  EU (82).  A 
also  amongst  the  highest 
continued 
skills 
development 
competitiveness, 
particularly considering the worsening PISA results. 
Finland  also  has  a  lower  share  of  population 
(between 25-34 year olds) with tertiary education 
compared to the OECD average (83) [see Education 
and Skills Annex].  

focus  on  education  and 

vital 

for 

is 

is 

The  prevalence  of  entrepreneurship  skills  in 
lower  than  the  EU  average. 
Finland 
‘The  missing 
According  to  the  OECD  report: 
entrepreneurs  2023’,  the  self-employment  rate  is 
also lower than the EU average, while the share of 
people  starting  new  businesses  in  Finland  is 
similar  to  the  EU  average.  However,  the  share  of 

youth  entrepreneurs 
average (84) [see Education and Skills Annex].  

lower 

than 

is 

the  EU 

in 

is  very  active 

Finland 
rolling  out 
connectivity  infrastructure.  5G  coverage  is 
already  very  close  to  100%  (98.4%),  but  fixed 
network coverage is slightly below the EU average 
(VHCN  at  77.7%  against  the  EU  average  of 
78.8%),  strongly  influenced  by  the  country’s  size 
and  geography.  The  recovery  and  resilience  plan 
supports  the  deployment  of  a  broadband  aid 
improve  this  result.  Cybersecurity 
scheme  to 
the 
is 
in  enterprises 
awareness 
resilience of digital infrastructures. The number of 
businesses  that  experienced  ICT  security  incidents 
leading  to  unavailability  of  ICT  services  due  to 
attack  from  outside  increased  in  Finland,  from 
4.9% in 2022 to 7.2% in 2024 and remains above 
the  EU  average  of  3.4%.  Almost  all  (98.7%) 
businesses  deployed  some  ICT  security  measures 
(above  the  EU  average  of  92.8%)  but  fewer 
businesses  (74.8%)  made  their  employees  aware 
of  their  obligations  in  ICT  security  related  issues, 
although this was still well  above the EU average 
(60%). 

increasing 

Transport  infrastructure  is  effective,  and 
Finland outperformed regional peers in 2023. 
The  Logistics  Performance  Index  indicates  a  high 
performance,  with  Finland  scoring  highly  in  the 
component (85). 
infrastructure 
EIB 
Investment  Survey  only  23%  of  companies 
reported  infrastructure  to  be  an  obstacle  to 
investment (compared  to EU  average of 45%) (86) 
and  Finland  continues  to  excel  in  the  world 
competitiveness rankings for infrastructure (87). 

the 

In 

The  late  payments  situation  in  Finland  is 
worsening.  The  payment  gap  in  B2B  payments 
was  17.8  days  in  2024,  higher  than  the  previous 
year  and  higher  than  the  EU  average  (15.6  days) 
(88).  For  SMEs,  the  proportion  of  businesses  that 
in  the 
had  experienced 

late  B2B  payments 

(78)  Tutkimus- ja kehittämistoimintaan uusi verokannustin - 

Valtiovarainministeriö 

(79)  Suomen talouden haaste numeroiden valossa - Sitra 

(80)  EIB Investment Survey 2024 Country Overview: Finland 

(81)  Do Adults Have the Skills They Need to Thrive in a Changing 

(84)  OECD report The Missing Entrepreneurs 2023 

(85)  Logistics Performance Index (LPI) 

World? | OECD 

(86)  EIB Investment Survey 2024 Country Overview: Finland 

(82)  Monitoring the level of financial literacy in the EU - July 

(87)  Finland - IMD business school for management and 

2023 - Eurobarometer survey 

leadership courses 

(83)  Population with tertiary education | OECD 

(88)  Intrum Payment Report 

40 

 
 
 
previous  and  current  quarter  was  47.4% in  2024, 
around the EU average (89). 

its  new 

In 
industrial  policy  strategy, 
published in December 2024, Finland outlines 
seven  essential  objectives  to  promote  the 
growth  of  Finnish  businesses.  The  objectives 
focus  largely  on  (i)  increasing  private  funding;  (ii) 
promoting  investment,  particularly  in  intangible 
assets;  (iii)  supporting  research  and  innovation 
policy;  (iv)  tapping  into  the  opportunities  of  the 
clean transition and (v) ensuring the availability of 
skilled labour. Finland is also targeting investment 
in 
and 
logistics (90).  Turning  this  strategy  into  concrete 
action  is  essential  to  securing  Finland’s  place 
on 
among 
competitiveness  on  both  the  European  and  the 
global scale. 

infrastructure 

performers 

developing 

strongest 

further 

the 

Graph A4.1: Making Business Easier: selected 
indicators. 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
Sources: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

(89)  SAFE Survey 

(90)  Teollisuuspoliittinen strategia : Ohjausryhmän raportti - Työ- 

Regulatory and administrative 
barriers 

the 

the  administrative  burden 

in 
Reducing 
Finland  would 
business 
improve 
environment.  Less  than  half  of  companies 
consider  business  regulations  (46%)  and  labour 
regulations (49%) as an obstacle to investment in 
Finland,  lower  than  regional  peers  and  the  EU 
average  (91).  In  2024,  8.1%  of  Finnish  companies 
reported  regulation  as  a  major  obstacle,  an 
increase  to  2023  but  still  significantly  less  than 
the  EU  average  of  24.5%  (92).  Further  work  is 
needed  to  reduce  the  administrative  burden  on 
businesses  with  Finland  performing  below  the 
OECD  average.  There  are  also  some  barriers  of 
entry  and  competition,  especially  in  the  service 
sectors.  This 
is  primarily  due  to  regulatory 
constraints in the retail sale of medicines (93). 

Other  noteworthy  barriers  to  business  in 
Finland  are  permits  and  relatively  high 
taxation.  The  streamlining  of  environmental 
permit  procedures  has  been  the  focus  of  a 
measure  in  the  Finnish  RRP.  On  taxation,  Finland 
has  one  of  the  highest  estimated  average  costs 
for total tax compliance for SMEs, with the highest 
estimated  average  compliance  cost  for  corporate 
income  tax  in  the  EU (94).  Furthermore,  Finland 
recently  increased  its  VAT  rate  from  24  to 
25.5% (95) [see Taxation Annex]. 

Single market 

Finland  has  a  declining  and  particularly  low 
level of  EU  trade integration.  The  country  has 
only  a  24%  EU  trade  integration  level  (measured 
as  the  average  intra-EU  imports  and  exports 
against GDP), which is particularly low for a small 
economy  and  around  the  sixth  lowest  within  the 
EU  (96).  An  above  the  EU  average  share  of 

(91)  EIB Investment Survey 2024: European Union overview 

(92)  EIB Investment Survey 2024 Country Overview: Finland 

(93)  OECD PMR country note Finland 

(94)  Tax compliance costs for SMEs 2022 

(95)  Vero - New VAT rate from 1 September 2024 

ja elinkeinoministeriö 

(96)  Eurostat 

41 

47.412.1823.98.147.916.61041.624.50102030405060from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27FI 
        
 
 
exporters  in  Finland  (70%  vs  EU  60%)  also 
reported  that  they  had  to  comply  with  differing 
standards  and  consumer  protection  rules  across 
EU  countries.  This  figure  is  82%  for  exporters  in 
manufacturing,  signalling  this  fragmentation  is 
Finnish 
particularly 
manufacturing companies (97). 

harmful 

for 

less 

take  part 

companies 

participate 

Small 
in 
international  trade  and  trade  in  services 
faces  some  restrictions.  Some  67%  of  Finnish 
companies participate in international trade, in line 
with the EU average. However, only 42% of Finnish 
micro  and  small  companies 
in 
international  trade,  while  the  same  figure  is  79% 
for  medium  and  large  companies  (98).  Trade 
statistics  demonstrate  that  Finnish  SMEs  account 
for  a  smaller  share  of  intra-EU  goods  trade 
compared  to  EU  average  (36%  vs  EU  41%)  and 
could  hence  be  better  integrated  to  the  Single 
in 
Market.  Supporting 
particular  SMEs,  in  entering  foreign markets is  an 
important  part  of  enabling  companies  to  scale  up 
their  business.  The  Services  Trade  Restrictiveness 
Index  in  Finland  is  above  the  OECD  average, 
particularly  in  the  most  restricted  distribution 
sector  (99).  However,  these  restrictions  are  less 
present  in  intra-EEA  trade  as  Finland  has  a  quite 
level  of  intra-EEA  trade  restrictions,  for 
low 
example  in  the  computer  services  sector,  while  a 
higher 
trade 
restrictions  can  be  seen  in  air  and  road  freight 
transport (100). 

relative  degree  of 

businesses, 

intra-EEA 

Finnish 

Sound  compliance  with  EU  single  market 
legislation means that both the transposition 
and  conformity  deficit  in  Finland  are  better 
than  the  EU  average.  The  percentage  of 
incorrectly 
(conformity 
transposed  directives 
deficit)  continued  to  decrease,  reaching  0.6%  in 
2024 (EU average 0.9%) with Finland having also 
one  of  the  lowest  transposition  deficits  in  EU  at 
0.4% in 2024 (EU average 0.8%).  Finland has the 
lowest  number  of  single  market  infringement 
cases  of  any  Member  State,  and  their  duration  is 
slightly  shorter  than  the  EU  average.  In  2024, 
Finland  solved  91.7%  of  the  SOLVIT  EU  rights 

(97)  EIB Investment Survey 2024 Country Overview: Finland 

(98)  EIB Investment Survey 2024 Country Overview: Finland 

resolution  cases  it  handled  as  lead  centre  (EU 
average, 84.9%) (101). 

framework 

Finland  has  a  fairly  competition-friendly 
regulatory 
for  professional 
services, despite the reported figure of around 90 
generic  and  230  specific  regulated  professions. 
Most  of  the  professions  in  Finland  are  more 
competition-friendly  than  the  OECD  median,  and 
Finland placed first for accountants and architects. 
However,  some  professions  such  as  transport  by 
rail and natural gas providers face quite stringent 
regulations (102). 

Public procurement 

and 

transparency. 

Finland performs well on public procurement 
Finland 
competition 
continues  to  be  among  top  EU  performers  in  the 
share  of  single  bid  awards,  which  has  been 
fluctuating  around  15%  for  the  past  five  years. 
The percentage of direct awards was 5% in 2024, 
around EU average (103). However, there are cases 
of  wrongful  application  of  public  procurement 
rules.  One  example  mentioned  by  Finnish 
authorities  is  a  too  broad  or  even  misinterpreted 
interpretation  of  application  exemptions  (in-house 
exemptions  and  the  exception  on  research  and 
development) (104). 

the  world 

in  applying 

Finland  is  one  of  the  frontrunners  in  Europe 
and 
strategic 
dimensions  of  public  procurement  and  in 
innovation  goals  for  public 
setting  up 
procurement. Finland is actively promoting green, 
socially 
public 
procurement  and  performing  well  in  all  three.  For 
example,  48.3%  of  Finland’s  procurement  volume 
was  green  in  2023 (105).  This  shows  a  very 
advanced understanding of strategic procurement, 
and a systemic approach. 

responsible  and 

innovative 

(101) Country data: Finland | Single Market and Competitiveness 

Scoreboard 

(102) OECD PMR country note Finland 

(103) Commission internal 

(104) Country reports and information on EU countries - Finland- 

(99)  OECD Services Trade Restrictiveness Index 2024 Finland 

European Commission 

(100) OECD Services Trade Restrictiveness Index 2024 Simulator 

(105) Ministry of Finance data. 

42 

 
 
 
Key outstanding challenges on the uptake of 
strategic  public  procurement  reported  by 
Finland  are  linked  to  lack  of  capacity  and 
skills  among  staff  as  well  as  insufficient 
policy  guidance.  Other  significant  barriers  to 
further development are a lack of coordination and 
measurable 
the  contracting 
authority  and  the  category  levels.  In  addition, 
effective  monitoring  of  social  criteria  and 
enforcement  mechanisms 
to  address  non-
compliance cases remain a challenge. 

targets  at  both 

and 

help 

public 

KEINO  Competence  center  established  to 
support 
contracting 
the  development  of 
authorities  with 
sustainable  and 
innovative  procurement 
ended most of its activities during 2024. This 
might lead to a slowdown on the further uptake of 
the  strategic  public  procurement. In  2024,  the 
Finnish  government  launched  a  new  initiative  to 
update  the  Finnish  National  Public  Procurement 
Data  Repository.  The  project  aims  to  set  out  a 
national  framework for data collection and  use in 
public procurement and is focused on producing a 
comprehensive,  structured  database  for  public 
procurement information in Finland.(104) 

43 

 
Table A4.1:  Making Business Easier: indicators. 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**The 2024 data on single bids is provisional and subject to revision. Please note that approximately 34% of the total data is 
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of 
direct awards data is calculated without Romania. 
Sources: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports, (5) Intrum Payment Report, (6) SAFE survey, 
(7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space (PPDS). 

44 

POLICY AREA20202021202220232024EU-27 average5.329.541.514.08.010.09.016.124.416.79.220.22.02.93.12.41.92.36.94.12.92.71.513.4-68.070.877.7-78.8-40.050.361.1-64.0-71.694.798.3-89.3Regulatory environment7.59.99.55.48.124.516.912.89.914.417.815.616.18.211.516.013.215.1from public or private entities in the last 6 months45.243.542.145.6--from private entities in the previous or current quarter----47.447.9from public entities in the previous or current quarter----12.116.620.222.526.524.623.941.60.0400.0400.0400.0400.0500.0500.60.80.90.40.40.81.21.11.31.00.60.981.890.983.380.091.784.915.011.013.011.08.024.41414141515-333357.0FinlandINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
 
 
 
       
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

Finland’s  economy  enjoys  a  stable  banking 
system,  a  pool  of  robust  domestic  savings 
and  a  relatively  deep  capital  market.  This 
environment  supports  corporate  financing  with 
local  companies  having  an  easy  access  to  both 
equity and debt financing. Internal financing listed 
equities  and  bank  loans  remain  the  predominant 
sources  of  funding  for  the  non-financial  sector. 
Scarcity  of  funding  is  generally  not  considered  as 
being  an  issue  in  Finland  as  only  6%  of  firms 
report  obstacles  when  seeking  to  obtain  a  bank 
loan.  The  generally  rather  high  financial  literacy 
(though  unevenly  spread  across  the  population) 
and widespread digital adoption fuel retail investor 
participation  in  the  financial  market  and  the 
growth  of  institutional  investors.  Both  venture 
capital  and  private  equity  markets  are  well-
regarded  internationally.  The  diversity  of  local 
venture capital funds contributes to the success of 
various new ventures in Finland.  

Availability and use of domestic 
savings 

in 

amid 

2020 

Finland’s  economy  channels  its  net  savings 
predominantly  into  domestic  investments. 
Over the past decade, the private savings ratio, net 
of  fixed  capital  consumption,  has  hovered  around 
its  ten-year  average  of  5.6%  of  GDP,  peaking  at 
10.3% 
pandemic-driven 
precautionary savings (graph A3.1). In contrast, the 
net private investment ratio, reflecting the private 
sector’s  role  in  capital  accumulation,  has  been 
more  volatile,  averaging  4.3%  of  GDP  and 
reaching  a  high  of  7.3%  in  2022  as  businesses 
ramped  up  spending  in  the  post-Covid  recovery. 
the  government  has  fluctuated, 
Lending 
averaging  2.1%  of  GDP  but  dipping  to  near  zero 
back  in  2023,  reflecting  tighter  fiscal  conditions. 
These dynamics, coupled with a structural  current 
account  deficit,  has  led  to  consistent,  albeit  very 
limited,  net  borrowing  from  abroad,  averaging 
some  0.8%  of  GDP  over  the  period  2014-2023. 
Finland’s  net  savings  are 
largely 
absorbed by domestic projects while foreign funds 
play a minor role in bridging the financing gap. 

therefore 

to 

Graph A5.1: Net savings-investment balance 

Source: AMECO 

net 

Finland’s 

Finland’s  economy  maintains  a  cautiously 
balanced stance in its international financial 
engagements. 
international 
investment  position  has  remained  marginally 
positive  in  recent  years.  As  of  Q3  2024,  total 
assets held by foreigners stood at 338.2% of GDP, 
while liabilities to foreigners were slightly lower at 
316.4%  of  GDP,  resulting  in  a  net  international 
investment position (NIIP) of 21.4% of GDP (graph 
A3.2).  Finnish  foreign  direct  investment,  at  69.8% 
of GDP, outweighed foreign direct investments into 
Finland  at  48.5%  of  GDP.  Portfolio  investments 
showed  a  very  balanced  position  highlighting 
Finland’s  attractiveness  for  portfolio  investors 
while  indicating,  in  parallel,  that  local  investors 
show  a  strong  preference  for  portfolio  allocation 
abroad. Lastly, other investments, both assets and 
liabilities,  remained  relatively  balanced  over  the 
past years in the brackets between 80-90% of the 
GDP. This structure highlights the economy’s deep 
integration into the global capital markets. Its net 
creditor status, albeit narrow, signals a preference 
of  Finnish  investors  to  invest  abroad  rather  than 
locally,  in  particular  when  it  comes  to  direct 
investments. 

45 

-50510152025302017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate saving, netPrivate saving, grossBorrowing from the rest of the world 
 
 
   
 
 
Graph A5.2: International investment position 

financial 

investment 

funds  and 

markets.  Non-bank 
intermediaries, 
insurance 
particularly 
corporations, are notable, with assets at 64% and 
30%  of  GDP  respectively  in  2023,  driven  by  a 
strong  cultural  emphasis  on  long-term  savings 
amid  an  aging  population.  Local  pension  funds, 
which  managed  by  end-2024  assets  worth  EUR 
277  bn  are  not  fully  accounted  for  in  the 
international  statistics  as  they  are  embedded  in 
the pillar 1 of the Finnish national pension system. 

Source: ECB 

Graph A5.3: Capital markets and financial 
intermediaries 

Structure of the capital markets and 
size of the financial sector 

The  Finnish  economy  is  underpinned  by  a 
well-developed  domestic  capital  market. 
Listed equity market capitalisation reached 93.4% 
of  GDP  in  Q3  2024,  reflecting  a  strong  equity 
culture driven by investor confidence in local firms 
(graph  A3.3).  Non-financial  corporations  account 
for roughly 73% of this capitalisation, highlighting 
the  market’s  focus  on  financing  technology, 
various industries and other non-financial services, 
which  remain  central  to  the  country’s  economic 
identity. The outstanding volume of debt securities 
(excluding  government  securities)  stood  at  83.6% 
of  GDP 
financial 
in  2023,  with  monetary 
institutions  (MFIs)  contributing  around  64.2%  of 
the  total.  This  highlights  the  banking  sector’s 
pivotal role in funding the local economy but also 
reflects the specificity of Nordic financial markets 
where covered bonds remain an important source 
of  funding  for  local  credit  institutions.  General 
for 
government 
approximately 52% of the GDP and has increased 
by a few percentage points over the past decade, 
in line with the growing indebtedness of Finland. 

accounts 

issuance 

bonds 

Finland’s  financial  sector  is  dominated  by 
banks. By 2023, the banking sector’s assets stood 
at 256.8% of GDP, a few percentage points above 
the  EU  average  of  247.2%.  Total  assets  of  local 
lenders increased significantly following the 2018 
redomiciliation  of  Nordea  Bank  from  Sweden  to 
Finland.  Finland's  banking  sector  is  concentrated 
with the top five lenders owning ca. 82% of total 
banking  sector  assets.  Foreign  presence  remains 
rather  limited,  below  10%  of  total  assets,  but  all 
lenders  do  have  strong  ties  to  other  Nordic 

46 

Source: ECB, EIOPA, AMECO 

Resilience of the banking sector 

of 

high 

sector 

banking 

Finland’s 
showcases 
robustness  and  soundness.  Despite 
the 
households’ 
levels 
historically 
indebtedness and the predominance of loans with 
variable  interest  rates,  the  non-performing  loans 
ratio  (1.2%)  of  the  system  is  lower  than  the 
European average, though coverage ratios indicate 
some  room  for  improvement.  Local  banks  have 
remained  resilient  and  profitable  over  the  past 
years  and  exhibit  a  high  level  of  CET1  capital  of 
19.1%  (Q3  2024),  some  240  basis  points  higher 
than  EU’s  average  (see  Table  A3.1).  Major  local 
banks  have  consistently  met  EU-wide  stress  test 
requirements demonstrating resilience even under 
severe  stress  scenarios.  The  aggregate  Minimum 
Requirement for Own Funds and Eligible Liabilities 
(MREL)  rate  stood  at  28%  of  TREA  (total  risk 
exposure  amount)  by  end-2023,  exceeding 
regulatory thresholds and the EU’s average. While 
the system maintains exceptional liquidity metrics 
supported  by  a  stable  funding  structure,  local 

-400-300-200-100010020030040020172018201920202021202220232024-Q3% of GDPForeign Direct Investment, AssetsPortfolio Investment, AssetsOther investment, AssetsOfficial reserve assetsForeign Direct Investment, LiabilitiesPortfolio Investment, LiabilitiesOther investment, LiabilitiesNIIPNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds050100150200250300     Listed equity               Bonds                        Assets by sector% of GDP 
   
   
banks continue to rely to a certain extent on short 
term  market  financing,  a  feature  that  is  pointed 
out by supervisors and analysts as a vulnerability. 
However, the sector’s exposure to commercial real 
estate  risks  is  lower  than elsewhere (in  the  4-6% 
bracket  in  relation  to  total  assets),  thanks  to 
stringent lending standards introduced post-2008. 

Resilience of the non-bank financial 
intermediaries 

Finland’s  insurance  sector,  a  vital  pillar  of 
non-bank financial intermediation. The Finnish 
insurance  market,  much  like  the  banking  sector, 
remains highly concentrated. In 2023, over 84% of 
all premiums were written by the four largest life 
and property and casualty insurance groups. These 
collectively  managed  assets 
major  players 
totalling approximately EUR 180 bn. Gross written 
insurance  premiums  (both  life  and  non-life)  are 
expected  to  grow  at  a  healthy  compound  annual 
growth rate of about 4.36% between 2024-2029. 
Finnish  insurers  are  active  participants  in  both 
local  and  international  capital  markets,  with  their 
investment  portfolios  heavily  weighted  towards 
shares (two thirds of AUM) and bonds (about 20% 
of  the  allocation).  The  sector's  solvency  ratios 
remained  healthy,  in  line  with  the  European 
average. Local insurers have until now successfully 
embraced  the  emergence  of  new  technologies 
shaping consumer preferences and experience. 

No  significant  vulnerabilities 
identified. 
protection  gap  assessment 
EIOPA’s  2024 
highlights  Finland’s  high  exposure  to  windstorms 
and  a  medium  risk  of  flooding.  The  insurance 
penetration,  at  10%  of  GDP  in  2023,  exceeds the 
EU average of 7.8%, mitigating the protection gap. 
The  local  supervisor,  FIN-FSA,  conducted  stress 
tests  in  2023  on  major  insurers,  confirming  their 
resilience to market shocks and climate scenarios. 
A  local  specificity  is  the  sector’s  integration  with 
cooperative 
the 
distribution  networks  of  insurers,  particularly  in 
rural  areas,  and  supports  high  penetration  of 
household insurance products. 

banking,  which 

enhances 

Finnish 

The 
fund  market 
investment 
experienced  robust  growth.  Similarly  to  the 
banking  and 
insurance  sectors,  the  domestic 
investment  funds  sector  is  heavily  concentrated. 
the  two  top  tier  players  manage  about  three 

47 

quarters of all funds under management, and the 
Nordea  group  alone  manages  over  40%  of  the 
total  pool  of  assets.  Total  assets  under 
management (worth EUR 184 billion in end-2024) 
increased  by  close  to  20%  to  the  figure  reported 
at  the  end  of  2023.  This  increase  reflects  both 
strong  net  inflows  as  well  as  favourable  market 
appreciation  in  2024,  notably  in  the  equity  funds 
segment.  Foreign  fund  holdings  (EUR  8.6  billion) 
increased  by  32%  in  2024,  reflecting  a  growing 
appetite for international diversification, while real 
estate  funds  saw  continued  outflows  over  2024. 
The  investment  funds  sector  is  dynamic  and 
resilient  though  there  are  some  concentration 
risks, and the local market alternative investments 
is lagging. 

Sources of business funding and the 
role of banks 

Bank  and  equity  financing  are  on  a  par. 
Finnish corporates rely on a sound mix of internal 
financing  (covering  up  to  69%  of  all  investment 
needs (106)  against  an  EU  average  of  66%),  bank 
loans and capital market instruments for business 
funding  needs.  An  average  Finnish  firm  relies  on 
bank  loans  and  overdrafts  to  a  slightly  higher 
extent (30% of total funding) than its average EU 
peer  (about  27%).  In  total  corporate  funding  in 
Finland  is  equivalent  to  214%  of  GDP,  about  16 
percentage  points  lower  than  the  EU  average  of 
230%  of  GDP.  Capital  market 
instruments, 
including  shares  and  bonds,  contribute  around 
68%  to  the  total  financing  of  Finnish  firms,  on  a 
par with the EU average of 69%. More specifically, 
listed  and  unlisted  shares  are  equivalent  to 
125.5%  of  GDP  in  Finland,  while  the  EU  average 
stands at 100.5% of GDP. This reliance on equity-
based instruments and, in particular, listed equities 
highlights  the  level  of  development  of  Finland’s 
capital markets and the fact that Finnish investors 
are  more 
in  equity-based 
invest 
likely 
instruments than their EU peers. 

to 

is  not  perceived  as  a  major 
Financing 
obstacle  to  investment  decisions.  Just  6%  of 
domestic  firms  reported  having 
issues  when 
seeking  a  bank  loan  and  23%  claimed  that  that 
financing was an issue when pursuing investment 

(106) EIB Investment Survey 2024. 

 
 
plans,  compared  to  an  EU  average  of  45%.  More 
generally, four out of five firms in Finland believe 
that  their  investment  actions  over  the  past  three 
years  were  adequate  for  market  requirements,  in 
line  with  the  EU  average (107).  This  suggests  that 
there  is  no  material  financing  gap  relative  to 
investment  demand  and  perceived  investment 
needs.  However, 
the  proportion  of  finance-
constrained  firms  in  Finland  (around  12%)  is 
somewhat higher than the EU average (6.8%). 

weakened  Finland’s  housing  and  real  estate 
markets,  a  major  contributor  to  GDP.  As  a  result, 
construction  and  real-estate  related  firms  have 
found  it  more  difficult  to  repay  debt  and  finance 
new  ventures.  Nevertheless,  in  general,  corporate 
credit remained positive over 2023 and in the first 
half  of  2024,  with  year-on-year  growth  of  1.3% 
and 1.4% respectively. 

Graph A5.4: Composition of NFC funding as % of 
GDP 

Capital markets and the participation 
of retail investors 

The capital markets are a vital component of 
the  country’s  financial  system.  Despite  not 
being  very  large,  Finland’s  capital  markets  are 
considered  to  be  among  the  most  efficient  and 
in  the  EU.  The  stock  market 
well-developed 
the  Nasdaq  Helsinki 
remains  dominated  by 
exchange,  with  a  market  capitalisation  equivalent 
to  93.4%  of  GDP  in  the  first  half  of  2024,  about 
25 percentage points higher than the EU average. 
The  local  exchange  lists  some  188  stocks  (end-
2024)  and  has  ambitious  plans  going  forward, 
with  several  dozen  new  public  debuts  to  be 
expected  in  the  coming  years.  Finnish  large  and 
medium  firms  also  make  use  of  fixed-income 
financing,  although  the  outstanding  volume  of 
Finnish  corporate  bonds  is  worth  about  12.2%  of 
GDP  (vs  an  EU  average  of  10.8%),  substantially 
lower  than  the  equity  financing  part  of  corporate 
funding. 

Retail participation in the capital markets is 
significant  as  households  actively  look  to 
diversify  their  financial  holdings.  As  of 
September  2024,  Finnish  households’  financial 
assets surpassed the EUR 400 bn mark (equivalent 
to 145% of GDP), with deposits representing 28% 
of  the  total  (vs  an  EU  average  of  32.3%). 
Investments in domestic investment funds reached 
record  high  of  EUR 37.9 bn  and  were 
a 
predominantly  allocated  to  equity  funds  (43%), 
bond  funds  (28%)  and  mixed  funds  (19%).  In 
parallel, households’ direct investments in publicly 
listed equities amounted to EUR 51 bn, marking a 
17% year-on-year jump. This surge underscores a 
growing  appetite  for  direct  stock  investments, 
driven  by,  among  other  factors,  the  popularity  of 
the  stock  savings  accounts.  Furthermore,  Finnish 
households  have  shown  considerable  interest  in 
foreign investment funds, with holdings exceeding 
EUR 8 billion in Q3 2024. The diverse allocation of 

The sum of NFC liabilities only reflects the total for the NFC 
liabilities considered. Reference period 2023. 
Source: Eurostat 

somewhat 

The  banking  sector  plays  a  crucial  role  in 
financing the economy. Finland's banking sector 
remained  liquid  and  robust  throughout  the  recent 
turbulent  times.  This  allowed  the  sector  to 
successfully pass various stress tests and ensures 
that  domestic  lenders  can  provide  the  necessary 
financial  resources  to  support  investment  and 
consumption in Finland. In 2023 and 2024, lending 
to  households  and  lending  to  corporate  clients 
trajectories, 
followed 
reflecting  broader  economic  conditions  and  policy 
adjustments.  Credit  to  households  contracted  by 
1.2%  year-on-year  in  2023  and  continued  on  a 
downward  path  in  2024  (down  by  0.6%  year-on-
year 
in  the  first  half  of  2024).  Economic 
uncertainty  and  high  interest  rates  discouraged 
already highly indebted domestic consumers from 
taking  on  more  debt.  This  led  to  a  decline  in 
mortgage  applications  and  a  slowdown 
in 
consumer  credit  growth.  For  Finnish  firms,  credit 
conditions  also  became  tighter.  The  rise  of 
inflation  in  2023  and  higher  interest  rates  have 

divergent 

(107) EIB Investment Survey 2024. 

48 

050100150200250FIEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
   
 
financial assets across deposits, investment funds 
and  equities  highlights  the  dynamic  and  engaged 
investors 
nature  of  retail 
in  Finland,  and  a 
gradually  rising 
level  of  financial  confidence 
across the population. 

Graph A5.5: Composition of household financial 
assets per capita and as % of GDP 

The sum of household assets only reflects the total for the HH 
assets considered. Reference period 2023. 
Source: Eurostat 

Finnish  pension  funds  invest  in  a  well-
diversified  range  of  asset  classes  ensuring 
stable  returns.  Pension  funds 
(or  pension 
insurance companies) in Finland represent a stable 
and  integral  part  of  the  country’s  social  security 
system  fully  complementing  the  national  pension 
scheme.  At  the  same  time,  to  a  certain  extent, 
Finnish  pensions  support  the  further  development 
of Finland’s capital markets. Total AUM (all pillars 
combined) AUM reached over EUR 277 bn at end-
2024.  Assets  from  the  first  pillar  (earnings-
related) represent most of the pension funds’ AUM. 
Pension funds invest in equities, fixed income and 
real  estate,  but  alternative  investments  such  as 
private  equity  and  hedge  funds  have  been 
increasingly  widespread. 
In  fact,  hedge  fund 
allocation  has  been  gradually  gaining  weight  with 
some  10%  of  AUM  invested  in  this  asset  class. 
This  reflects  a  broader  trend  among  Finnish 
investors  towards  diversified  and 
institutional 
Pension 
investment 
high-yield 
insurance  companies  represent  the  bulk  (about 
87%)  of  the  local  insurance  sector,  however,  life 
(8.5%) and non-life (4.5%) insurers do manage an 
additional EUR 30-40 bn in assets. 

strategies. 

The role of domestic institutional 
investors 

The depth of available venture and 
growth capital 

firms  operating 

The  Finnish  fund  industry:  an  impressive 
growth trend. As of 2024, there were over 1 700 
investment  management 
in 
Finland, mostly located in the Helsinki area. At the 
end  of  2024,  total  assets  under  management 
(AUM) by local funds had surged to approximately 
EUR 184 bn,  up  from  EUR 149 bn  just  a  year 
earlier.  This  growth  has  been  driven  both  by 
positive  market  performance  and  by  substantial 
new  capital  inflows,  with  over  EUR 9.3 bn  of  new 
capital  invested  in  the  course  of  2024.  The 
industry  is  quite  diverse,  with  equity  funds,  bond 
the  primary 
funds  and  mixed  funds  being 
investment  vehicles.  More  recently,  funds  have 
tried  to  adapt  to  investors’  evolving  requirements 
by  launching  new  thematic  and  sector-specific 
funds. Overall, the local fund industry is poised for 
continued  growth,  supported  by  robust  demand 
and  an  appropriate 
framework. 
However, investments into the riskier asset classes 
such  as  venture  capital  are  just  a  fraction  (under 
1%) of total AUM. 

regulatory 

Venture capital and private equity have been 
gaining  importance.  The  country  has  long  been 
present on the global start-up stage. Finland is one 
of  the  EU  leaders  in  terms  of  investments  into 
venture  capital  and private  equity  relative  to  GDP 
(0.14%  and  0.83%  of  GDP  respectively  at  end-
2023)  with  both  domestic  and 
international 
investors  (65%  of  the  invested  volume)  finding 
local  start-ups  worth  financing  and  supporting 
further.  Despite 
the 
participation  of  domestic  institutional  investors, 
particularly  pension  funds,  remains  rather  on  the 
conservative  side,  limiting  the  availability  of  local 
venture and growth capital for start-ups, especially 
in the later stages of financing. 

relative  success, 

this 

Finland  has 
implemented  a  series  of 
strategic  policy  measures  to  make  the 
domestic  start-up  scene  more  dynamic. 
Finnish  innovation  strategy  is  heavily  focused  on 
supporting start-ups. The strategy is encapsulated 
in  the innovation  and  skills  in  Finland  2021-2027 
programme,  which  aims  to  boost  sustainable 

49 

0501001502002500102030405060708090FIEUFIEUper capita (000 EUR) (lhs)% of GDP GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
   
Table A5.1:  Financial indicators 

(1) Annualised data 
Credit growth and pension funds EU data refers to the EA average. 
Source: ECB, ESTAT, EIOPA, DG FISMA CMU Dashboard, AMECO 

growth,  regional  development  and  societal  well-
being.  This  rather  comprehensive  programme  has 
a  budget  of  over  EUR 3.1 bn  (two  thirds  financed 
from  the  EU  budget),  across  seven  priority  areas, 
including digitalisation, green transition and health 
technologies. The programme helps start-ups with 
funding,  enables  public-private  collaboration  and 
assists start-ups to scale up internationally. Recent 
legislative  measures  have  mostly  focused  on 
creating  more  flexible  investment  vehicles  and 
introducing  some  tax  incentives  to  encourage 
equity investments by institutional investors. 

December  2021,  a  decree  was  issued  to  support 
energy  investments,  allocating  over  EUR 0.5 bn  to 
projects  aimed  at  reducing  greenhouse  gas 
emissions  and  achieving  carbon  neutrality  by 
2035.  Finland  has  also  embraced  green  bonds  as 
a  tool  to  finance  the  green  transition.  Municipal 
Finance  Plc  has  been  a  key  player  in  that  arena, 
issuing  green  bonds  to  support  projects  that 
contribute  to  environmental  sustainability.  By  the 
end of 2023, MuniFin had issued over EUR 2 bn in 
green  bonds,  financing  projects  ranging  from 
renewable energy to sustainable housing. 

Financing the green transition 

Financial literacy 

Finland  has  continued  to  lead  the  way  in 
sustainable  development  and  sustainable 
goals. With nearly 40% of its energy mix derived 
from  renewables,  the  country  is  setting  a  global 
example  in  transitioning  to  a  low-carbon  future. 
This  commitment  is  mirrored  in  the  financial 
sector,  where  each  of  the  systemically  important 
credit  institutions  are  integrating  sustainability 
across their operations. 

The  Finnish  government  has  been  proactive 
in  promoting  green  investments.  It  launched 
the sustainable growth programme, which became 
the  overarching  programme  for  the  country’s 
Recovery  and  Resilience  Facility  (RRF)  goals.  In 

50 

room 

there 

literacy 

is  still 

is  quite  advanced 

in 
Financial 
Finland,  but 
for 
improvement.  The  country  has  ambitious  goals 
for  financial  literacy,  which  is  crucial  to  promote 
retail-investor  participation  in  capital  markets  but 
also  to  familiarise  small  and  medium-sized 
(SMEs)  with  alternatives  to  bank 
enterprises 
financing.  Despite  various  initiatives,  Finland’s 
current  financial  literacy  levels  hover  around  the 
OECD  average,  with  a  score  of  65  out  of  100  in 
the latest international survey. This places Finland 
slightly  above  the  global  average  but  highlights 
significant  disparities  within  the  population,  with 
women,  young  adults  and  older  people  having 
comparatively  lower  financial  literacy  levels.  As 

20172018201920202021202220232024-Q3EUTotal assets of MFIs (% of GDP)201.1271.0273.5295.6287.9291.6263.4256.8247.2Common Equity Tier 1 ratio21.017.217.618.117.817.218.319.116.7Total capital adequacy ratio23.420.921.321.221.420.622.123.120.1Overall NPL ratio (% of all loans)1.21.51.41.51.21.01.11.21.9NPL (% loans to NFC-Non financial corporations)2.12.82.52.52.11.31.51.63.5NPL (% loans to HH-Households)1.91.31.31.61.41.41.61.72.1NPL-Non performing loans coverage ratio27.826.530.228.131.229.426.626.242.6Return on Equity18.88.14.95.89.29.613.515.110.1Loans to NFCs (% of GDP)35.436.838.141.039.939.438.739.130.1Loans to HHs (% of GDP)57.056.356.358.557.754.652.451.844.4NFC credit annual % growth4.67.96.96.83.25.71.21.30.5HH credit annual % growth2.62.12.93.34.01.5-1.2-0.60.3Stock market capitalisation (% of GDP)97.0101.5109.9131.6139.5107.697.293.467.6Initial public offerings (% of GDP)0.360.270.120.281.370.140.00-0.05Market funding ratio64.463.862.762.461.861.161.4-49.6Private equity (% of GDP)0.320.700.500.870.540.730.84-0.41Venture capital (% of GDP)0.070.090.110.180.150.130.06-0.05Financial literacy (composite)------38.0-45.5Bonds (as % of HH financial assets)1.21.10.90.70.50.50.8-2.7Listed shares (as % of HH financial assets)14.713.114.515.316.314.413.7-4.8Investment funds (as % of HH financial assets)10.39.911.111.613.312.213.5-10.0Insurance/pension funds (as % of HH financial assets)18.017.216.916.117.115.816.0-27.8Total assets of all insurers (% of GDP)33.431.132.834.336.029.830.631.653.4Pension funds assets (% of GDP)--1.81.81.71.41.41.422.81-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States.Banking sectorNon-banks sector 
 
   
 
regards EU comparisons, the 2023 Eurobarometer 
survey (108) indicates that only 20% of Finns have 
a high level of financial literacy, while 65% have a 
medium  level,  and  15%  fall  into  the  low  literacy 
category. This places Finland slightly above the EU 
average  but  highlights  the  need  for  continued 
work  to  provide  financial  education.  Finland  has 
implemented  a  national  strategy  for  financial 
literacy,  coordinated  by  the  Bank  of  Finland  and 
other  key  stakeholders.  This  strategy  includes 
integrating financial education into school curricula 
and  providing  targeted  support  for  different 
demographic  groups.  The  Finnish  financial  sector 
also  offers  free  financial  literacy  education  and 
advisory  services  to  all  age  groups.  As  digital 
financial  tools  become  more  prevalent,  improving 
digital  financial  literacy  is  also  a  priority,  helping 
the population to navigate and protect themselves 
against  various 
in  an 
increasingly digital world. 

cybersecurity 

risks 

(108) Source: Monitoring the level of financial literacy in the EU - 

July 2023 - Eurobarometer survey. 

51 

 
 
 
 
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

Finland’s  institutional  framework  influences 
its  competitiveness.  Finland’s  public institutions 
have maintained their performance. Finland would 
gain  from  upholding 
its  strong  tradition  of 
accountability  and  digitalisation.  Additionally, 
framework  and 
regulatory 
strengthening 
reducing  administrative  burdens  would  be 
beneficial for the country. 

its 

Public perceptions 

increase 

Finland  continues  to  enjoy  high  trust  in  its 
institutions.  46%  of  citizens  trust  the  national 
government,  62%  trust  the  regional  and  local 
authorities,  and  87%  trust  the  judiciary  system 
(Graph  A6.1).  When  asked  about  improvements 
that  can 
in  Finland’s  public 
trust 
administration,  52%  of  citizens  pointed  to  less 
bureaucracy  (the  same  percentage  as  in  the  EU), 
49%  to  more  transparency  around  decision-
making  and  the  use  of  public  money  (EU:  44%) 
the 
and  34% 
administration  (EU:  28%)  (109).  The  perceived 
quality  of  government  has  improved  and  remains 
visibly above the EU average (110). 

interaction  with 

to  easier 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

(1) EU-27 from 2019; EU-28 before 
Source: Standard Eurobarometer surveys 

(109) Understanding Europeans’ views on reform needs - April 
2023 - - Eurobarometer survey, Country Fact Sheet. 

(110) Inforegio – European Quality of Government Index 

52 

Quality of legislation and regulatory 
simplification 

is  above 

Performance  in  developing  and  evaluating 
legislation 
the  EU  average. 
Performance  is  generally stronger  for  stakeholder 
engagement  and  ex-ante  impact  assessments 
than for ex post evaluation of legislation. However, 
there  is  room  for  improving  the  requirements 
governing  the  oversight  and  quality  controls  for 
consultations  of  both  primary  and 
public 
secondary 
transparency 
requirements  applied  to  the  regulatory  impact 
assessments and ex post evaluation of legislation, 
as  well  as  the  methodological  aspects  of  ex  post 
evaluation  of  legislation  (Graph  A6.2).  Challenges 
remain,  including  enhancing  the  accessibility  and 
laws  and  ensuring  that 
understandability  of 
both 
assessments 
impact 
regulatory 
comprehensive and effective. 

legislation, 

are 

the 

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

There  is  scope  to  further  strengthen  the 
mechanisms  for  simplifying  regulation  and 
identifying  administrative  burdens. 
For 
example,  periodic  ex  post  evaluation  of  primary 
In  addition, 
legislation 
duplications, 
requirements 
administrative 
substantive 
compliance costs in ex post evaluations of primary 
legislation  apply  to  some  (not  all)  primary  laws 
(see table A6.1). 

is  not  mandatory. 

to 
burdens 

assess 

and 

00.10.20.30.40.50.60.70.80.91AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system FIRegional or local public authorities EU27Regional or local public authorities FIGovernment  EU27Government  FI0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsFI_StakeholderengagementFI_Regulatory ImpactAssessmentFI_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27 
 
      
 
   
 
 
Table A6.1:  Finland. Selected indicators on administrative burden reduction and simplification 

(1) This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming). 

The  OECD  product  market 
regulation 
indicator shows that that Finland´s licensing 
system is slightly more burdensome than the 
EU  average,  with  room  to  further  align  it  with 
best practices. While the government keeps an up-
to-date  inventory  of  all  the  permits  and  licences 
required/issued  to  businesses  by  public  bodies, 
there  is  no  requirement  for  the  government  to 
regularly  review  it  and  assess  whether  such 
licences and permits are still required or should be 
withdrawn.  Moreover,  there  is  no  requirement  for 
public  bodies  at  the  central/federal 
level  to 
observe to the once-only principle (see also Annex 
4).  

Social dialogue 

collective 

Tripartite  social  dialogue  remains  strong, 
although 
has 
decentralised  in  recent  years  with  a  move 
towards 
local-level  bargaining.  Collective 
bargaining coverage at 89% is one of the highest 
in  the  EU  (111).  Legislation  related  to  labour 

bargaining 

(111) OECD/AIAS ICTWSS database, data from 2017 OECD Data 

Explorer • Collective bargaining coverage 

53 

2021-2027  multifund 

markets and social policies is prepared in tripartite 
working  groups,  and  social  partners  are  regularly 
consulted  in  the  Parliament’s  EU  subcommittee. 
Social partners are a recognised important partner. 
They  also  benefit  from  the  Innovation  and  Skills 
Finland 
investment 
programme,  where  they  were  involved  in  the 
they  are  also 
programming  process,  and 
represented 
the  programme  monitoring 
in 
committee. The ESF+ also supports social partners 
in  capacity  building  and  training  activities.  Most 
recently,  in  January  2025  the  social  partners 
concluded  an  agreement  on  the  reform  of 
occupational  pensions  upon  the  request  of  the 
government,  aiming  to  preserve  the  long-term 
fiscal sustainability of occupational pensions while 
keeping contributions at an affordable level (112). 

In  collective  bargaining,  there  has  been  a 
continuous  trend  towards  decentralisation 
and  local-level  collective  agreements,  which 
was underlined by the legislative reforms entering 
into  force  on  1  January  2025.  Firms  who  are  not 
part  of  a  registered  employers’  union  are  now 

(112) For  an  analysis  of  the  involvement  of  Finland’s  social 
partners at national level in the European Semester and the 
Recovery  and  Resilience  Facility,  see  Eurofound  (2025), 
National-level  social  governance  of  the  European  Semester 
and the Recovery and Resilience Facility. 

Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are required to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
 
 
 
   
 
Table A6.2:  Digital Decade targets monitored through the Digital Economy and Society Index 

Source: Digital Economy and Society Index 

permitted  to  negotiate  local  derogations  from 
sector-level  collective  agreements  in  consultation 
with workers’ representatives. While this reform is 
not  expected  to  significantly  impact  collective 
bargaining  coverage,  it  will  require  continuous 
monitoring (see Annex 10).  

Single Digital Gateway. Finland is in the process of 
connecting up the first authorities (113). However, it 
has  not  yet  set  up  and  notified  eID  schemes  for 
legal persons under the eIDAS Regulation (114). This 
means 
cannot 
authenticate  themselves  to  access  public  services 
provided  by  other  Member  States, including those 
enabled by the Once-Only Technical System (115).  

businesses 

Finnish 

that 

Digital public services 

Graph A6.3: Participation rate of 25-64 year olds 
in adult learning (%) by occupation 

with 

widespread 

Finland  is  a  frontrunner  in  digital  public 
services, 
citizen 
engagement  and  user-centric  service  design 
(Table  A6.2).  The  availability  of  digital  public 
services  for  citizens  and  businesses  scores  well 
above the EU average. The share of e-Government 
and  eID  users  are  also  significantly  above  the  EU 
average  (respectively  97.6%  vs  EU  75%,  and 
94.4% vs EU 41.1%). However, access to e-health 
records  exceeds  the  EU  average  only  slightly. 
92.5%  of  citizens  engage  online  with  authorities, 
and  96.5%  of  services  are  designed  to  be  user-
centric.  Ongoing  digitalisation  is  being  fuelled  by 
key initiatives like ‘Digital Finland’ and the strategy 
on  information  and  communications  technology. 
However, challenges remain in terms of improving 
accessibility  and  usability,  and  ensuring  that  all 
citizens  have 
to 
the  digital  skills 
effectively use these services.  

required 

Source: European Commission, based on the Labour Force 
Survey. 

Progress  is  being  made  towards  seamless, 
automated exchange of authentic documents 
It  has  already 
and  data  across  the  EU. 
successfully  tested  its  first  transactions  through 
the  Once-Only  Technical  System,  part  of  the  EU 

(113) European Commission, Once-Only Technical System 

Acceleratormeter 

(114) European Commission, eIDAS Dashboard. 

(115) European Commission, The Once Only Principle System: A 

breakthrough for the EU’s Digital Single Market 

54 

05101520253035404550FIEU-27FIEU-27FIEU-27FIEU-272021202220232024Public administration and defence; compulsory social securityHigh-skilled occupationsMedium-skilled occupationsUnskilled occupationsArmed forcesTotal economyDigital Decadetarget by 20302022202320242024EU-27Digitalisation of public services190929179100Score (0 to 100)2021202220232023203029310010085100Score (0 to 100)202120222023202320303na908379100Score (0 to 100)20212022202320232030FinlandEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
   
 
 
 
 
  
 
Civil service 

employees 

participated 

The  capacity  of  the  Finish  civil  service 
In  2024,  39%  of  public 
remains  high. 
administration 
in 
education  and  training,  giving  Finland  one  of  the 
highest  rates  in  the  EU  (Graph  A6.3).  Moreover, 
72%  of  the  staff  has  higher  education  (116).  The 
strategy for human resources management in the 
central  government  puts  emphasis  on  increasing 
attractiveness  and  enabling  further  professional 
development  via  career  path  models  (117).  Staff 
surveys  monitor  annually 
satisfaction, 
leadership,  working  culture  and  content  of  work. 
Women hold 54.2% of senior roles (118).  

job 

the 

innovative 

To sustain public administration productivity, 
Finland  is  adopting  innovative  approaches 
such  as  artificial  intelligence  (AI)  data  analytics 
and  agile  methodologies.  Finland  has  recently 
launched 
AI-powered 
Osaamistarvekompassi  (Skills  Needs  Compass) 
which  tackles  skills  mismatches  by  predicting  job 
transitions  and  future  skill  demands.  It  uses  AI-
driven  data  mining 
to  provide  user-friendly 
insights  for 
individuals  and  policymakers.  A 
proposal  on  principles  of  public  management  and 
their 
the 
foundations of public administration management 
and promote a common understanding of it. 

implementation,  aims 

to  enhance 

Integrity 

A  lower  percentage  of  businesses  than  the 
EU  average  consider  corruption  to  be  a 
problem.  In  Finland,  only  18%  of  companies 
consider that corruption is widespread (EU average 
64%)  and  only  14%  consider  that  corruption  is  a 
problem  when  doing  business  (EU  average  36%) 
(119).  Moreover,  63%  of  companies  believe  that 
people  and  businesses  caught  bribing  a  senior 
official  are  appropriately  punished  (EU  average 

(116) Eurostat. Labour Force Survey.  

continues 

smoothly,  with 

31%)  (120).  Cooperation  between  the  police  and 
a 
prosecution 
strengthening  of 
for  police  and 
resources 
prosecution  allowing  them  to  efficiently  perform 
their tasks (121). A new study was launched by the 
Ministry of Justice on the opportunity to revise the 
provisions on foreign bribery, but there are still no 
legislative  measures  (122).  Furthermore,  only  14% 
of  companies  (EU  average  27%)  think  that 
corruption  has  prevented  them  from  winning  a 
public  tender  or  a  public  procurement  contract  in 
practice  in  the  last  three  years  (123).  Risk  sectors 
land  use  planning,  and 
include  urban  and 
specialised  procurement  (such  as  ICT,  medicines 
and medical supplies) (124). 

Finland  has  upgraded  in  2024  its  lobbying 
framework.  In  2024,  Finland  established  an 
electronic  transparency  register,  managed  by  the 
National  Audit  Office.  Under  the  Transparency 
Registry Act, legal persons and private traders are 
now  required  to  report  to  the  Transparency 
Register  their 
lobbying  activities  targeted  at 
Parliament  and  ministries  (125).  These  provisions 
can help ensure a level playing field for businesses 
in access to policymakers. 

Justice 

time 

justice  system  performs  efficiently 
The 
overall.  The  disposition 
in  civil  and 
commercial cases at first instance saw an increase 
from  327  in  2022  to  349  days  in  2023.  For 
the 
administrative  cases  at 
disposition  time  was  lower  and  decreased  from 
281  in  2022  to  263  in  2023.  The  quality  of  the 
justice  system  is  good  overall.  The  Government 
Report  on  the  Administration  of  Justice  has 
contributed  to  discussions  on  the  most  pressing 
issues 
case 
management and digitalisation system for general 

system.  The 

instance, 

justice 

first 

the 

in 

(120) Ibid. 

(121) See the 2024 country-specific chapter for Finland of the Rule 

of Law Report, p. 13. 

(122) Ibid., p. 12. 

(117) Ministry of Finance (2024). ‘Appendix: Implementation of the 

(123) Flash Eurobarometer 543 on businesses’ attitudes towards 

Central Government Human Resources Strategy’, link.  

corruption in the EU (2024). 

(118) European Institute for Gender Equality (EIGE). 

(124) See the 2024 country-specific chapter for Finland of the Rule 

(119) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024). 

of Law Report, p. 17. 

(125) Ibid., pp. 14-15. 

55 

 
 
 
courts  was  implemented  in  2024.  As  regards 
judicial  independence,  no  systemic  deficiencies 
have been reported (126). 

(126) For more detailed analysis of the performance of the justice 
system  in  Finland,  see  the  upcoming  2025  EU  Justice 
Scoreboard and 2024 Rule of Law Report. 

56 

 
 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

Finland  faces  several  challenges  regarding 
its  clean  industry  transition  and  climate 
mitigation.  It  has  development  potential  in  the 
battery  sector  but  manufacturing  capacity  for 
other  net  zero  technologies  remains  modest,  and 
skilled  labour  shortages  may  hinder  progress. 
Despite  being  mineral-rich,  Finland's  dependency 
on  critical  raw  material  imports,  particularly  from 
Russia,  poses  geopolitical  risks.  While  efforts  are 
being  made 
industry  decarbonisation  and 
sustainable  practices,  the  emissions  intensity  in 
certain  sectors  remains  high,  and  there  is  a 
significant  gap  to  bridge  in  reducing  waste  and 
enhancing  recycling  and  resource  productivity 
rates.  This  annex  reviews  the  areas  in  need  of 
urgent  attention 
industry 
transition  and  climate  mitigation, 
looking  at 
different dimensions. 

in  Finland’s  clean 

in 

Strategic autonomy and technology 
for the green transition  

Net zero industry 

Finland’s  manufacturing  capacity  across  all 
net  zero  technologies  remains  modest  but 
with significant development potential in the 
battery  sector.  (127)  Finland’s  manufacturing 
capacity for solar PV amounts to between 100 and 
200  MW/y  (1%  of total  EU  capacity). Finland  also 
has  at  least  two  facilities  producing  wind  turbine 
generators; one lithium-ion battery factory; and at 
least four facilities that manufacture heat pumps. 
Finnish  companies  are  also  participating  in  two 
hydrogen IPCEIs: Hy2Tech and Hy2Use (128). 

Finland  is  progressing  on  the  establishment 
of  a  targeted  policy  framework  for  net  zero 
technology  manufacturing.  The  new  industrial 
strategy  published  in  December  2024  puts  an 
emphasis  on  the  clean  transition,  highlighting 
‘leveraging  opportunities  of  the  clean  transition, 
bio economy  and  circular economy’  as  one  of  the 

strategy’s  seven  key  objectives  (129).  The  national 
implementation  of  the  Net  Zero  Industry  Act  is 
also  ongoing:  Finland  has  set  up  a  governmental 
working  group  and  is  setting  up  the  required 
government  processes,  e.g.  the  selection  process 
for  net  zero  strategic  projects  (130).  Finland  is 
supporting  net  zero  industry  through  its  recovery 
and  resilience  plan  (RRP)  and  state  aid  schemes, 
including  a  recently  adopted  clean  transition  aid 
scheme  worth  EUR  400  million  in  2025  (131). 
Beyond  investment,  the  Finnish  RRP  also  has 
environmental 
on 
measures 
permitting,  but 
labour  and 
particularly  capacity  in  public  authorities  might 
hinder this progress.  

speeding 
lack  of  skilled 

up 

More  specifically,  policy  support  in  Finland 
focuses  on  its  National  Battery  Strategy.  It 
targets  the  manufacturing  capacity  of  Finnish 
firms  and  aims  to  improve  the  competitiveness 
and  positioning  of  Finnish  companies  in  the 
battery  value  chain.  Alongside  access  to  raw 
materials,  Finland  has  a  developed  recycling 
system  and  strong  R&D  throughout  this  value 
chain. The industry’s growth is further underscored 
by  the  large  investment  planned,  with  a  total 
amount  of  EUR  6  billion  estimated  by  Finnish 
industry  by  2028.  However,  there  is  a  growing 
demand for skilled workers throughout the battery 
value  chain 
in  Finland,  with  an  estimated 
employment need of around 4 000 in 2025-2026 
(132). There are plans in Finland to establish one of 
the  first  net  zero  industry  academies  within  the 
EU.  

Building  on  its  strong  base  of  industrial 
knowhow  and  favourable  environment  for 
clean  tech,  Finland  is  home  to  many  climate 
innovations.  In  fact,  Finland  ranks  first  both  in 
the  eco-innovation 
the  clean 
innovation category,  part of the MIT Green Future 

index  and 

in 

(129) Ministry of Economic Affairs and Employment, 2024, 
Teollisuuspoliittinen strategia : Ohjausryhmän raportti 

(130) Ministry of Economic Affairs and Employment, EU:n 
nettonollateknologioita koskevan asetuksen (NZIA) 
kansallinen toimeenpano 

(131) Ministry of Economic Affairs and Employment, 2025 

(127) European Commission: Directorate-General for Energy, The 
net-zero manufacturing industry landscape across the 
Member 2025, https://data.europa.eu/doi/10.2833/2181110   

(128) European Commission 

(132) Innovation Norway, Business Finland, Business Sweden, and 
the Swedish Energy Agency, conducted by Business Sweden, 
2023, The Nordic Battery Value Chain - Market drivers, the 
Nordic value proposition, and decisive market necessities 

57 

 
 
 
 
 
 
 
Index (133). In terms of planned investment in clean 
technologies, offshore and onshore wind, hydrogen 
and  battery  technologies  are  among  the  clean 
technologies  gathering  most  planned  investment 
in  Finland,  while  hydrogen  is  leading  in  terms  of 
potential to create jobs (134). Additional investment, 
improved  investment  certainty  and  availability  of 
skilled labour could yet boost the clean technology 
sector in Finland. 

Transforming the car industry  

more  of  many  metals  than  are  extracted  in 
Finland,  thereby  also  relying  on  imports  of  ore 
concentrates to reach the processing volumes (141). 
Finland recently published a new National Mineral 
Strategy, outlining efficient implementation of the 
Critical  Raw  Materials  Act,  and  strong  raw 
materials supply for industry, as two of the six key 
objectives  (142).  Providing  efficient  support  for 
increasing  domestic  capacity  in  extraction  and 
processing  of  critical  raw  materials  is  an  action 
point within the strategy.  

Despite  a  very  small  domestic  automotive 
industry,  Finland  has  a  high  motorisation 
rate, with 664 cars per 1000 inhabitants. The 
car fleet is among the oldest in the EU, with 32.3% 
in  Finland  over  20  years  old  (135). 
of  cars 
Nonetheless, 
to  electric 
vehicles is in progress, with over 50% of the newly 
registered  cars  in  Finland  being  either  battery  or 
plug-in  hybrid  EVs.  This  is  second  highest  among 
EU countries, only surpassed by Sweden (136). 

transformation 

the 

Critical raw materials  

through 

measured 

Beyond  domestic  production,  Finland  also 
imports critical raw materials such as nickel, 
(143).  Finland’s 
copper  and  coking  coal 
dependency, 
import 
concentration, increased in 2023 to 0.24 (over the 
EU  average  of  0.22  and  just  below  the  level  of 
‘high  concentration’  <0.25)  (144).  Russia  provides 
43%  of  the  critical  raw  materials  imported  to 
Finland (145),  signalling  a  particularly  high  degree 
of  geopolitical  risk.    During  the  past  five  years, 
Finland  has  had  the  third  highest  critical  raw 
material  import  concentration  among  EU  Member 
States (146).  

rock 

Finland is a mineral-rich country with a long 
history  in  mining,  for  example  in  gold  and 
palladium  extraction (137).  At  EU  level,  Finland 
leads  in  the  production  of  several  CRMs:  cobalt, 
and 
platinum, 
phosphate 
nickel (138). 
In  addition,  copper,  platinum  and 
feldspar  are  produced  in  Finnish  mines  (139). 
Importantly  for  the  clean  transition,  also  lithium 
and  rare  earth  elements  are  present  in  Finnish 
bedrock,  and  extraction  projects  for  these  are 
planned (e.g.(140).  

palladium 

Beyond  extraction,  Finland  has  a  strong 
metal  processing  industry  which  produces 

(133) MIT Technology Review, 2023, The Green Future Index 

(134) Finnish Confederation of Industries, December 2024, Green 

transition investments in Finland, December 2024 

(135) Eurostat 

(136) European Environment Agency 

(137) Kaivosteollisuus 

(138) JRC RMIS - Country Profile Finland 

(139) Geologian tutkimuskeskus, Kriittiset ja strategiset raaka-

aineet 

(140) Finnish Minerals Group 

Aside  from  domestic  primary  production, 
recycling and increased use of secondary raw 
materials  can  help  reduce  dependency  on 
imports.  The  recycling  rate  for  e-waste,  a  key 
source  of  critical  raw  materials,  is  above  the  EU 
average, with 88% in 2022 compared to 81%. The 
reuse and recycling rate for end-of-life vehicles is 
slightly  below  the  EU  average  (85%  vs.  89%  in 
2022). This points to the need to avoid the leakage 
of  critical  raw  materials,  notably  as  the  car 
industry  shifts  to  battery-electric  vehicles.  The 
National Waste Plan, which was published in 2022 
and  covers  the  period  up  to  2027,  also  includes 

(141) Ministry of Economic Affairs and Employment, 2023, 

Kaivosalan toimialaraportti: Kriittiset raaka-aineet entistä 
tärkeämpiä EU:lle 

(142) Finnish Government, 2024, Kansallinen mineraalistrategia 

(143) JRC RMIS - Country Profile Finland 

(144) ￼COMEXT 

(145) JRC RMIS - Country Profile Finland 

(146) COMEXT 

58 

 
 
 
policy  recommendations  for  improving  circularity 
of minerals (147).  

Climate mitigation  

Industry decarbonisation 

gas 

come 

fifth  of  Finland’s 
emissions 

In  terms  of  its  share  of  all  greenhouse  gas 
emissions  and  the  emissions  intensity  of 
production,  Finland’s manufacturing  industry 
is comparable to the EU average. As in the EU 
total 
overall,  about  one 
greenhouse 
from 
manufacturing (148). With 260 g CO2eq per euro of 
gross  value  added 
the  greenhouse 
emissions  intensity  of  Finland’s  manufacturing 
industry  is  also  close  to  the  EU  value  (270  g/€). 
Between  2017  and  2022,  the  emissions  intensity 
of  Finland’s  manufacturing  production  has 
improved by 18%, slightly less than the EU overall 
(20%). 46% of its manufacturing emissions come 
from  industry  processes  and  product  use,  sightly 
more than in the EU overall (43%). The remainder 
is related to energy use.  

(GVA), 

In recent years, Finland has only made minor 
improvements  in  its  greenhouse  emissions 
intensities  in  both  energy  use  and  industry 
process and product use in manufacturing. In 
of 
both 
manufacturing  decreased  by  4%  between  2017 
and  2022  (149)  In  the  meantime,  the  share  of 

emissions 

intensity 

areas, 

the 

(147) Ministry of the Environment, 2022, Kierrätyksestä 

kiertotalouteen: Valtakunnallinen jätesuunnitelma vuoteen 
2027 (in Finnish only). 

(148) In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section,  unless 
indicated  otherwise,  data  on  manufacturing  refer  to  the 
divisions  of  the  NACE  section  C  excluding  division  C19 
(manufacture  of  coke  and  refined  petroleum  products),  and 
the  year  2022.  The  source  of  all  data  in  this  section  is 
Eurostat;  data  following  the  UNFCCC  Common  Reporting 
Framework (CRF) are from the European Environment Agency 
(EEA), republished by Eurostat. 

(149) For the GHG emissions intensity of GVA related to energy use 
and  industrial  processes  and  product  use  respectively,  GHG 
emissions  are  from  inventory  data  in  line  with  the  UNFCCC 
Common  Reporting  Format  (CRF),  notably  referring  to  the 
source sectors CRF1.A.2 –  fuel combustion in manufacturing 
industries  and  construction  and  CRF2  –  industrial  processes 
and  product  use.  The  CRF1.A.2  data  broadly  correspond  to 
the NACE C and E sectors, excluding C-19. GVA data (in the 
denominator  for  both  intensities)  are  aligned  with  this 

59 

electricity and renewables in manufacturing’s final 
energy  consumption  remained  broadly  stable,  at 
69%  –  the  fourth  highest  share  in  the  EU.  In 
parallel,  the  energy  intensity  of  manufacturing 
decreased by about the same degree as in the EU 
as  a  whole,  by  14%  (from  3.9  GWh  per  euro  of 
GVA  to  3.4  GWh/€)  –  while  still  remaining  more 
than  three  times  above  the  EU  average  of  1.1 
GWh/€ in 2022.  

Graph A7.1: GHG emission intensity of manu-
facturing and energy-intensive sectors, 2022 

Source: Eurostat. 

In  Finland,  greenhouse  gas  emissions 
intensities  are  comparatively  high  in  the 
paper  products  and  metals  sectors.  Energy-
-intensive  industries  (150)  account  for  16%  of 
Finland’s  total  manufacturing  gross  value  added 
(2022).  Among  these  sectors,  the manufacture  of 
metals  has  a  relatively  high  emissions  intensity, 
with  5.9 kg CO2eq/€  of  GVA,  well  above  the  EU 
total,  3.5 kg.  Likewise,  at  1.1 kg/€,  the  emissions 
intensity  of  the  manufacture  of  paper  and  paper 
products  is  much  higher  than  the  EU  average  of 
0.68 kg/€.  Like  other  EU  countries,  Finland  has 
recently  seen  an  increase  in  energy  prices  for 
industry, in particular concerning gas (151). In recent 
years,  Finland  has  experienced  a  double-digit 
decline in output by the paper and paper products 
industry and in the non-metallic minerals sector. In 

sectoral  coverage.  Therefore,  they  are  not  fully  consistent 
with the data referred to in other part of this section. 

(150) Notably,  the  manufacture  of  paper  and  paper  products 
(NACE  division  C17),  of  chemicals  and  chemical  products 
(C20),  “other”  non-metallic  mineral  products  (C23;  this 
division includes manufacturing activities related to a single 
substance of mineral origin, such as glass, ceramic products, 
tiles,  and  cement  and  plaster),  and  basic  metals  (C24).  To 
date,  these  industries  are  energy-intensive  –  i.e.  consuming 
much  energy  both  on  site  and/or  in  the  form  of  purchased 
electricity  –  and  greenhouse  gas  emissions  intensive,  in 
various combinations. 

(151) For a detailed analysis of energy prices, see Annex 8 on the 

affordable energy transition. 

01234567C-C19C17C20C23C24KG CO2eq / €FinlandEU-27 
 
 
  
 
contrast,  the  manufacture  of  basic  metals  has 
expanded by about one fifth.  

Graph A7.2: Manufacturing industry production: 
total and selected sectors, index (2021 = 100), 
2017-2023 

from Finland’s effort sharing sectors are expected 
to have been 27% below those of 2005. By 2030, 
current  policies  are  projected  to  reduce  them  by 
45.2% relative to 2005 levels. This would result in 
a  shortfall  of  4.8  percentage  points  regarding 
Finland’s  effort  sharing  target,  a  50%  reduction, 
once  those  measures  had  been  adopted  and 
implemented  (153).  While  Finland  could  reach  its 
target  by  using  domestic  flexibilities  available 
under  the  effort  sharing  regulation,  swift  and 
steady  adoption  and  implementation  of  further 
climate mitigation measures will be critical. 

Graph A7.3: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

Source: Eurostat. 

in  decarbonising 

Though  some  challenges  remain,  Finland  is 
making  progress 
its 
industry.  Its  aim  is  to  achieve  carbon  neutrality 
by 2035, as laid out in the 2022 Climate Change 
Act.  This  goal  is  supported  by  integrated,  sector-
-specific  low  carbon  roadmaps  developed  by  the 
public  and  private  sectors.  Key  industries  such  as 
metals,  chemicals  and  manufacturing  are  at  the 
these  efforts.  Finland  supports 
forefront  of 
industrial decarbonisation through various funding 
initiatives, for instance the Clean Energy Transition 
Partnership  (CETP),  which  focuses  on  industrial 
energy systems and carbon capture, utilisation and 
storage 
Sustainable 
and 
Manufacturing  Finland  programme,  which  focuses 
on  innovative  business  models  and  productivity 
improvements,  while  addressing  climate  change 
challenges.  

(CCUS), 

the 

Reduction  of  emissions  in  the  effort  sharing 
sectors 

With  planned  climate  mitigation  measures 
that are yet to be adopted, Finland still has a 
gap to close to reach its 2030 effort sharing 
target  (152).  In  2023,  greenhouse  gas  emissions 

(152) The national greenhouse gas emission reduction target is set 
out 
(the  Effort  Sharing 
(EU)  2023/857 
Regulation).  It  applies  jointly  to  buildings  (heating  and 

in  Regulation 

60 

Source: European Environment Agency 

Sustainable industry 

Circular economy transition 

is 

room 

There 
for  boosting  Finland’s 
circularity  transition.  The  circular  material  use 
rate  in  Finland  dropped  to  2.4%  in  2023,  against 
the EU average of 11.8%. This makes Finland the 
country  with  the  third  lowest  use  of  circular 
materials 
the  EU.  Resource  productivity 
measures  the  total  amount  of  materials  directly 
used  by  an  economy  in  relation  to  GDP.  In  2023, 

in 

cooling); road transport, agriculture; waste; and small industry 
(known as the effort sharing sectors). 

(153) The emissions from effort sharing sectors for 2023 are 

based on approximated inventory data. The final data will be 
established in 2027 after a comprehensive review. 
Projections on the impact of current policies (“with existing 
measures”, WEM) and additional policies (“with additional 
measures”, WAM), as per Finland’s final updated NECP. 

7080901001101201302017201820192020202120222023ManufacturingManufacture of paper and paper productsManufacture of other non-metallic mineral productsManufacture of basic metals051015202530354020052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
      
 
 
      
 
Finland  generated  EUR  1.17  per  kg  of  material, 
against  the  EU  average  of  EUR  2.74.  Finland’s 
material  footprint,  an  indicator  for  raw  material 
consumption,  is  the  highest  in  the  EU  at  46.6 
tonnes per capita in 2023 (EU average: 14 tonnes 
per capita).  

by 

the 

objectives: 

In  2021,  Finland  adopted 
its  Strategic 
Programme  to  promote  a  circular  economy, 
with a vision to have the country’s economic 
success founded on a carbon-neutral circular 
economy  society  by  2035 (154).  The  vision  is 
the 
following 
guided 
consumption  of  non-renewable  natural  resources 
will  decrease,  and 
the  sustainable  use  of 
renewable  natural  resources  may  increase,  to  the 
extent  that  the  total  consumption  of  primary  raw 
materials  in  Finland  in  2035  will  not  exceed  that 
of  2015.  The  productivity  of  resources  is  planned 
to  double  by  2035  from  what  it  was  in  2015, 
while the circular material use rate should double 
by  2035.  Finland’s  Circular  Economy  Green 
Deal (155)  is  in  its  starting  phase.  It  builds  on 
parallel  research  work  done  on  circular  economy 
involves 
scenarios 
organisations  voluntarily  committing  to  reduce 
their natural resource use, setting goals and taking 
action to promote a low-carbon circular economy. 

country 

and 

the 

for 

Finland's  municipal  and  packaging  waste 
recycling  rates  show  room  for  improvement 
to  meet  future  targets,  requiring  significant 
additional  investment  in  waste  management 
and  circular  economy  initiatives.  In  2023, 
Finland  generated  468  kg  per  capita  of  municipal 
waste,  which  is  below  the  EU  average  of  511  kg 
per  capita.  In  Finland,  incineration  with  energy 
recovery  is  the  main  waste  treatment  type.  The 
share  of  incineration  significantly  increased  since 
2010  and  stands  at  55%  in  2023.  Landfilling 
accounts for less than 1% of waste treatment. The 
recycling rate increased from 33% in 2010 to 43.7 
in 2022, which is below the estimated EU average 
of  49%.    Finland  has  reported  data  to  show 
compliance with the target for preparing municipal 
waste  for  reuse  and  recycling  of  55%  for  2025. 
Finland’s overall packaging waste recycling rate as 
well  as  the  recycling  rates  for  all  materials 
In  2022,  the 
steadily 

increased  until  2019. 

increased 

reported  recycling  rate  for  total  packaging  waste 
was  60%.  It  is  mainly  driven  by  paper,  cardboard 
and  plastics  packaging,  as  these  are  the  largest 
packaging  waste  fractions.  The  recycling  rate  for 
plastics  packaging  is  still  rather  low,  although  it 
almost 
time, 
has 
15% from 2016 to 2020  –  but 
reported 
rate was only 31% in 2022. The yearly investment 
needs in the fields of circular economy and waste 
management are EUR 1 475 m. The current yearly 
gap  that  needs  to  be  bridged  with  additional 
investment is EUR 454 m (156). 

by 
the 

over 

Graph A7.4: Municipal waste treatment 

Source: Eurostat 

Zero pollution industry 

Air  quality  in  Finland  is  generally  good.  The 
main  contributors  to  emissions  to  air  are  the 
energy  sector  (including  refineries,  gasification 
etc.) and the metal sector. The external costs of air 
pollution,  stemming 
industrial 
emissions,  are  quantified  at  EUR  5.9  billion  in 
life 
the  value  of 
2021  using 
methodology,  ranking  as  the  12th  highest  in  the 
EU (157).  Emissions  of  several  air  pollutants  have 
decreased  significantly  in  Finland  since  2005, 
while GDP growth has continued. According to the 

in  part  from 

statistical 

(154) Ministry of the Environment, 2021, Government resolution on 

the strategic programme for circular economy, Link. 

(155) Ministry of the Environment, 2024, Circular Economy Green 

Deal, Link. 

(156) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

(157) EEA, 2024, The costs to health and the environment from 
industrial air pollution in Europe – 2024 update, Link. 

61 

566609630522468010020030040050060070020192020202120222023Kg per capitaMaterial recyclingComposting and digestionLandfill/disposalTotal incineration (incl. energy recovery)Waste treatment unspecifiedEU-27 total waste per capita 
 
      
 
latest  projections,  Finland  would  meet 
its 
emissions  reduction  commitments  by  2030  for 
NOx,  NMVOC,  SO2,  NH3  and  PM2.5 (158).    The  latest 
available  annual  estimates  (for  2022)  by  the 
European  Environment  Agency 
for  Finland 
attribute  70  deaths  a  year  (or  640  years  of  life 
lost  (YLL))  to  fine  particulate  matter  (PM2.5);  50 
deaths  a  year  (or  510  YLL)  to  nitrogen  dioxide 
(NO2),  and  440  deaths  a  year  (or  4 100  YLL)  to 
ozone (159).    Finland  has  achieved  the  highest 
percentage  reduction  in  the  EU  in  the  number  of 
premature  deaths  attributable  to  fine  particulate 
matter compared to 2005 (97%) (160).   

Finland’s  industry  releases  significant  water 
pollutants. Finland has the 4th highest amount of 
emissions  of  heavy  metals  to  water  and  has  the 
highest  emissions  intensity  in  the  EU.  The  main 
contributors  to  emissions  to  water  in  Finland  are 
the  pulp,  paper  and  wood  sector  in  general  and 
metal  sector  for  heavy  metals.  Yearly  investment 
needs for pollution prevention and control are EUR 
1 737 m. The current yearly gap that needs to be 
bridged  with  additional 
is  EUR 
871 m (161). 

investment 

(158) As submitted under Article 10(2) of the NEC Directive. 

(159) EEA, 2024, Harm to human health from air pollution in 

Europe: burden of disease status, 2024, Link. 

(160) EEA, 2024, Premature deaths due to exposure to fine 

particulate matter in Europe, Link. 

(161) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

62 

 
 
Table A7.1:  Key clean industry and climate mitigation indicators: Finland 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

63 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW100-200 (m)- Electrolyzer, MW-- Wind (b: blade, t: turbine, n: nacelle), MW-- battery, MWh-Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %617629642652656660664539561New zero-emission vehicles, electricity motor, %0.420.641.664.4010.3117.7933.751.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %19.819.518.818.017.616.124.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€0.320.320.30.250.270.260.240.340.27Share of energy-related emissions in industrial GHG emissions46.246.045.544.844.545.545.944.842.5Energy-related GHG emissions intensity of manufacturing129.1135.0129.3126.3129.6124.3-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption69.670.470.971.070.769.371.443.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€3.924.094.093.333.503.363.191.291.09Share of energy-intensive industries in manufacturing production16.37.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)0.891.051.010.930.821.100.80-0.730.68- chemicals and chemical products (NACE C20)0.670.650.480.500.650.790.57-1.251.26- other non-metallic mineral products (NACE C23)1.351.171.151.171.191.131.05-2.532.24- basic metals (NACE C24)2.452.792.422.336.685.855.38-2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % -21.0-22.9-27.0- domestic road transport-9.0-12.2-17.7-21.3-23.3-26.31.45.2- buildings-34.1-33.3-37.9-40.4-41.6-47.621.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %34.427.226.525.1-50.0-4.80Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person49.447.948.848.951.846.614.715.0Circular material use rate, %4.4        4.5        4.4        5.1        5.4        2.4        11.611.1Resource productivity, €/kg0.9        1.0        1.0        1.0        1.0        1.2        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants86        33        12        30        17        -702571Air pollution damage cost intensity, per thousand € of GVA    10.8          27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    4.9   0.9FinlandEU-27FinlandEU-27FinlandEU-27 
 
 
 
 
  
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  competitiveness  and  affordability, 
while advancing the transition to net zero. It 
examines  the  measures  and  targets  proposed  in 
the  final  updates  to  the  National  Energy  and 
Climate Plan (NECPs) for 2030. 

Finland  has  made  significant  progress  in  its 
clean  energy  transition  pathway,  having 
completed  the  phase  out  of  coal  in  April 
2025(162),  and  no  Russian  gas  imports  since 
2024.  Finnish  companies  are  looking  for  non-
fossil  fuel  sources,  and  the  use  of  peat  has 
decreased.  Wind  and  solar  power  production  are 
competitive  on 
the  energy  market  without 
government  support.    Finland  has  made  some 
progress  in  reforming  the  permitting  process 
introducing  measures  to  facilitate  the  uptake  of 
renewable  energy  projects,  including  faster  and 
shorter procedures, digitalisation of processes, and 
improvements  in  grid  connection  and  integrated 
planning.  Some  areas,  such  as  deployment  of 
innovative projects remain to improve.  

(162) Finland's last coal-fired power and heat plant in active 
production shut down permanently on 02/04/25. 

64 

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

for  non-household 

Retail  energy  prices  in  Finland  followed 
different  trends  in  2024,  with  electricity  retail 
prices for household consumers increasing by 14% 
compared  to  2023,  and  both  electricity  and  gas 
retail  prices 
consumers 
decreasing  by  16%.  The  energy  and  supply 
component  of  electricity  for  households  is  below 
the EU average, as it represents 30% of the price, 
compared to an EU average of 47.8%. Finnish non-
household  consumers  retail  electricity  prices  are 
the  lowest  in  the  EU  and  are  supported  by  low 
taxes  and  levies,  representing  only  0.9%  of  the 
total price, compared to the EU average of 15.4%. 
Gas  prices  are  subject  to  a  higher  taxation 
representing  25.8%  of  the  price,  while  the  EU 
average is of 11.6%. 

Thanks  to  a  large  share  of  renewables 
(55.3%)(163) and nuclear power (39.1%) in its 
electricity mix,  Finland  had  the  EU’s  second-
lowest  wholesale  electricity  prices,  averaging 
45.6  EUR/MWh  in  2024(164)  (EU  average  of  84.7 
EUR/MWh).  Along  with  the  broader  Nordic  region, 
Finland  experienced  price  spikes  in  the  winter 

(163) Wind energy and hydropower accounted for 24.4% and 

17.0% of Finland’s electricity mix in 2024. 

(164) Fraunhofer (ENTSO-E data) 

 
 
 
 
 
 
 
months  of  early  2024  which  occurred  amid 
significant demand increases due to a cold winter 
(+21.9% and +15.8% in Jan. and Feb. vs the same 
period  in  2023,  respectively).  Prices  picked  up 
again  in  the  second  half  of  the  year  amid  rising 
natural  gas  costs  and  still  limited  non-fossil 
flexibility. 
In  November,  prices  spiked  further 
across  the  broader  Central  Western  European 
(CWE)  region  due  to  the  Dunkelflaute  which 
in 
impacted 
negatively 
neighbouring markets.  

day-ahead 

prices 

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) Nordics and CWE respectively provide average prices in the 
Nordic (Denmark, Finland, and Sweden) and central-western 
European (Belgium, France, Germany, Luxembourg, the 
Netherlands, and Austria) markets. 
Source: S&P Platts and ENTSO-E 

Flexibility and electricity grids 

is  part  of  the  Nordic(165)  and 
Finland 
Baltic(166) capacity calculation regions (CCRs). 
Cross-border trade capacities in  these regions are 
consistently  high.  Member  States  should  ensure 
that a minimum of 70% of technical cross-border 
capacity is available for trading. The borders in the 
Nordic  region  are  highly  interdependent  and,  to 

(165) Norway, Sweden, Finland and Denmark are part of the 
Nordic CCR. A CCR is a group of countries which calculate cross-
border electricity trade flows together. 
(166) Finland, Sweden, Estonia, Latvia, Lithuania and Poland 
belong to the Baltic CCR. 

65 

to 

support  system  operation,  flow-based  market 
coupling was successfully implemented in October 
2024, thereby increasing the volume of capacities 
available for trade. To make it more effective, it is 
important 
regional 
operationalise 
coordination centre to ensure smooth coordination 
within the region and with neighbouring countries. 
A  new 
(Aurora  Line)  between 
northern  Finland  and  northern  Sweden,  which  is 
currently  under  construction,  further  enhance 
electricity  interconnectivity.  Finland  has  a  good 
level of electricity interconnection (15.23%) in line 
with the EU target of at least 15% by 2030. 

interconnector 

the 

to 

the 

ensure 

A  number  of  projects  are  planned  or  under 
construction 
efficient 
functioning  of  the  energy  market  through 
strengthened  interconnections.  These  include 
the  Projects  of  Common  Interest  in  electricity 
transmission:  the  two  electricity  interconnections 
between  Finland  and  Sweden  (Aurora  Line,  under 
construction,  and  Aurora  Line  2)  and  the  subsea 
cable  with  Estonia  (Estlink  3).  Finland  is  also 
planning  a  series  of  cross-border  hydrogen 
transport infrastructure projects that draw from its 
renewable  energy  potential.  Also,  the  Finnish 
Recovery  and  Resilience  Plan 
includes  major 
investments  in  the  infrastructure  required  for  the 
production  and  distribution  of  renewable  energy. 
The  objective  of  these  investments  is  to  enhance 
the 
attracting 
conditions 
investment in clean energy, with a focus on energy 
system  integration,  energy  storage  and  transport. 
The four projects planned will be completed by Q2 
2026,  as  evidenced  by  project  reports  submitted 
by  project  beneficiaries.  These  will  correspond  to 
an  increase  in  new  renewable  energy  capacity 
and/or  grid  connection  capacity  of  at 
least 
137 MW. 

framework 

for 

There  is  an  increasing  trend  in  Finland 
towards  negative  prices  in  the  country’s 
bidding  zone.  Finland  was  the  European  country 
with the highest number of negative price hours in 
2023  (467  instances),  and  with  93 GWh  of  RES 
(renewable energy sources) curtailment. 

Finland’s 

flexibility. 

Finland  is  taking  steps  to  further  develop 
non-fossil 
current 
operational  electricity  storage  capacity  is  around 
250 MW  (mostly  batteries).  The  final  updated 
NECP  notes  that  there  are  several  electricity 
storage projects under development (batteries and 
pumped  hydro),  but  there  are  no  specific  targets 
for  electricity  storage  capacity.  Demand  response 

 
 
 
in 

is  well  developed  in  Finland,  with  around  1 GW 
the  day-ahead  market.  This 
participating 
capacity  is expected  to increase  and  to  expand  in 
other  markets  (intraday  and  balancing  markets). 
Finland’s 
the 
participation of demand response and of electricity 
storage  in  the  electricity  markets  (day-ahead, 
intraday  and  balancing).  However,  independent 
aggregators cannot participate in these markets. 

framework  allows 

regulatory 

Consumer  empowerment  in  the  electricity 
market 
is  significant,  but  the  enabling 
framework  for  energy  communities  would 
needs  to  be  still  further  developed.  45%  of 
household consumers have a fixed-price electricity 
contract  in  Finland,  while  31%  have  a  dynamic 
price  contract  and  24%  have  an  open-ended 
contract.  Switching  rates  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%). 

Finland  demonstrated  some  progress  in  the 
enabling framework for energy communities. 
Since  two  government  decrees  on  local  energy 
communities were published in 2020 and 2021, as 
of January 2023, Finland has made it possible for 
electricity to be shared among the members of an 
energy  community  from  production  and  storage 
facilities  in  a  virtual  net-metering  scheme  within 
the  boundaries  of  a  property  or  group  of 
properties. 

In  2023,  electricity  accounted  for  28.4%  of 
Finland's  final  energy  consumption,  above 
the EU average of 22.9%, and this share has 
seen a slight increase in the last decade(167). 
When it comes to households, electricity  accounts 
for  34.3%  of  final  energy  consumption,  while  in 
industry  it  represents  30.6%  (see  also  Annex  7). 
For  the  transport  sector,  this  share  remains 
negligible 
in 
electrification  across  sectors  is  required  for  cost 
effectively  decarbonising 
the  economy  and 
bringing  the  benefits  of  affordable  renewable 
generation to consumers. 

at  3.0%. 

progress 

Further 

(167) CAGR (compound annual growth rate) of -0.3% between 
2013 and 2023 and minimum/maximum share of 28.2% and 
29.3%, respectively. 

66 

Renewables and long-term contracts 

2024, 

energy 

renewable 

In 
sources 
accounted  for  55%  of  the  electricity  mix  (vs 
EU  overall  RES  share  of  47%),  increasing  from 
51%  in  2023.  The  total  expected  additional 
installed  wind  capacity  in  2025  is  1 500 MW 
(mostly 
(onshore)  and 
onshore), according to the document Wind Pledges 
–  European  Wind  Power  Action  (19  December 
2023).  Renewable 
installed  capacity  rose  by 
13,3% in 2024 (compared to 2023), thanks to the 
significant  increase  in  onshore  wind  and  solar 
energy.  Finland’s  total  renewable  energy  capacity 
was 15 903 MW in 2024.  

in  2026  1 530 MW 

Graph A8.3: Finland's installed renewable capacity 
(left) and electricity generation mix (right) 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

Finland  has  made  significant  progress  in 
implementing  reforms  to  accelerate  the 
renewables.  Finland  has 
deployment  of 
introduced  legislation  which  has  created  a  single 
unified  application  process 
the 
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 

to 

in 
Finland  has  made  some  progress 
It  has 
reforming  the  permitting  process. 
introduced  many  measures 
the 
permitting  process  for  renewable  energy  projects, 
including 
procedures, 
digitalisation  of  processes,  and  improvements  in 
grid connection and integrated  planning. However, 
there  are  some  areas  –  such  as  deploying 
innovative projects, streamlining human resources 

improve 

shorter 

faster 

and 

 
 
 
and  enhancing  public  engagement  –  that  require 
infringement 
further  attention.  Moreover,  an 
procedure  has  been  launched  against  Finland  for 
failing  to  transpose  the  permitting  provisions  of 
the  revised  Renewable  Energy  Directive  (deadline: 
July  2024).  In  2023,  Finland  contracted  0.48 GW 
via power purchase agreements (PPAs), comprising 
11 deals, thus dropping one position in the ranking 
of EU Member States since last year(168).  

Energy efficiency 

(FEC), 

in  final 
Despite  energy  efficiency  gains 
energy 
structural 
consumption 
changes in the energy sector have resulted in 
higher  primary  energy  consumption  (PEC).  In 
2023,  PEC  grew  by  3.8%  to  31.33 Mtoe.  FEC 
decreased  by  2.9%  to  22.23 Mtoe.  Nevertheless, 
both  figures  are  below  pre-pandemic  energy 
consumption  levels.  Compared  to  2022,  a  fall  in 
FEC  was  observed  in  all  the  main  sectors  except 
transport. In industry it was 3.3%, in services 2.9% 
and in the residential sector 2.3%. In the transport 
sector,  consumption  scarcely  changed  because  of 
consumption  growth  of  17.4%  in  the  aviation 
sector. Under the recast Energy Efficiency Directive 
(Directive  (EU)  2023/1791),  Finland  should  try  to 
reach a PEC of 29.8 Mtoe and an FEC of 20.6 Mtoe 
by  2030.  As  the  largest  producer  of  district 
heating  in  the  Nordics,  Finland  has  notified  the 
Commission  of  its  comprehensive  heating  and 
cooling  assessment  identifying  potential  for  the 
application  of  high-efficiency  cogeneration  and 
efficient  district  heating  and  cooling  in  line  with 
Article  25(1)  of  the  Energy  Efficiency  Directive. 
While  final  energy consumption for space heating 
in residential buildings remained stable from 2018 
to  2022,  Finland  has  consistently  reduced  its 
greenhouse  gas  emissions  in  the  household  and 
service sectors (-28% from 2018 to 2023), with a 
6% decrease between 2022 and 2023. 

Financing of energy efficiency measures and 
energy renovations can be improved through 
guarantee  schemes  and  loans  for  energy 
efficiency  projects.  Finland  deploys  a  national 
financing  framework  mobilising  energy  efficiency 
investments, where most of the measures can be 
categorised as grants. These measures have been 

(168) European PPA Market Outlook 2024, Pexapark.   

operational for several years. In terms of outreach, 
tax  credits  have  been  temporarily  increased  for 
households  replacing  oil  heating  (for  the  period 
2022-2027)  and  have  attracted  thousands  of 
beneficiaries.  But  they  may  need  to  be  continued 
in  order  to  phase  out  oil-based  heating.  Further 
efforts  are  needed  in  order  to  ensure  continuous 
investment  in  energy  efficiency,  and  in  particular 
to  engage  more  private  financing.  Finland’s 
national  financing  framework  has  measures  to 
improve energy efficiency in the residential sector, 
business and public sectors. Further changes in the 
its 
national  financing  framework  will  ensure 
responsiveness  when  it  comes  to  achieving  long-
term policy goals regarding energy efficiency. 

More than 100 000 single-family homes still 
use oil as their primary source of heating. As 
part of its recovery and resilience plan, Finland has 
adopted  an  action  plan  for  phasing  out  fossil  oil 
heating that includes multiple measures. Subsidies 
are  made  available  for  households  seeking  to 
install  a  heat  pump  or  other  environmentally 
friendly  options.  The  residential  electricity-to-oil 
price  ratio  has  risen  by  110%  over  the  past  five 
years,  reducing  the  financial  appeal  of  heat 
pumps,  although  it  remains  below  a  ratio  of  3. 
Approximately  109 000  heat  pumps  were  sold  in 
2023,  representing  a  decrease  of  44%  compared 
to the previous year. 

Security of supply and diversification  

Finland’s  overall  energy  mix  in  2023  was 
highly  reliant  on  renewables  and  biofuels 
(40.3%) and nuclear (24.3%). Fossil fuels were 
limited (oil accounting for 23.6%, solid fossil fuels 
for 5.2% and natural gas only 3.8%). 

to  achieve 

Nuclear  energy  plays  a  role  in  Finland’s 
energy  sector  and  is  a  central  part  of  the 
government’s  plan 
carbon 
neutrality by 2035. In 2023, Finland fell slightly 
short  of  achieving  self-sufficiency,  as  the  1 600-
megawatt  Olkiluoto  3  nuclear  power  plant  began 
producing  electricity  for  the  grid  only  in  the  late 
winter.  Finland  is  fully  dependent  on  supply  of 
Russian nuclear fuel for its Loviisa NPP (VVER 440 
reactor  units)  of  several  hundred  fresh  fuel 
assemblies.  Despite  a  new  supplier  is  currently 
under  negotiation,  it  is  important  for  Finland  to 
develop  a  national  plan  to  fully  phase  out  its 

67 

 
 
dependency  on  Russian  nuclear  fuel,  as  foreseen 
by  the  REPowerEU  Roadmap  adopted  on  6  May 
2025. 

Fossil fuel subsidies 

In  2023,  environmentally  harmful  (169)  fossil 
fuel  subsidies  without  a  planned  phase-out 
before  2030  represented  0.33%  (170)  of 
Finland’s  GDP  (171),  below  the  EU  weighted 
average of 0.49%. Tax measures accounted for 
99%  of  this  volume,  while  income/price  support 
and  direct  grants  represented  0.9%  and  0.1%, 
respectively. Additionally,  Finland’s 2023 Effective 
Carbon Rate (172) averaged EUR 94.37 per tonne of 
CO₂,  above  the  EU  weighted  mean  of  EUR 
84.80(173). 

(169) Direct fossil fuel subsidies that incentivise maintaining or 
increasing in the availability of fossil fuels and/or use of 
fossil fuels. 

(170) Numerator is based on volumes cross-checked with the 

Finnish authorities. For all Member States, it includes public 
R&D expenditures for fossil fuels as reported by the IEA 
(Energy Technology RD&D Budgets) and excludes, for 
methodological consistency, excise tax exemption on 
kerosene consumed in intra-EU27 air traffic. 

(171) 2023 Gross Domestic Product at market prices, Eurostat. 

(172) The Effective Carbon Rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(173) OECD (2024), Pricing Greenhouse Gas Emissions 2024. 

68 

 
 
Table A8.1:  Key Energy Indicators 

Source: Eurostat, ENTSO-E, S&P Platts 

69 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0,1804          0,2189              0,2482              0,2830          0,2314              0,2649          0,2877          0,2879          Energy & supply [%]30,9%42,1%42,6%30,6%36,6%54,3%55,6%47,8%Network costs37,3%30,3%32,1%41,8%26,7%25,3%24,8%27,2%Taxes and levies including VAT31,8%27,6%25,3%27,6%36,7%20,3%19,6%25,0%VAT19,3%18,8%17,5%19,7%14,5%13,4%13,8%14,6%Household consumer - Gas retail pricen/an/an/an/a0,0684              0,0948          0,1121          0,1128          Energy & supplyn/an/an/an/a43,7%61,0%64,5%53,9%Network costsn/an/an/an/a22,5%17,3%17,1%18,3%Taxes and levies including VATn/an/an/an/a33,8%21,7%18,4%27,8%VATn/an/an/an/a15,5%11,6%10,2%13,6%Non-household consumer - Electricity retail price0,0710          0,1071              0,0898              0,0747          0,1242              0,1895          0,1971          0,1661          Energy & supply55,9%65,3%61,4%61,1%43,0%66,5%63,0%55,8%Network costs24,0%15,7%18,7%18,5%15,8%10,7%11,9%15,5%Taxes and levies excluding VAT1,0%0,7%0,7%0,9%30,4%9,9%11,2%15,4%Non-household consumer - Gas retail price0,0671          0,1313              0,0981              0,0818          0,0328              0,0722          0,0672          0,0517          Energy & supply48,8%66,2%54,6%47,5%66,2%77,3%77,3%68,7%Network costs10,1%3,7%8,7%12,2%7,7%3,8%5,3%7,1%Taxes and levies excluding VAT31,4%16,1%21,5%25,8%12,5%6,1%7,3%11,6%Wholesale electrity price (EUR/MWh)72,2153,556,645,2111,0233,299,184,7Dutch TTF (EUR/MWh)n/an/an/an/a46,9123,140,534,420172018201920202021202220232024Gross Electricity Production (GWh)67.523          70.263              68.650              69.267          72.122              72.186          81.540          -Combustible Fuels25.030       27.959           25.923           21.391       23.672          20.693       16.032       -Nuclear22.477       22.793           23.870           23.291       23.598          25.336       34.308       -Hydro14.772       13.301           12.421           15.883       15.792          13.491       15.200       -Wind4.795         5.839             6.025             8.256         8.507            12.022       15.043       -Solar48               90                  147                219             298                392             716             -Geothermal-              -                 -                 -              -                 -              -              -Other Sources401             281                264                227             255                252             241             Gross Electricity Production [%]Combustible Fuels37,1%39,8%37,8%30,9%32,8%28,7%19,7%-Nuclear33,3%32,4%34,8%33,6%32,7%35,1%42,1%-Hydro21,9%18,9%18,1%22,9%21,9%18,7%18,6%-Wind7,1%8,3%8,8%11,9%11,8%16,7%18,4%-Solar0,1%0,1%0,2%0,3%0,4%0,5%0,9%-Geothermal0,0%0,0%0,0%0,0%0,0%0,0%0,0%-Other Sources0,6%0,4%0,4%0,3%0,4%0,3%0,3%-Net Imports of Electricity (GWh)20.42519.93620.04215.10417.76812.5171.724-As a % of electricity available for final consumption 24,8%23,7%24,3%19,3%21,3%16,0%2,3%-Electricity Interconnection [%]28,8%28,2%29,1%29,0%24,2%24,0%20,1%15,5%Share of renewable energy consumption - by sector [%]Electricity35,0%36,5%38,0%39,6%39,6%48,0%52,4%-Heating and cooling54,6%54,9%56,9%57,6%52,1%58,3%61,3%-Transport18,7%14,8%14,8%14,3%20,3%18,8%20,6%-Overall40,9%41,2%42,8%43,9%42,8%47,7%50,8%-20202021202220232020202120222023Import Dependency [%] 43,0%37,9%40,9%29,6%57,5%55,5%62,5%58,3%of Solid fossil fuels 92,2%72,4%126,3%70,4%35,8%37,2%45,9%40,8%of Oil and petroleum products 102,4%95,5%101,7%86,9%96,8%91,7%97,8%94,5%of Natural Gas 100,3%99,6%103,1%103,6%83,6%83,6%97,6%90,0%Dependency from Russian Fossil Fuels [%]of Natural Gas 67,4%75,1%49,1%10,2%41,0%40,9%20,7%9,3%of Crude Oil84,0%83,0%17,6%0,0%25,7%25,2%18,4%3,0%of Hard Coal54,8%47,2%15,1%0,0%49,1%47,4%21,5%1,0%2017201820192020202120222023Gas Consumption (in bcm)2,4                 2,6                     2,6                     2,6                 2,6                    1,3                 1,5                 Gas Consumption year-on-year change [%]-4,7%10,5%-1,3%-0,4%0,5%-48,2%15,0%Gas Imports - by type (in bcm)2,3                 2,6                     2,6                     2,6                 2,6                    1,4                 1,8                 Gas imports - pipeline2,3                 2,6                     2,4                     2,4                 2,3                    1,1                 -                 Gas imports - LNG0,00,10,20,20,20,31,8Gas Imports - by main source supplier [%]United States0,0%0,0%0,0%0,0%0,0%0,0%54,2%Norway0,0%1,4%2,2%0,3%0,0%0,0%21,3%Russia100,0%97,6%97,0%67,4%75,1%49,1%10,2%FinlandEU 
 
   
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

is  a  frontrunner 

regional 
is  needed  to 

Finland 
in  terms  of 
institutional  coordination  and  climate  risk 
assessment  work  and  has  an  ambitious 
climate  adaptation  framework  in  place  at 
levels.  However, 
national  and 
additional  action 
increase  the 
country’s  preparedness  for  climate  risks  and  its 
water  resilience,  and  to  reduce  its  economy’s 
impact on nature. Finland is taking action to build 
resilience,  but  some  sectoral  policies,  particularly 
agriculture  are  lagging  behind.  Sustainable  water 
management also remains a major environmental 
issue, notably in terms of water governance, water 
body rehabilitation and water efficiency. The state 
of  nature  and  ecosystems  continues  to  degrade, 
creating  significant  risks  to  the  economy  and 
competitiveness.  Finland  has  begun  its  transition 
towards  more  sustainable  agriculture  practices, 
but  its  agri-food  system  still  has  significant 
climate and environmental impacts. More action is 
therefore  needed  to  encourage  the  uptake  of 
sustainable agriculture practices. 

Climate adaptation and preparedness 

Finland’s  main  challenge  is  the  rate  of 
temperature  rise.  It  is  around  twice  the  global 
increased  by  around  +2 °C 
average,  having 
compared  with 
the  mid-1800s.  Over  recent 
decades,  Finland  has  seen  an  increase  in  the 
number  and  intensity  of  heatwaves,  which  can 
also  lead  to  local  droughts.    Recent  years  have 
seen  significant  effects  on  ecosystems,  for 
instance  in  2021  when  around  12%  of  Finland’s 
area experienced drought (compared to around 3% 
in  the  entire  EU).  While  temperature-related 
changes have more noticeable effects, alterations 
in  precipitation  and  drought  are  less  apparent. 
Finland has observed 20 different climate hazards 
and  is  affected  by  uncertainties  as  to  their 
evolution  in  the  future.  Flooding,  coastal  flooding 
and drought are identified as the most significant 
climate-related hazards (174). 

Climate risks directly affect Finland’s society 
and  economy.  Finland  recorded  24  heat-related 
fatalities per 100 000 inhabitants  over the period 

2013-2022. Extreme weather- and climate-related 
in 
events  caused  a  total  of  EUR 2.4  billion 
economic  losses  over  the  period  1980-2023. 
These developments are likely to have a particular 
impact  on  vulnerable  groups  and  on  regions  in 
Finland  with  populations  of  lower  socioeconomic 
status,  where  unemployment  is  high,  due  to  their 
lesser  capacity  to  adapt,  while  climate  change 
aggravates  pre-existing  vulnerabilities.  Overall, 
climate-related  losses  in  Finland  are  low.  They 
account for 0.3% of all economic losses caused by 
extreme  weather  events  in  the  EU.  Just  3%  of 
economic  losses  were  insured  over  the  period 
1980-2023.  This  is  the  fifth  lowest  level  of 
economic losses per capita in the EU (175). 

its 

climate 
strengthened 
Finland  has 
adaptation  measures  at  both  national  and 
regional levels. In 2022, it adopted a climate act 
and  a  national  adaptation  plan 
to  2030 
(NAP 2030).  Finland’s  new  assessment  of  risks 
and  vulnerabilities  provides  a  solid  basis  for 
climate  adaptation  by  covering  all  major  climate 
risk  factors,  including  floods,  drought,  heatwaves 
and forest fires. Further measures are planned to 
improve  both  risk  assessments  and  monitoring 
frameworks.  Adaptation  is  mainstreamed  across 
policies  and  there  are  additional  resources  to 
support  regional  adaptation  measures.  There  are 
also a wide range of local and regional adaptation 
policies and actions, and Finnish municipalities and 
regions are active in the EU Mission on Adaptation 
to Climate Change. Some Finnish regions and local 
authorities  are  active  in  developing  local  climate 
action plans. In 2023, 45% of the population was 
covered  through  their  municipalities  which  were 
signatories  to  the  EU  Covenant  of  Mayors  for 
Climate and Energy. 

The  NAP  2030  is  Finland’s  main  tool  for 
institutional  coordination.  It  emphasises  well-
being, prosperity, safety and security in a changing 
climate.  This  covers  actions  under  10  main 
themes,  such  as  the  use  and  management  of 
renewable 
nature-based 
solutions and drought risk management. Moreover, 
it  includes  specific  actions,  responsible  actors, 
timelines and monitoring measures, preventing the 
need  for  a  separate  programme  of  actions.  The 
measures  set  out  in  the  plan  are  binding  for 
central government authorities, and the Ministry of 

resources, 

natural 

(174) European Commission, 2023, Assessment of progress on 
climate adaptation in the individual Member States 
according to the European Climate Law, p. 95. 

(175) EEA, 2024, Economic losses from weather- and climate-

related extremes in Europe, Link. 

70 

 
 
 
 
 
 
Agriculture  and  Forestry 
its  overall 
implementation.  Each  ministry  is  responsible  for 
implementing  and  monitoring  the  plan  within  its 
own administrative area of responsibility. 

leads 

Several  national  policy  measures  related  to 
adaptation  and  preparedness  have  been 
implemented  over  recent  years.  One  out  of 
three regions in Finland are identified climate-risk 
hotspots most affected by climate change, i.e. low-
lying  coastal  regions.  Finland  is  taking  a  multi-
tiered approach to climate adaptation, involving a 
broad  range  of  policymakers  and  stakeholders, 
and  harnessing  scientific  and 
technological 
advances.  

Finland  makes  use  of  several  EU  funds  to 
improve  its  preparedness.  These  include  the 
European  Regional  Development  Fund;  the  Social 
Climate  Fund;  the  Just  Transition  Fund,  limited  to 
relevant  regions;  and  the  Recovery  and  Resilience 
Facility.  Finland’s  Recovery  and  Resilience  plan 
includes  adaptation  measures  such  as  gypsum 
treatment  of  fields  and  nutrient  recycling,  as  well 
as  developing  new  methods,  technologies  and 
knowledge to improve the selection of appropriate 
tree species for various locations and to augment 
the mix of trees (precision forestry). 

Water resilience 

status.  Diffused 

Water  quality  is  good  in  Finland  overall, 
though  some 
issues  remain  as  regards 
surface  and  groundwater  bodies.  Finland’s 
third  river  basin  management  plan  (2022-2027) 
under  the  Water  Framework  Directive  shows  that 
74.6%  of  surface  water  bodies  have  good  or 
higher  ecological  status/potential,  but  100%  of 
surface  water  bodies  are  failing  to  achieve  good 
chemical 
from 
agriculture  and  forestry  have  remained  at  high 
levels  and  are  the  main  pressure  in  terms  of  the 
quality  of  water  bodies.  Failure  to  achieve  good 
status  is  largely  due  to  mercury  (50%  of  water 
bodies,  mainly  through  atmospheric  deposition 
from 
to  PBDEs 
(polybrominated  diphenyl  ethers).  All  groundwater 
bodies,  except  two,  have  a  good  quantitative 
status.  Water  quantity  is  not  a  problem  for 
recharging  groundwater  bodies.  93.4%  of 
groundwater bodies are in good chemical status. 

transport)  and 

pollution 

range 

long 

Finland’s  wastewater  treatment  is  mostly 
compliant,  with  some  exceptions.  Overall,  the 
compliance  rate  was  97%  in  Finland  in  2020. 
Seven  agglomerations  did  not  meet 
the 
requirements  of  the  EU's  Urban  Wastewater 
take 
Treatment  Directive.  Finland  needs 
additional measures and implement the necessary 
projects  to  fully  comply  with  the  EU  water 
the 
legislation.  As  shown 
investment  needs  for  water  protection  and  water 
management are substantial, with a financing gap 
of EUR 198 million per year by 2027. 

in  Graph  A9.2, 

to 

As  regards  quantitative  management  of  the 
resource, the water exploitation index plus (WEI+) 
remained  stable  at  0.6  in  2022,  showing  no 
indication  of  over-exploitation  of  water  resources. 
Yet,  Finland’s  water  productivity  is  considerably 
higher than that of other Member States, standing 
at  EUR  100  per  m3  of  abstracted  water  in  2022 
and  showing  an  increasing  trend  over  a  five-year 
period  (155).  The  main  consumer  of  water  is  the 
manufacturing sector (77% of the total in 2022). 

Although  the  resource  is  currently  not  over-
exploited,  water  resilience  considerations 
must  also  take  into  account  climate  change 
impacts  (e.g.,  droughts,  floods)  as  well  as  other 
risks,  such  as  cybersecurity.  On  cybersecurity, 
although some progress is being made, the water 
supply sector fails to reach a level of maturity as 
good as most other sectors, despite its crucial role 
in  societal  functionality.  On  climate  change,  a 
National  Climate  Change  Adaptation  Plan  is  in 
place;  besides,  Finland  produced  industry  specific 
guides  for  aquaculture,  agriculture  and  fur 
production, forestry, water supply, peat production, 
and water infrastructure, to help sectors maintain 
their  operations  under  climate  change  conditions 
and  help  planning  the  management  of  water 
resources. In practice, based on a survey of water 
utilities  and  a  desk  study  from  2019,  water 
utilities  are  making  efforts  to  adapt  but  further 
work needs to be done. Water supply in Finland is 
strictly  regulated  and  water  supply  utilities  are 
required to have comprehensive risk management 
and prepare for exceptional situations. 

71 

 
 
Biodiversity and ecosystems 

Graph A9.1: Direct dependency(1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 in the European Union 

in 

Finland. 

degraded 

The  state  of  nature  and  ecosystems  has 
Forest 
slightly 
management is the most frequently reported 
pressure.  This  trend  could  reduce  the 
country’s  climate  resilience.  According  to  the 
latest  available  data,  only  31.9%  of  the  country’s 
habitats have a good status, though this is higher 
than  the  EU  average  of  14.7%.  In  terms  of  the 
conservation status of species, 45.3% are reported 
as  having  a  good  status,  which  is  again  higher 
than the EU average of 27%. Data show a slightly 
deteriorating  trend  compared  to  the  previous 
reporting period. On the other hand, only 11.8% of 
the  forest  habitats  of  community  interest  in 
Finland  show  a  favourable  conservation  status. 
The loss of biodiversity impairs ecosystems’ ability 
to  provide  services  that  help  mitigate  the  effects 
of climate change, such as regulating water cycles, 
maintaining  soil  health  and  sequestering  carbon. 
To preserve Finland's climate resilience, it is crucial 
that  the  status  of  habitats  and  species  be 
maintained  and  that  forestry  practices  take  that 
need fully into account. 

Nature  degradation  creates  significant  risks 
to Finland's economy and competitiveness, as 
it  is  one  of  the  Member  States  with  a 
particularly  high  dependency  on  ecosystem 
services.  The  economy’s  direct  dependency  on 
ecosystem  services  is  classified  as  high  for  50% 
of gross value added and is therefore much higher 
than  the  EU-27  average  of  44%  (see  detailed 
information  at  EU  level  in  Graph  A9.1).  Finland’s 
supply chain dependency on ecosystem services is 
25% of gross value added, which is above the EU-
27  average  of  22%.  This  means  that  failure  to 
maintain  the  capacity  of  ecosystems  to  deliver 
services could entail significant costs or even stop 
production 
these  sectors.  Protecting  and 
restoring  key  ecosystems  would  ensure  that  the 
long-term  competitiveness  of  these  economic 
sectors is preserved. 

in 

72 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature, Link. 

action 

and  much 

higher 
Targeted 
investments 
in  nature  protection  and 
restoration  are  needed  to  meet  Finland’s 
nature  restoration  targets.  In  2022,  13%  of 
Finland's  territory  was  covered  by  protected  land 
area  (below  the  EU  average  of  26%)  and  this 
percentage has remained stable over the last few 
years.  Finland  is  therefore  far  from  achieving  its 
political  commitment  of  30%  protection  of  land 
and  sea  by  2030  and  the  country  should  foster 
nature  protection  and  restoration  through  the 
implementation  of 
forthcoming  National 
Biodiversity  Strategy  and  an  action  plan  to  2030. 
Finland needs to ensure that species and habitats 
of  community  interest  are  maintained  at,  or 
restored to, favourable conservation status across 
their  natural  range.  Finland  has  nature  protection 
and  restoration  programmes,  such  as  the  METSO 
forest  biodiversity 
programme 

financing 

for 

its 

0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow 
     
measures (176) and the HELMI programme focusing 
mainly  on  mires,  wetlands,  coastal  habitats  and 
semi-natural  grasslands  (177).  Furthermore,  the 
SOTKA project is designed to improve the status of 
waterfowl (178).  Given  the  increasing  numbers  of 
negative  trends  in  the  conservation  status  of 
habitats  and  species,  it  is  important  that  Finland 
pursue similarly ambitious actions over the coming 
years,  as  Finland  is  estimated  to  need  to  restore 
up to 86 953 km2 of habitats listed in Annex  I to 
the  Habitats  Directive,  corresponding  to  up  to 
25.7% of its territory (179).  Finland requires EUR 5 
billion  of  investment  per  year  to  effectively 
conserve  and  restore  its  natural  capital,  mitigate 
the  impacts  of  climate  change,  and  preserve  the 
(see  Graph  A9.2). 
country’s  rich  biodiversity 
level  of  financing  for 
However,  the  current 
biodiversity and ecosystem conservation in Finland 
is  only  EUR 384  million  per  year.  This  shortfall 
puts  at  risk  the  country’s  commitment  to  global 
biodiversity  agreements  and  undermines  its  long-
term economic and social development. 

(176) METSO – The Forest Biodiversity Programme for Southern 

Finland, Link. 

(177) Ministry of the Environment, 2021, Helmi-ohjelma vahvistaa 

luonnon moni muotoisuutta, Link. 

(178) Finnish Wildlife Agency’s Sotka Wetlands, 2023, Link. 

(179) European Commission, 2022, Impact assessment 

accompanying the proposal for a Regulation on nature 
restoration. 

73 

Graph A9.2: Investment needs and gaps in EUR 
million, in 2022 constant prices 

Source: European Commission, DG Environment, 
Environmental investment needs & gaps assessment 
programme, 2025 update. 

Sustainable agriculture and land use 

Finland’s  carbon  removals  fall  short  of  the 
level  of  ambition  needed  to  meet  its  2030 
target  for  land  use,  land  use  change  and 
forestry  (LULUCF).  Finland’s  net  removals  have 
decreased since 2015, resulting in worryingly large 
net emissions in 2021 and 2022. To meet its 2030 
LULUCF target, additional carbon removals of -2.9 
million  tonnes  of  CO2  equivalent  (CO2eq)  are 
needed (180). The latest available projections show 
a gap to target of 1.2 million tonnes of CO2eq for 
2030  (181).  Additional  measures  are  therefore 
needed to achieve the 2030 target. 

Finland’s agriculture is still a major source of 
greenhouse gas emissions, in particular from 
peatlands  in  agricultural  areas.  In  2022, 
agriculture  was  responsible  for  a  total  of  6.1 
million  tonnes  of  CO2eq,  accounting  for  around 
15%  of  Finland’s  total  emissions.  Emissions  from 
cultivated peatland account for more than half of 
the agricultural sector's total emissions. Peatlands 

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

Regulation (EU) 2023/839. 

(181) EU Climate Action Progress Report 2024 (COM/2024/498). 

 - 1.000 2.000 3.000 4.000 5.000 6.000BiodiversityWaterBaselineGap 
 
     
 
therefore offer the greatest potential for reducing 
the 
greenhouse  gas  emissions.  To  mitigate 
environmental  impact  of  agriculture,  Finland  has 
implemented  measures  under 
the  common 
agriculture  policy  (CAP)  strategic  plan.  Under  its 
CAP  plan,  Finland  aims  to  promote  the  protection 
of  peatlands  in  agricultural  areas  –  a  ban  on 
digging  new  ditches,  a  ban  on  extraction  and 
burning  of  peat,  a  ban  on  ploughing  in  newly 
land  and  on  permanent 
cleared  agricultural 
grasslands,  and  an  obligation  to  have  newly 
cleared  areas  under  grass.  Finland’s  CAP  plan 
plays a crucial role in supporting the national goal 
of  carbon  neutrality  by  2035  and  reducing 
greenhouse  gas  emissions  from  agriculture  by 
29% of the 2019 level by 2035. 

Finland is transitioning to a sustainable food 
system.  Finland  has  agricultural 
land  with 
landscape features such as forests, non-productive 
grasslands  and  wetlands,  offering  numerous 
environmental  and  biodiversity  benefits,  including 
carbon  sequestration  and  habitat  creation  for 
wildlife.  Finland's  proportion  of  agricultural  land 
with  those  characteristics  was  7.6%  in  2022, 
above  the  EU  average  of  5.6%.  The  area  under 
organic farming in Finland has increased, from 9% 
of utilised agricultural area (UAA) in 2014 to 15% 
in  2022.  This  is  above  the  EU  average  of  9%  in 
2020. Finland aims to achieve 20% of UAA under 
organic farming by the end of the funding period. 
The  CAP  plan  promotes  an  increase  in  organic 
livestock  production,  and  the 
production  and 
widespread  cultivation  of  organically  produced 
vegetables  in  the  open  field.  The  measure  under 
the CAP plan promotes organic farming in line with 
the National Organic Programme, which aims for a 
25% organically farmed area by 2030. 

74 

 
Table A9.1:  Key indicators tracking progress on climate adaptation, resilience and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action. The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes the figure for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) 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. 
Source: Eurostat, EEA. 

75 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems8.516.732.8711.951.342.096.772.76[area impacted by drought as % of total]Forest-fire burnt area (1)191          191          191          191          191          191          [ha, annual average 2006-2023]Economic losses from extreme events-           -           97            49            -           -           24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.00         1.00         [composite score between 0 and 4]Heat-related mortality (3)24            24            24            24            24            [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action42            44            46            46            45            45            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)0.80.80.60.60.6-4.54.6[total water consumption as % of renewable freshwater resources]Water consumption860          887          849          802          718          -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies---25%---59%Groundwater bodies---0%---93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)31.9-----14.7-[% of habitats having a good conservation status]Common farmland bird index76.876.784.488.779.8-72.274.42000=100Protected areas---1313--26[% of protected land areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)14 748     14 269     13 733     15 506     634 378     716 124     [EUR million]Landscape features----8              -[% of agricultural land covered with landscape features]Food waste--116125109-[kg per capita]Area under organic farming13.113.513.914.515.07.99-[% of total UAA]Nitrogen balance58.043.7-35.2-8.7--[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)0.40.20.20.2--[mgNO3/l]Net greenhouse gas removals from LULUCF (9)2 324       3 233-       5 354-       3 474       4 443       -           256 077-     240 984-     [Kt CO2-eq]FinlandEU-27FinlandEU-27FinlandEU-27FinlandEU-27 
 
  
 
FAIRNESS 
ANNEX 10: LABOUR MARKET 

Finland’s labour market continued to weaken 
in  2024,  although  the  employment  rate 
remains  high  overall.  Unemployment  is  rising 
and  the  country  faces  structural  challenges  such 
as  labour  and  skills  shortages  in  specific  sectors, 
regional  inequalities  and  demographic  challenges, 
its  economic  growth  potential  and 
limiting 
competitiveness.  As  Finland  continues  to  work 
towards  its  2030  employment  target,  it  would 
benefit  from  better  harnessing  the  potential  of 
underrepresented  groups  in  the  labour  market 
such  as  the  long-term  unemployed,  people  with 
partial  work  ability,  migrant  women  and  older 
people.  Measures  to  tackle  labour  and  skills 
shortages  could  include  improving  the  quality  of 
working  life  and  ensuring  decent  wages  and 
collective  bargaining.  Ongoing  efforts  to  simplify 
the 
including 
unemployment benefits, should eliminate incentive 
traps while maintaining adequate social protection. 
There are positive signs that efforts to encourage 
international recruitment and attract foreign talent 
are  bearing  fruit,  in  terms  of  mitigating  labour 
shortages, particularly in the social and healthcare 
sectors. 

security 

system, 

social 

private 

consumption. 

In  2024,  the  employment  rate  in  Finland 
declined and unemployment increased, as the 
effects of the prolonged economic slowdown 
took  hold  in  the  labour  market.  The  Finnish 
economy  fell  into  a  recession  in  2023  and 
in  2024(182).  The  weak 
contracted  slightly 
performance  of  the  economy  has  been  driven  by 
the struggling export and construction sectors and 
stagnating 
Rising 
unemployment  combined  with  cuts  to  social 
benefits have put further pressure on low-income 
the  socioeconomic 
households,  compounding 
challenge.  Finland’s  employment  rate  fell  1.2 
percentage  points  (pps)  to  77.0%  in  2024,  away 
from  the  national  2030  target  of  80%,  while  the 
EU  average  increased  by  0.5  percentage  points 
(pps)  to  75.8%  (see  Social  Scoreboard  in  Annex 
13). The unemployment rate increased by  1.2 pps 
to  8.4% 
the  EU  average 
unemployment rate reached a historic low of 5.9% 
(graph A10.1).  

in  2024,  while 

(182) Economic forecast for Finland - European Commission (15 

November 2024 

76 

Graph A10.1: Employment and unemployment, FI 
and EU 

Employment (left axis): % of population 20-64 
Unemployment (right axis): % of labour force 15-74 
Source: Eurostat: tesem120; tesem010 

Regional 
labour  market  disparities  are 
significant,  with  the  sparsely  populated  and 
rural  border  regions  in  the  most  challenging 
situation.  The  unemployment  rate  is  highest  in 
North Karelia (15.1%), south-east Finland (13.8%) 
and  central  Finland  (13.7%),  and  lowest  in  Åland 
(5.1%) and western Finland (183). Between October 
2023  and  2024,  the  number  of  unemployed 
people  increased  in  all  Finnish  regions  except 
Lapland, while the number of vacancies declined in 
all  regions.  To  address  these  challenges,  funding 
(TSI) 
from  the  Technical  Support 
supports  the  preparation  of  a  transition  strategy 
for  the  border  regions  and  areas  in  eastern  and 
south-eastern Finland (184). 

Instrument 

As  the  working-age  population  in  Finland 
continues to decline, achieving a high level of 
employment becomes ever more important to 
support  the  welfare  state.  Demographic 
changes make it essential to harness the skills and 
potential  of  both  younger  and  older  people, 
inactive  persons  with  disabilities,  focusing  on  i) 

(183) Ministry of Economic Affairs and Employment: Employment 

Bulletin – March 2025  

(184) Ministry of Economic Affairs and Employment: Joint project 
seeks new solutions for strengthening vitality of eastern 
Finland  

02468101214455055606570758085201320142015201620172018201920202021202220232024FI employmentEU27 employmentFI unemploymentEU27 unemployment 
 
 
 
   
 
 
 
the 

setting  specific  targets,  ii)  education,  iii)  reskilling 
and  iv)  flexible  employment  options  to  boost 
economic  resilience  and  foster  intergenerational 
solidarity  (185).  Several  measures  in  the  Finnish 
government  programme, 
recovery  and 
resilience plan (RRP) and the medium-term fiscal-
structural  plan  therefore  focus  on  strengthening 
work  incentives  and  combating  labour  and  skills 
shortages.  Structural  reforms  such  as  the  Nordic 
(186), 
of 
model 
unemployment  benefit 
social 
protection  reforms  to  eliminate  incentive  traps 
contribute  to  the  government’s  aim  of  increasing 
employment by 100 000 people by 2027.  

services 
reforms  and 

employment 

income 

The  employment  and  social  protection 
reforms  already  implemented  could  account 
for  an  additional  89 250  persons  entering 
work,  according  to  internal  calculations  (187). 
While the reforms have strengthened incentives to 
take  up  full-time  employment  by  reducing  the 
disposable 
in  cases  where  part-time 
employment  is  supplemented  by  unemployment 
benefits,  this  has  also  increased  the  vulnerability 
of  low-income  households  who  are  unable  to 
increase their labour-market participation (188). For 
people  requiring  complex  or  dynamic  forms  of 
income  support,  considerable 
traps 
remain  in  the  way  of  labour  market  participation, 
since  accepting  part-time  or  casual  employment 
during a transition to full-time employment is not 
rewarded  with  higher  disposable  incomes  (189). 
Additional  measures  are  required  to  eliminate 
incentive 
part-time 
employment,  while maintaining  an  adequate  level 
of minimum income protection at all stages of life. 

discouraging 

incentive 

traps 

(185) EPSCO Council 2-3 December 2024: Comprehensive 

solutions to demographic challenges: Supporting parents and 
unlocking the untapped potential of young and older 
generations 

(186) The  Nordic  model  of  employment  services,  an  RRP  reform 
implemented 
finding 
employment  through  job  search  obligations  and  personal 
interviews with public employment services. 
(187) Ministry of Finance 2024: Hallitusohjelman 

in  2022,  added 

incentives 

for 

rakennepoliittisten toimien työllisyystavoitteiden seuranta 

(188) Ministry of Social Affairs and Health 2024: Vuosien 2024 ja 

2025 sosiaaliturvamuutosten yhteisvaikutukset 
kotitalouksien taloudelliseen asemaan 

Finland has implemented tax relief measures 
to  encourage  labour  market  participation, 
with  a  specific  focus  on  low-  and  middle-
income  households  (190).  Besides  the  indexation 
of  tax  brackets  for  personal  income  tax,  the 
income  credits  for  earned  and  employment 
incomes  have  been  increased  in  both  2024  and 
2025.  From  the  beginning  of  2025,  the  earned 
income tax credit may be increased by EUR 50 for 
each  child  in  the  household  under  18  (amount 
doubled  for  single  parents).  The  earned-income 
allowance  (for  both  state  and  municipal  taxes) 
was  abolished  in  the  beginning  of  2025,  and  the 
earned income tax credit was amended to account 
for this change. The pension income deduction was 
tightened  for  middle-income  pensioners.  Further 
tax  burden  were 
measures 
announced  in  the  government’s  mid-term  policy 
review session of April 2025.  

reduce 

the 

to 

careers  and 

The  Ministry  of  Economic  Affairs  and 
Employment  also  focuses  on  encouraging 
late-life 
combating  age 
discrimination  in  the  labour  market  (191). 
Specific  recommendations  to  better  harness  the 
untapped  potential  of  older  workers  (those  over 
55) 
time 
arrangements, ii) better utilisation of data in public 
employment services, iii) strengthening the role of 
experienced workers as mentors in the workplace, 
and  iv)  simplifying  the  regulatory  burden  to 
between 
information-sharing 
facilitate 
government institutions. 

i)  more  flexible  working 

include 

Real  wages  are  set  to  recover  slightly  in 
2025, following a significant decline between 
2022  and  2024.  Nominal  wage  growth 
is 
expected  to  reach  2.7%  in  2025,  after  0.5%  in 
2024 and 3.4% in 2023 (192). This is relatively low 
compared to other Member States. Real wages fell 
(193), 
sharply  during 
remaining 5.9% below their levels in 2019 (194). In 
2025, real wages are set to increase only slightly, 

the  period  2022-2024 

(190) Finnish Government 2025: Decisions in mid-term policy 

review session 

(191) Ministry of Economic Affairs and Employment 2024:  

Ehdotuksia +55-vuotiaiden työllistämisen edistämiseksi 

(192)Based on the European Commission Autumn 2024 economic 

forecast. 

(189) Prime Minister’s Office 2024: The effectiveness of social 
security in the diverse and changing life situations of 
adolescents 

(193) 4.4% in 2022, -0.8% in 2023 and -0.8% in 2024. 

(194) OECD 2024: OECD Employment Outlook 

77 

 
 
 
is  forecast  to  reach  1.8% 

by 0.7%, below the EU  average of 1.1% (195). The 
increase  in  unit  labour  costs  (ULCs)  has  been 
significantly less than in most member states. ULC 
growth 
in  2025, 
following  a  0.1%  fall  in  2024.  Since  2023,  the 
(196)  has  been 
cumulative  growth 
substantially below the EU  average. Wage growth 
over  the  last  decade  has  been  below  what  could 
be 
in 
expected  based  on  developments 
macroeconomic drivers, including productivity (197). 
This suggests that there is scope for further wage 
increases without jeopardising competitiveness. 

in  ULCs 

Disputes  over  legislative  changes  to  wage-
setting and collective bargaining have led to 
strikes  and  other 
industrial  action.  On 
1 January  2025,  a  reform  promoting  local-level 
bargaining,  to  improve  the  flexibility  of  labour 
markets, took effect. This allows firms that are not 
part of a registered employers’ union to negotiate 
local  derogations  from  sector-level  collective 
agreements 
consultation  with  workers’ 
representatives.  The  reform  is  not  expected  to 
significantly impact collective-bargaining coverage, 
which at 89% is among the highest in the EU (198). 
Still,  the  effects  of  decentralised  bargaining 
require  ongoing  evaluation  to  prevent  gaps  in 
coverage,  especially  in  sectors  with  low  levels  of 
unionisation such as services and platform work.  

in 

Ongoing  reforms  to  the  wage-setting  model, 
which  could  restrict  the  autonomy  of  social 
partners, may make it more difficult to close 
the  gender  pay  gap.  Amendments  to  the 
National  Conciliator  Act  that  took  effect  on  1 
January  2025  are  aimed  at  preserving  the 
competitive  advantage  of 
the  export-driven 
economy 
through  a  harmonisation  of  wage 
increases with those in the public sector. However, 
since  export-sector  occupations  have  higher 
average  wages  and  a  high  proportion  of  men, 
while  many  public  sector  occupations  have  lower 
average  wages  and  a  high  proportion  of  women, 
remains 
the 
considerable.  The  effects  of  this  reform  on  equal 

structural 

gender 

gap 

pay 

(195) DG EMPL, own calculations based on the 2024 Autumn 
economic forecast. HICP deflator is used for real gross 
wages. 

pay  between  women  and  men,  and  on  work  of 
equal value, is to be closely monitored.  

tend 

between 

occupations 

The  labour  market  is  strongly segregated  by 
gender,  posing  challenges  for  equal  pay.  At 
16.8%,  the  gender  pay  gap  in  Finland  remains 
worse  than  the  EU  average  of  12%.  Wage 
inequalities 
to 
exacerbate  wage  inequalities  between  men  and 
women,  due  to  the  strong  gender  segregation  of 
qualifications  and  occupations  (199).  In  2022  only 
8.9%  of  employees  worked  in  an  occupation 
imbalances  (200).  The 
without  notable  gender 
relatively  high  gender  pay  gap  presents  a 
challenge for inclusion, especially for women from 
migrant  backgrounds.  Women 
from  non-EU 
countries  have  a  particularly  high  over-
qualification  rate,  at  33.0%  compared  to  17.8% 
for nationals of other EU countries and 17.4% for 
Finnish 
recognition 
Easing 
requirements  for  foreign  qualifications  should 
encourage  integration  through  work,  while  also 
addressing  the  gender  pay  gap.  Schools  could 
encourage  both  young  girls  and  boys  to  pursue 
career  paths  based  on  interests  and  skills,  rather 
than gender (201).   

nationals. 

the 

It  has  been  noted  that  the  social  protection 
reforms taking effect in 2024 and 2025 tend 
to  affect  vulnerable  groups  such  as  single-
parent  households  (202).  Accordingly,  the  risk  of 
inequalities  in  labour  market  participation  should 
be  assessed  and  mitigated.  Effective  national 
transposition of the pay transparency directive (203) 
in  conjunction  with  the  social  partners,  could  be 
beneficial  for  exposing  gender  pay  gaps  within 
organisations  and 
collective 
bargaining  to  reduce  the  structural  pay  gaps  in 
female-dominated sectors. 

for  promoting 

(199) In 2020, 52.7% of Finnish men employed in the private 

sector had a degree in technology and ICT, in contrast to only 
11.7% of women. Private-sector services, health and social 
care account for a total of 30.5% of women’s qualifications 
but only 9.7% of men’s. 

(200) Ministry of Social Affairs and Health 2024: Changes in 

working life, the position of the genders in the labour market 
and equal pay 

(201) European Commission 2020: A Union of Equality: Gender 

Equality Strategy 2020-2025 

(196) 5.3% in both 2022 and 2023. 

(202) Ministry of Social Affairs and Health 2024: Vuosien 2024 ja 

(197) Wage benchmarks are predicted by developments in 
inflation, productivity, the trade balance and the 
unemployment rate. 

(198) OECD Data Explorer - Collective bargaining coverage 

2025 sosiaaliturvamuutosten yhteisvaikutukset 
kotitalouksien taloudelliseen asemaan 

(203) Directive (EU) 2023/970 of the European Parliament and of 

the Council of 10 May 2023. 

78 

 
 
 
Finland faces persistent labour shortages for 
health,  social  and  childcare  workers  and 
special  education  teachers.  There 
is  high 
demand for ICT workers, personal service workers, 
metal  and  machinery  workers  and  special-
education  teachers  (204).  Shortages  of  qualified 
nurses  and  care  workers  have  led  the  wellbeing 
services  counties  (205)  to  purchase  care  provision 
as  outsourced  services,  with  spending  doubling 
from  EUR 281 million  in  2021  to  EUR 604 million 
in 2023 (4.6% of total staff expenses). This steep 
increase  in  outsourcing  presents  a  concern  for 
both financial sustainability and the continuity and 
stability of care services (206). Measures to improve 
the  attractiveness  of  the  healthcare  sector  are 
beneficial, 
of 
administrative  duties  and  the  use  of  digital  and 
technological  innovations  to  reduce  the  workload 
and improve safety at work (207). 

reduction 

including 

the 

booking, 

advisory 

services, 

includes  measures  to 
The  Finnish  RRP 
improve access to health and social services 
while  enhancing  cost-effectiveness  through 
service-oriented  digital  innovations  such  as 
client 
e-
transactions  and  remote  services.  In  addition, 
the  Ministry  of  Social  Affairs  and  Health 
coordinates  a  number  of  programmes  to  improve 
the quality of working life and wellbeing at work to 
tackle  shortages  across  the  labour  market  (208). 
These include a mental health at work programme 
and  a  work  ability  programme,  which  supports 
people  with  partial  work  ability,  ageing  workers, 
people  outside  of  employment  and  other  worker 
groups  at  risk  of  claiming  disability  pensions (209). 
Additional  measures  could  be  taken  to  ensure 
effective  and  adequate  activation  support  to  get 
key 
long-term 
unemployed into work.  

target  groups  such  as 

the 

(204) Ministry of Economic Affairs and Employment 2024: 

Työvoimabarometri 

(205) Wellbeing services counties - Ministry of Social Affairs and 

Health. See also Annex 11 

(206) Ministry of Social Affairs and Health 2024: Vuokratyövoiman 

käyttöä on hillittävä hyvinvointialueiden toiminnan ja 
talouden turvaamiseksi 

(207) Ministry of Social Affairs and Health 2024: Hyvän työn 

ohjelma 2024-2027 

(208) Ministry of Finance: memorandum 27 June 2024 on 

programmes to improve working life 

the 

was 

than 

services 

services 

employment 

The  responsibility  for  organising  public 
recently 
employment 
transferred  to  the  municipalities  (210).  Since 
1 January 2025, public employment services have 
been  provided  by  municipalities  or  municipal  co-
management  areas 
the  state’s 
rather 
employment and economic development offices. In 
total,  45 
employment  areas  have  been 
established,  including  41  areas  based  on  the 
principle  of  municipal  co-management  and  four 
municipalities (Lahti, Kouvola, Helsinki and Vantaa) 
organising 
by 
themselves. The initial outcomes since the transfer 
are  positive,  as  the  vast  majority  of  customers 
have been allocated a case handler and payments 
of unemployment benefits have not been affected. 
More  than  4 400  administrative  staff  members 
have been transferred as part of the reform, with 
a  follow-up  monitoring  exercise  planned  by  the 
end of the government term in 2027. The transfer 
of  public  employment  services  to  municipalities 
will  also  affect  the  delivery  of  active  labour 
market  services,  where  key  lessons  were  learned 
from  the  pilot  studies  conducted  in  the  period 
2021-2024. Further efforts could be considered to 
to  employment, 
strengthen  active 
support 
particularly  for 
in  need  of 
jobseekers  most 
personalised support.  

The  ESF+  in  Finland  promotes  employment 
and  supports  the  development  of  skills  that 
meet  the  needs  of  the  labour  market.  An 
investment  of  EUR  182 million  has  been made to 
boost  employment  by  developing  employment 
support  services,  increasing  the  employability  of 
jobseekers  through  reskilling  and  upskilling,  and 
promoting  regional  and  inter-occupational  labour 
mobility. 
investments 
(EUR 156 million)  are  targeted  at  the  long-term 
unemployed and the most vulnerable to help them 
enter  work. 
remains 
underdeveloped, with ICT specialists accounting for 
7.6%  of  total  employment  in  2023,  albeit  above 
the  4.8%  on  average  in  the  EU.  Women  are 
underrepresented, at 22.2% of ICT specialists (EU: 
19.4%).  

Additional 

sector 

ESF+ 

The 

ICT 

could 

the 
further 
Finland 
employment  opportunities  of  the  green 
transition.  The  green  transition  is  expected  to 

harness 

(209) Ministry of Social Affairs and Health 2024: 

Työelämäohjelmat 2024-2027 

(210) Employment areas - Ministry of Economic Affairs and 

Employment 

79 

 
 
 
transform  labour  markets  in  the  long  term  (211). 
Finland  is  preparing  its  education  system  in 
anticipation  of  upcoming  labour  needs  for  green 
skills,  such  as  energy  efficiency,  energy  supply, 
construction  and  transport  (see  annex  12). During 
the  ongoing  transition,  the  Just  Transition  Fund 
supports people who have lost their jobs or are at 
risk  of  losing  their  jobs  in  the  peat  sector. 
Investments  have  been  made  in  measures  to 
improve  access  to  employment,  support  self-
employment  and  business  start-ups  and 
to 
support the adaptation of workers, enterprises and 
entrepreneurs to the green transition. The target is 
to  create  3 700  new  jobs  by  2029  in  areas  most 
significantly  impacted  by  the  transition  to  a 
climate-neutral economy. 

(211) Prime Minister’s Office 2023: Skills and education needs in 

the green transition 

80 

 
 
 
ANNEX 11: SOCIAL POLICIES 

While  social  conditions 
in  Finland  are 
generally good, the number of people at risk 
of  poverty  or  social  exclusion  has  increased 
in  recent  years.  Weakening  demographics 
continue  to  put  strain  on  the  sustainability  of 
pensions,  healthcare  and 
social  protection 
systems.  Regional  inequalities  in  access  to  social 
and  healthcare  services  present  an  additional 
challenge.  Ongoing  reforms  to  social  protection 
benefits, including budget cuts and the abolition of 
supplements, will require close monitoring to avoid 
negative effects of reforms on people in the most 
vulnerable situations. Further efforts to strengthen 
active 
for 
to 
underrepresented  and  vulnerable  groups,  and  to 
ensure adequate levels of social protection, will be 
essential  for  further  progress  towards  the  2030 
poverty reduction target and contribute to inclusive 
growth and competitiveness. 

employment 

support 

The  rapidly  ageing  population  is  placing  a 
burden  on  public  spending  for  pensions, 
social  protection,  healthcare  and  long-term 
care.  The  population  share  aged  65  years  and 
over  increased  by  4.0 pps  between  2014  and 
2024  (EU:  2.9 pps),  standing  at  23.4%.  The  old-
age  dependency  ratio  is  41.6,  far  above  the  EU 
average  of  37.0  (212),  while  the  fertility  rate  of 
1.26  is  below  the  EU  average  of  1.38.  In  2022, 
public spending on pensions in Finland was 13.0% 
of  GDP,  one  of  the  highest  shares  in  the  EU. 
Ensuring  adequate  public  and  private  funding  for 
the  welfare  state,  notably  social  and  healthcare 
services and minimum income protection presents 
a  considerable  challenge  given 
the  ongoing 
demographic  changes  (213).  Reforms  to  social 
policies,  including  pensions,  require  coordination 
between  administrations  at  the  national  and 
regional  levels,  as  well  as  the  involvement  of 
social  partners  and  the  occupational  pension 
funds.  In  January  2025,  the  social  partners  and 
government agreed on the framework for a reform 
of  the  occupational  pensions  system  aiming  to 
strengthen public finances by EUR 1 billion. Robust 
formal  and  effective  access  to  social  protection, 
including  for  non-standard  workers  and  the  self-
employed,  accounts  for  the  generally  positive 
living  situations  of  people  who  are  integrated  in 

the labour market (214). However, people dependent 
on  minimum  income  protection  have  not  seen 
improvements  in  their  living  standards.  Reforms 
with  regressive  distributional  effects  should  be 
avoided  where  possible,  with  adequate  social 
protection  guaranteed  in  all  living  situations  and 
particularly  for  groups  at  risk  of  income  losses. 
Expenditure on long-term care is the third highest 
in the EU (215) and the ageing of the population is 
projected to lead to long-term fiscal sustainability 
challenges  (see  Annex  12).  While  the  reform  of 
social and healthcare services lays the ground for 
potential  improvements  in  governance  and  the 
management  of  the  performance  of  the  LTC 
system,  it  is  not  clear  to  what  extent  such 
mechanisms  have  been  implemented  yet.  While 
wellbeing  services  counties  (WSCs)  are  being 
required to make savings, in the area of LTC, this 
seems  to  have  been  achieved  largely  through 
reductions 
in  services  rather  than  efficiency 
improvements. 

The  social  and  healthcare  sector  suffers 
from 
labour  and  skills  shortages  and 
budgetary  challenges  leading  to  high  unmet 
needs. Self-reported unmet need for medical care 
increased significantly from 4.4% in 2021 to 8.5% 
of  the  adult  population  in  2024  (EU:  2.5%)  (see 
Annex  14).  This  increase  reflects  a  challenging 
situation  combining  labour  and  skills  shortages, 
long  waiting  times  and  backlogs  in  non-urgent 
care following the COVID-19 pandemic, as well as 
budgetary  pressures  on  publicly  funded  services. 
As a key reform under the recovery and resilience 
plan  (RRP),  the  Finnish  social  and  healthcare 
system  was  fundamentally  reformed  in  2023, 
when 21 WSCs were established to provide social, 
healthcare  and  rescue  services  at  the  regional 
level.  In  their  first  years  of  operation,  the  WSCs 
have  accumulated  a  deficit  of  EUR 2.7  billion,  
factors  such  as  high  inflation  putting  upward 
pressures  on  prices  and  collectively  bargained 
wages,  rising  demand  for  services,  and  labour 
leading  to  the  use  of  outsourced 
shortages 
services  from  private-sector  providers.  By  law, 
WSCs are required to achieve budget neutrality by 
the  end  of  2026.  They  have  committed  to  fiscal 
consolidation  and  efficiency  improvements  worth 
EUR 3.5  billion  to  achieve  this  goal,  possibly 

(212) Eurostat: demo_pjanind, old-age dependency ratio defined 
as population 65 years or over to population 20-64 years. 

(214) ESPAN 2023: Making access to social protection for workers 

and the self-employed more transparent through information 
and simplification. 

(213) DG EMPL, SPC 2024: The 2024 pension adequacy report. 

(215) 2024 ageing report - Publications Office of the EU 

81 

 
 
 
 
 
 
professionals 

putting  the  quality  and  adequacy  of  care  at  risk 
(216). From 1 January 2025, the ‘care guarantee’ in 
basic,  non-urgent  care  was  prolonged  from  two 
weeks  to  three  months  for  people  over  23  (217). 
This entails a risk of rising average waiting times, 
further exacerbating the situation of unmet needs. 
While  the  ratio  of  vacancies  to  unemployed 
healthcare 
significantly 
improved,  with  shortages  for  nurses  and  care 
workers dropping by half between 2023 and 2024 
(218),  most  WSCs  still  experience  challenges  with 
labour  and  skills  shortages  (see  Annexes  10  and 
12).  Measures  to  encourage  effective  cooperation 
between  public  and  private  healthcare  providers 
could  be  considered  to  ensure  most  efficient  use 
of  public  funds  and  resources  while  improving 
patient outcomes. 

has 

to 

care 

long-term 

Finland’s  long-term  care  system  is  generous 
by  EU  standards,  with  high  levels  of  public 
spending  and  coverage.  However,  WSCs  face  a 
deterioration  in  their  ability  to  ensure  adequate 
access 
services,  given 
demographic  trends  and  budgetary  pressures. 
Access  to  long-term  care  (LTC)  for  older  people 
and persons with disabilities is increasingly limited 
by labour shortages and the limited availability of 
places  for  24-hour  services,  particularly  as  the 
demand  for  LTC  is  expected  to  increase  with  the 
ageing  population.  The  LTC  staff-to-patient  ratio 
was reduced from 0.65 to 0.6 from the beginning 
of  2025  to  achieve  annual  public  savings  of 
EUR 45  million  (219).  However,  expert  evaluations 
highlight  the  risk  that  LTC  services  may  become 
under-resourced 
the  expenditure  savings 
become  excessive  (220).  In  addition  to  publicly 
funded  services,  LTC  relies  heavily  on  local  care 

if 

(216) Ministry of Finance 2024: Hyvinvointialuetalouden näkymät 

2024-2028. 

(217) Ministry of Social Affairs and Health 2024: 

Perusterveydenhuollon kiireettömään hoitoon pääsyn 
enimmäisajat pitenevät vuoden 2025 alusta lukien. 

(218) Ministry of Economic Affairs and Employment 2024, Labour 

supply and matching. KEVA 2024: Local Councillors’ 
Barometer. 

(219) Ministry of Social Affairs and Health 2025: Hallitus esittää 

iäkkäiden ympärivuorokautisen hoidon henkilöstömitoituksen 
tasoksi 0,6. 

(220) Finnish Institute of Health and Wellbeing 2024: 

Hyvinvointialueet ovat käynnistäneet sote-palvelujen 
uudistamisen, mutta tarvitsevat taloutensa 
tasapainottamiseen enemmän aikaa. 

82 

providers (221). The role of home-based and family 
care  is  also  central,  particularly  in  light  of  limited 
places  in  care  homes  or  assisted  living  facilities 
(222).  Despite  high  levels  of  collective  bargaining 
coverage,  more  efforts  are  required  to  improve 
wellbeing  at  work  and  reduce  the  burden  of  work 
in the sector, both in the eyes of  existing workers 
and prospective job applicants (223). 

While  the  share  of  the  population  at  risk  of 
poverty or social exclusion remains relatively 
low,  it  has  increased  in  recent  years.  The  at-
risk-of-poverty  or social  exclusion (AROPE)  rate  in 
Finland  stood  at  16.8%  in  2024  (EU:  21.0%).  
Looking at the components  of AROPE, the at-risk-
of-poverty  (AROP)  rate is prevalent (12.6% vs EU: 
16.2%);  severe  material  and  social  deprivation  is 
very  low  (3.7%  vs  EU:  6.4%)  while  the  rate  of 
people  in  very  low  work  intensity  households  is 
relatively high and above EU average (9.3% vs EU: 
7.9%).  Reaching  the  national  target  of  reducing 
the  number  of  people  at  risk  of  poverty  by 
100 000 in 2030, of which one third children, will 
be challenging as the number of people at risk of 
poverty  or  social  inclusion  in  2024  is  117  000 
higher than the reference year (2019).  

rate 

The  AROPE 
the  unemployed 
for 
increased  by  11.6 pps  since  2015,  reaching 
72.0%  in  2024.  At  the  same  time,  the  EU 
average  slightly  decreased  by  0.6 pps  to  66.6%. 
AROPE  increased  strongly for  people  born  outside 
of  the  EU,  rising  by  3.8  pps  to  34.4%.  This  still 
remains below the EU average of 38.2%. 24.4% of 
persons with some or severe disabilities are at risk 
of  poverty  and  social  exclusion  in  Finland.  The 
general in-work poverty rate in 2024 remains very 
low  at  2.8%compared  to  an  EU  average  of  8.2%. 
In-work  poverty  rates  are  considerably  higher  for 
vulnerable  households,  such  as  single  parents 
(6.6%),  part-time  workers  (12.0%)  or  persons  not 
born  in  Finland  (5.5%).  The  European  Social  Fund 
Plus  (ESF+)  contributes  to  poverty  reduction  in 
Finland  through  EUR 156  million  in  investments 
aimed  at  increasing  social  inclusion  and  active 
participation,  especially  for  disadvantaged  groups. 
The  aim  is  to  prevent  intergenerational  exclusion 

(221) ESPAN 2022: Long-term care social protection models in the 

EU. 

(222) ESPAN 2018: Thematic report on challenges in long-term 

care: Finland. 

(223) Ministry of Social Affairs and Health: Hyvän työn ohjelma 

2024-2027. 

 
 
 
and poverty by supporting families and promoting 
and 
parents’ 
employment. 

participation 

education 

in 

following 

to  2025, 

from  2023 

Social  protection  reforms  including  direct 
cuts  in  social  spending  pose  challenges  for 
vulnerable  groups.  Several  reforms  have  taken 
effect 
the 
commitments  in  the  government  programme  to 
improve  work  incentives  and  strengthen  public 
finances through direct savings in public  spending 
(see Annex10). For example,  the child supplement 
and  earned-income  deduction  for  unemployment 
benefits  were  abolished.  For  the  general  housing 
allowance,  the  earned-income  deduction  was 
abolished, and means-testing of wealth and assets 
reintroduced.  Criteria  for  acceptable  costs  related 
to  basic  social  assistance  were  tightened  (224). 
Further  reforms  to  emphasise  the  last-resort 
nature  of  social  assistance  and  clarifying  the  link 
between benefits and job search requirements are 
planned for the second half of 2025 (225). An index 
freeze  for  unemployment  benefits,  childcare 
allowances  and  study  grants  is  in  place  for  2024 
to  2027,  resulting  in  minor  disposable  income 
losses  particularly  for  the  bottom  two  income 
deciles  and  the  unemployed  (226).  Further  action 
could  close  the  poverty  gap,  as  minimum  income 
benefits  in  2019  reached  70.3%  of  the  poverty 
threshold and 56.7% of the income of a low-wage 
earner in a single-person household (227). 

Child  poverty  remains  low,  but  a  concerning 
increase  in  2024  means  further  progress  is 
required  to  meet  the  poverty  reduction 
target  for  2030.  The  AROPE  rate  for  children 
increased  by  3.5pp  between  2023  and  2024  to 
17.3%,  compared  to  24.2%  in  the  EU.  By  2030, 
Finland  aims  to  reduce  the  number  of  children 
experiencing poverty or social exclusion by at least 
30 000. In 2024, 178 000 children were at risk of 
poverty or social exclusion in Finland, 31 000 more 
than the 2019 level. Parental unemployment is the 
main  risk  factor  for  child  poverty.  Children  at  risk 

(224) Ministry of Social Affairs and Health 2024: Vuoden 2024 
sosiaaliturvamuutosten yhteisvaikutusten arviointi. 

(225) Ministry 

of 

Social 

Affairs 

and 

Toimeentulotukilain 
työryhmän loppumuistio. 

kokonaisuudistusta 

Health 

2025: 
valmistelevan 

(226) Counterfactual effects compared to a scenario where all 

benefit types had remained subject to indexation in 2024. 
Source: European Commission, Joint Research Centre (JRC) 
calculations based on the EUROMOD model, J.051. 

(227) SPC benchmarking framework of minimum income. 

plan.  Main  aspects  of 

of poverty or social exclusion are much less likely 
to participate in childcare than other children (20% 
vs 44% for all children), with a decrease of 9 pps 
between  2022  and  2023.  To  mitigate  the  impact 
of poverty on children, Finland is implementing the 
European Child Guarantee (ECG) under its national 
the  ECG 
action 
recommendation 
through 
universal  schemes  such  as  free  of  charge  leisure 
activities,  school  meals  and  healthy  nutrition  (228). 
The  implementation  of  the  ECG  is  supported  by 
around  EUR 46  million  in  ESF+  funding  targeting 
child  poverty  reduction  and  increased  inclusion, 
alongside support for the structural reform of child 
protection services. 

implemented 

are 

(EU:  8.5%) 

Finland  is  one  of  the  EU  countries  with  the 
highest  rates  of  housing  difficulties  among 
those  at  risk  of  poverty  or  social  exclusion. 
The  share  of  people  in  AROPE  facing  housing 
in  2023. 
difficulties  was  17.5% 
According  to  the  most  recent  national  available 
data,  homelessness  affected  a  total  of  3 806 
people  in  2024  (229),  representing  a  rise  of  more 
than  10%  from  2023  levels.  Among  them,  the 
number  of  rough  sleepers  and  people  staying  in 
night (emergency) shelters increased by more than 
30%.  This  was  the  first  rise  in  the  number  of 
homeless people since 2012 signalling the end  of 
a  downward  trend  lasting  more  than  a  decade. 
Finland is implementing a programme to end long-
term  homelessness  by  2027,  implementing  the 
Housing First approach (230). 

negatively 

While 
system 
the  housing  allowance 
effectively  reduces  poverty,  reforms  to 
enhance  targeting  and  spending  efficiency 
may 
low-income 
households.  While  housing  allowances  reduced 
the AROP rate by 1.4 pps on average in the EU, the 
poverty-reducing effect in Finland in 2022 was far 
higher,  reaching  4.3 pps  (231).  Nevertheless,  this 
strong  performance  comes  at  a  cost,  as 
government  spending  on  housing  benefits  per 

impact 

(228) 2024: Biennial report on implementation of the ECG in 

Finland. 

(229) https://www.varke.fi/fi/ajankohtaista/asunnottomuus-kasvoi-

ensi-kertaa-yli-kymmeneen-vuoteen. 

(230) Ohjelma pitkäaikaisasunnottomuuden poistamiseksi vuoteen 

2027 mennessä - Valtioneuvosto 

(231) ESDE review 2024, Chapter 3.4 

83 

 
 
 
of 

housing 

revisions 

inhabitant is one of the highest in the EU (232). On 
1 April 2024, the housing allowance was reformed 
to  achieve  budgetary  savings  of  EUR 330  million, 
including 
cost 
reimbursements  by  municipality,  and  adjustments 
to  the  conditions  of  qualifying  households  (233). 
Over  32 000  households  whose  housing  costs 
exceeded  their  revised  upper  limits  were  sent 
relocation notices after the reform took effect (234). 
Expert  assessments  indicate  that  the  cuts  in  the 
housing  allowance  have  had  negative  effects  on 
the disposable incomes of low-income households, 
especially among vulnerable groups such as single 
parents,  students  and  people  living  alone  (see 
Graph  A11.1) 
impact 
assessment  of  this  reform  shows  that  the 
reduction in disposable incomes was strongest for 
households  in  the  second  income  decile  (-2.21%) 
(236). While the number of households receiving the 
general housing allowance fell by 22 700 in 2024, 
data  from  the  Finnish  Social  Insurance  Institution 
suggests that many  of these former beneficiaries 
may  have  shifted  to  basic  social  assistance. 
Applications  for  basic  social  assistance  increased 
by 14% and the average payments per household 
have  increased,  although  the  overall  number  of 
beneficiary  households  has  remained  constant  at 
approximately  250  000.(237)  These  households 
include  an  increasing  share  of  Ukrainians  whose 
status  has  changed  from  refugee  to  permanent 

(235).  A  distributional 

(232) Over 300 PPS / inhabitant. Source: ESDE review 2024, DG 

EMPL calculations. 

(233) Approximately 67-70% of general housing allowance 

beneficiaries are single-person households, out of which half 
are students. One fifth are households with children: from 
this share, two thirds are single-parent households. Source: 
Prime Minister’s Office 2024: Social security and living 
arrangements of low-income families. Final report on 
LAPSOSET project. 

(234) While  the  relocation  notices  sent  by  Kela  to  affected 
households  do  not  compel  anyone  to  move,  the  portion  of 
housing  costs  that  exceeds  the  revised  upper  limits  will  no 
longer be covered by the housing allowance. 

(235) Prime Minister’s Office 2024: The effectiveness of social 
security in the diverse and changing life situations of 
adolescents. 

(236) European Commission, Joint Research Centre (JRC) 
calculations based on the EUROMOD tax-benefit 
microsimulation model, J.051. 

(237) Social Insurance Institution (Kela) 2025: 

resident  with  the  right  to  apply  for  social 
assistance in Finland(238). 

Graph A11.1: Change in equivalised disposable 
incomes due to General Housing Allowance 
reform, by household type 

% change with respect to baseline (counterfactual situation 
without housing allowance reforms) 
Source: European Commission Joint Research Centre, based 
on the EUROMOD model, J.051. 

House  prices  have  stagnated  over  the  past 
decade  and  have  fallen  in  the  recent  years. 
House  prices  have  increased  by  only  6%  since 
2015 in nominal  terms, one of the lowest growth 
rates  among  EU  countries.  House  prices  are 
estimated not to be overvalued. They decreased by 
5.7%  in  2023  and  decreased  further  in  2024 
(-4.8% year-on-year in Q2-2024 and -2.8% in Q3-
2024). The increase of interest rates from 0.7% in 
2021  to  3.9%  in  2023  is  also  being  reflected  in 
lower house transactions, -16.6% and -24.5%, and 
building permits, -18.0% and -43.4% in 2022 and 
2023, respectively. 

Overall  housing  affordability  improved  over 
the past decade. House prices have increased by 
less than household incomes and the standardised 
house price-to-income ratio has been on a gradual 
downward  trend  since  2015  (-17%  from 2015  to 
2023),  standing  below  its  long-term  average.  The 
affordability  of  housing  does  not  appear  to  be  a 
concern  from  a  macroeconomic  perspective  and 
house  price  levels  compared  to  income  levels  are 
lower  than  in  most  EU  countries.  Taking  into 
account  the  cost  of  mortgages,  the  borrowing 
capacity  of  households  remained  broadly  stable 
over the past decade and is one of the highest in 
the EU. While the rental market is rather small, the 

Sosiaaliturvaleikkausten vaikutuksista toimeentulotukeen 
saa paremman kuvan, jos ukrainalaiset lasketaan pois 
tilastoista 

(238) Social Insurance Institution (Kela) 2025: 

Perustoimeentulotuen kustannukset kasvoivat lähes sata 
miljoonaa euroa 

84 

-1,20%-1,0%-0,80%-0,60%-0,40%-0,20%0,0%One adult < 65,no childrenOne adult >=65, no childrenOne adult withchildrenTwo adults <65, no childrenTwo adultswith one childTwo adultswith twochildren 
 
 
   
 
ratio  of  new  rents  to  incomes  also  fell  over  the 
last decade. 

low-income  groups 

While  energy  and transport poverty are low, 
they  have  slightly  increased  particularly  for 
low-income groups. The share of the population 
unable  to  keep  their  homes  adequately  warm  is 
significantly  lower  than  the  EU  average  (2.7%  vs 
9.2%),  though  it  has  increased  by  1.4pp,  a 
doubling,  compared  to  2021.  Energy  poverty  is 
also  reflected  by  the  share  of  individuals  with 
arrears  on  utility  bills.  The  share  was  8.3%  in 
2024, an increase of 2.5pp since 2021 and above 
the  EU  average  of  6.9%.  In  relation  to  transport 
poverty,  car  affordability  presents  a  significant 
challenge,  particularly  for 
low-income  groups. 
11.2% of the population could not afford a car in 
2024,  compared  to  the  EU  average  of  5.6%.  For 
people at risk of poverty, this share is 33.9%. Since 
car  ownership  among 
is 
comparatively  rare,  few  people  at  risk  of  poverty 
have  very  high  expenditures  on  private  transport 
fuels (239) (13% vs EU: 18.2% in 2024). The social 
security  system  mainly  addresses  energy  and 
transport  poverty  through  housing  allowances, 
renovation  subsidies,  and  other  benefits  for 
vulnerable populations. Finland also has voluntary 
energy efficiency agreements in place and aims to 
halve  residential  energy  consumption  by  2050. 
However,  there  are  limited  initiatives  to  address 
root causes of energy and transport poverty. Over 
the  2026-2032  period,  the  Social  Climate  Fund 
will  provide  EU  Member  States  with  specific 
funding  to  support  vulnerable  groups,  such  as 
households  in  energy  and/or  transport  poverty, 
implementation  of  the  Emissions 
during  the 
Trading  System.  EU  Member  States  may,  for 
example,  use  the  Fund  to  support  structural 
measures  and  investments  in  energy  efficiency 
and  renovation  of  buildings,  clean  heating  and 
cooling  solutions,  as  well  as  in  zero-  and  low-
emission transport solutions. 

(239) Defined as transport fuel expenditures twice above the 

national median. 

85 

 
 
 
 
 
ANNEX 12: EDUCATION AND SKILLS 

put 

school 

Skills  shortages,  weaknesses 
in  skills 
development  and  an  increasing  share  of 
early 
Finland’s 
leavers 
competitiveness  at  risk.  Weaknesses  in  skills 
development  start  at  an  early  age  with  low 
participation  of  children  in  quality  early  childhood 
education  and  care  (ECEC).  At  the  same  time, 
traditionally  strong  education  outcomes  are 
declining, and the share of early school  leavers is 
increasing,  notably  for  disadvantaged  pupils.  This 
may negatively affect their upskilling opportunities 
and  employment  prospects  later  in  life.  While  the 
share  of  adults  engaged  in  learning  is  high  in 
Finland, there are still shortages of skilled workers 
in  sectors  such  as  education,  construction, 
hospitality  and  healthcare.  This  demonstrates  the 
need  for  dialogue  between  education  authorities, 
public administration and industry stakeholders to 
ensure  that  the  skills  profile  of  graduates  meets 
labour  market  needs.  Planned  cuts  in  funding  of 
adult  learning  pose  risks  in  this  respect.  Efficient 
public  spending  and  investments  in  upskilling  and 
reskilling and widening the higher education offer 
are  crucial  to  retain  Finland’s  potential  for 
research  and  innovation,  productivity  growth  and 
competitiveness. 

learning 

Low participation of children in ECEC impacts 
increases 
foundational 
and 
inequalities.  ECEC  participation 
in  Finland 
reached 89% for children aged 3 up to compulsory 
schooling age in 2022, well below the EU average 
(93.3%)  and  the  EU-level  target  of  96%.  Children 
from  low-income  households  are  less  likely  to 
participate  in  ECEC.  To  help  counteract  this,  the 
government  has  lowered  the  fees  for  ECEC.  The 
shortage  of  ECEC  teachers  is,  however,  a  barrier 
for  expanding  participation.  The  creation  of  new 
study places for ECEC staff might not be sufficient 
to remedy the shortage, which has been estimated 
at approximately 6 000 ECEC teachers nationwide, 
notably  in  the  Helsinki  metropolitan  area  (over 
4 000 teachers). 

The  decline  in  basic  skills  represents  a  risk 
for  human  capital  development  and  long-
term competitiveness. There has been a decline 
in  the  basic  skills  of  Finnish  students  in  the  past 
decade,  as  confirmed  by 
latest  OECD 
Programme  for  International  Student  Assessment 
(PISA)  2022.  The  proportion  of  15-year-old 
students underachieving in basic skills has steadily 
increased since 2012. While in 2018, the shares of 
Finnish  students  with  low  basic  skills  were  still 
below  the  EU  target  of  15%  in  all  three  areas 

the 

86 

tested,  in  2022  this  was  no  longer  the  case. 
Underachievement  has  been  growing  across  the 
entire  socio-economic  distribution  in  recent  years 
but  is  more  pronounced  in  the  bottom  socio-
economic  quartile.  Underachievement  among 
foreign-born students is one the highest in the EU, 
with  57.2%  of  students  born  outside  Finland 
underachieving. 

Graph A12.1: Underachievement rates by field 

Source: OECD (2023), Programme for International Student 
Assessment PISA 

challenge. 

Teacher shortages may impact further on the 
quality of education. Teacher shortages pose an 
increasing 
In  2024  and  2025, 
EUR 6.3 million  has  been  allocated  to  universities 
for  360  new  starting  places,  with  the  support  of 
the Recovery and Resilience Facility (RRF). In 2021, 
the  proportion  of  students  enrolled  in  tertiary 
studies  in  the  field  of  education  (almost  16 700 
students, of which 2 600 were new entrants) was 
around 5.4% of the total, below the EU average of 
7.4% (240).  Approximately  40%  of  applicants  for 
teacher 
general 
training  and  educational  science)  are  admitted 
annually, but the proportion differs among teacher 
training programmes. University access to teacher 
training  is  sometimes  as  competitive  as  it  is  for 
law or medicine (about 10% of applicants). 

(classroom 

training 

teacher 

The  share  of  early  leavers  from  education 
and training (ELET) is increasing. The ELET rate 
has been rising since 2012, and at 9.6% in 2024 it 
stands  above  the  EU  average  (9.3%)  for  the 
second  year  in  a  row.  There  are  considerable 
regional variations, as the share of early leavers in 
rural areas is 12.2%, while in urban areas the rate 
increased  by  1.9  percentage  points  (pps)  to  8.1% 
in  2024.  ELET  rates  are  lower  for  native-born 

(240) Eurostat: educ_uoe_enrt03. 

05101520253035FIEUFIEUFIEUMathematicsReadingScience%2012201820222030 EU target 
 
   
 
 
 
young  people  (9.2%)  than  they  are  for  young 
(13.0%).  Nearly  25 000 
people  born  abroad 
students graduated from general upper secondary 
schools  in  spring  2024,  slightly  fewer  than  the 
previous  year.  This  is  the  first  age  group  to 
graduate  under  the  new  general  upper  secondary 
education  curriculum  introduced  in  autumn  2021. 
Graduates have access to follow-up guidance for a 
year after completing their studies. The worsening 
of ELET rates should be monitored closely to avoid 
further deterioration. 

substantive  vocational 
Finland  has  a 
education  and  training  (VET)  sector.  In  2023, 
70.2%  of  students  in  medium-level  education 
were  enrolled  in  programmes  with  a  vocational 
orientation (241).  The  employment  rate  of  recent 
VET  graduates  in  2024  was  77.0%  (EU  average 
80%), below the 80.2% employment rate of recent 
graduates with a general upper secondary or post-
secondary non-tertiary education. Exposure of VET 
graduates to work-based learning is far above the 
EU average of 65.3%, growing by 2.6pps to 79.3% 
in 
national 
the 
implementation  plan  for  education,  Finland  is 
the 
implementing  measures 
accessibility 
its 
responsiveness  to  the  labour  market,  address 
changes in working lives, and counteract shortages 
of skilled labour. 

enhance 
improve 

2024.  Under 

to 
and 

updated 

VET 

of 

Finland  focuses  on 
transferable  skills, 
utilising  opportunities  from  digitalisation, 
and 
increasing  flexibility  of  vocational 
qualifications.  VET  programmes  can  directly 
address  the  needs  of  industry  through  optional 
vocational  units,  known  as  micro-credentials, 
which will strengthen the competencies needed for 
the  digital  and  green  transitions (242).  However, 
secondary-level  VET  schools  and  universities  of 
applied  sciences  will  face  a  budget  cut  of 
EUR 87 million 
the 
government’s  decisions  to  strengthen  the  public 
economy. While  students in compulsory education 
or 
their  first  professional 
qualification  should  not  be  affected,  it  remains 
important  that  vulnerable  and  under-represented 
groups  retain  access  to  quality  VET.  In  2026,  the 
financing model for VET will be reformed to better 

in  2025  as  part  of 

those  completing 

incentivise  quick  graduation  and  transitions  to 
employment. 

Finland  is  taking  measures  to  increase  the 
number  of  higher  education  graduates  and 
widen the education offer. In 2024, the tertiary 
educational  attainment  (TEA)  rate  was  39.1% 
(1.5 pps  less  than  in  2022),  below  both  the  EU 
average of 44.2% and the EU-level target of 45%. 
The  TEA  rate  has  been  stable  over  the  last  10 
years  at  around  40%,  remaining  far  from  the 
Finnish  ambition  of  reaching  50%  by  2030. 
Regional  differences  in  TEA  rates  are  significant, 
varying  from  34.6%  in  South  Finland  to  44.7% in 
the  Helsinki-Uusimaa  region.  The  gap  in  TEA  by 
country  of  birth  is  also  significant,  at  29.9%  for 
foreign-born  people  in  Finland  vs  40.9%  for 
native-born people).  

The demand for tertiary education graduates 
is  increasing,  particularly  in  the  engineering 
and service sectors.  In engineering, the number 
of completed degrees should increase by 22-41% 
from  present  levels  to  meet  the  labour  market 
demands  of  16 500-19 000  new  graduates 
annually.  It  is  estimated  that  by  2040  47%  of 
Finland’s  future  workforce  should  have vocational 
education, 30% should have completed studies at 
universities  of  applied  science,  and  22%  should 
have  a  traditional  university  education (243).  The 
restricted  number  of  study  places  results  in 
backlogs  for  university  admission,  particularly  in 
regional  universities  and  high-demand  courses. 
Students often take a long time to graduate, with 
only  34%  of  university  students  graduating  with 
their master’s degree within the target time of 5.5 
years,  and  57%  of  students  in  universities  of 
applied sciences graduating within the target time 
of  4.5  years.  In  the  field  of  technology,  38%  of 
students  graduate  within  the  target  time.  The 
accumulation of higher education degrees, as one 
quarter  of  admitted  students  already  hold  a 
degree,  limits  the  offer  of  entry  places  for  first-
time  degree  students.  An  Action  Plan  to  prevent 
unnecessary  accumulation  of  degrees  is  being 
implemented  to  address  this  challenge.  The 
tertiary education funding model was revised from 
the  start  of  2025  and  expect  to  encourage  first-
time admissions; however, it is too early to assess 
its effectiveness.  

(241) Medium-level education refers to the combination of upper-
secondary and post-secondary non-tertiary education. 
(242) Finland: more flexibility and skills for the green and digital 

transitions | CEDEFOP 

(243) Työvoima- ja koulutustarpeet 2017-2035 

87 

 
 
 
in 

shortages 

education, 

severely 
economic 

limit 
Skills 
growth 
competitiveness  and 
particularly 
construction, 
hospitality  and  healthcare.  Finland  has 
in  green  skills  related  to  energy 
shortages 
efficiency and construction, as well as in skills for 
customer  services, medical  care  and  first  aid (244). 
Upskilling  and  reskilling  are  crucial  to  accelerate 
the  growth  in  real  labour  productivity  per  hour 
worked,  which  has  declined  by  3pps  since  2021 
while  the  EU  average  has  increased  by  0.3pps. 
While  SMEs  report  fewer  difficulties  with  skills 
shortages  than  the  EU  average  (48%  vs  54%), 
these  remain  an  important  limit  on  productivity 
and  competitiveness (245).  Low  pay  and  poor 
working  conditions  contribute  to  labour  and  skills 
restaurant  and 
in 
shortages,  notably 
construction industries (246). Several national plans 
are also in place to improve the working conditions 
and  attractiveness  of  the  social  and  healthcare 
sector (247).  

the 

It  was  designed 

In  2025  and  2026,  the  Service  Centre  for 
Continuous  Learning  and  Employment  will 
carry  out  a  pilot  project  on  studying 
alongside  work (248). 
to 
strengthen  the  role  of  employers  in  continuous 
learning  of  employees  and  activities  of  education 
providers.  The  objective  of  the  pilot  project  is  to 
enable  continuous  learning,  whereby  employed 
persons  continue  working  while  developing  their 
competencies,  with  a  particular  focus  on  sectors 
with  acute  skills  shortages  such  as  social  and 
healthcare 
services.  Further  upskilling  and 
reskilling  measures,  supported  by  the  Recovery 
and  Resilience  Plan,  include  an  AI-driven  tool  for 
anticipating and forecasting future skills demands 
(249). It is important to assess which measures are 
most  effective  in  addressing  skills  shortages  and 
labour market demands. 

While  adult  participation  in  learning  is  high, 
Finland  is  not  moving  fast  enough  towards 
its  adult  learning  target  of  60%  by  2030. 
Adult  participation  in  learning  increased  slightly 

(24.8%) 

(0.4  pp)  to  51.8%  between  2016  and  2022 (250). 
in 
However,  unemployed  people  participate 
training  significantly 
the 
than 
less 
employed (55.5%). Similarly, those with low levels 
of education participate less than those with high 
levels of education (38.1% vs 65.7%). The gender 
gap  is  also  noteworthy:  57.7%  of  women  and 
46.3%  of  men  participated  in  learning  in  2022, 
resembling  the  general  gap  in  higher  education 
degrees.  

The  abolition  of 
the  adult  education 
allowance  poses  risks.  Finland  abolished  the 
adult education allowance for enrolments in 2024. 
In  2022,  30 124  people  received  the  adult 
education  allowance  (1.1%  of  the  labour  force 
aged  20-64) (251).  Although  most  of 
these 
beneficiaries  probably  would  have  been  able  to 
participate 
the 
allowance,  its  abolition  may  still  make  it  more 
difficult  for  jobseekers  to  engage  in  life-long 
learning.  

in  adult  education  without 

The  EUR 22.5 million  budget  cut  for  liberal 
adult  education (252)  in  2024  also  had  a 
negative  financial 
impact  on  education 
providers  and  on  vulnerable  groups.  For 
education providers  in  rural  or  sparsely populated 
areas  in  particular,  this  may  result  in  a  reduced 
offer  of  courses  or  an  increased  reliance  on  self-
funding through course fees. Efficient use of public 
spending  and  innovative  measures  are  needed  to 
support  adult  participation 
learning  and 
facilitate  progress  towards  the  2030  national 
target. 

in 

Finland  still  has  shortages  in  some  areas  of 
green  skills,  relevant  for  the  transition  to  a 
low  carbon  economy.  Finland’s  economy  is 
highly  energy  intensive  but  has  already  a  high 
share  of  renewables  in  its  energy  mix.  In  2024, 
shortages  were  reported  in  Finland  for  a  number 
of  occupations  requiring  specific  skills  related  to 
the  green  transition,  including  mixed  crop  and 
livestock  farm  labourers,  and  civil  engineering 

(244) Työvoimabarometri - Etusivu 
(245)November 2023 Eurobarometer. 
(246) Employment and Social Developments in Europe (ESDE) 

review 2023: p123. 

(247) Ministry of Social Affairs and Health 2025: Hyvän työn 

ohjelma 2024-2027 

(248) Finnish Government, 24 September 2024: Hallitus 

käynnistää hankkeen työn ohessa opiskelun vahvistamiseksi. 

(249) Skills Needs Compass | The Service Centre for Continuous 

Learning and Employment 

(250) Eurostat: trng_eas_100, Eurostat calculations for formal and 
non-formal education and training (excluding guided on-the-
job training). 

(251) HE 8/2024 vp, p52; DG EMPL calculations based on EU-LFS. 
(252) Liberal adult education institutions provide non-formal 

education. These include adult education centres, folk high 
schools, learning centres, sports training centres and summer 
universities. 1.1 million citizens annually take part in offered 
courses. 

88 

 
 
 
labourers (253).  In  the  short  to  medium  term, 
workers  with  appropriate  green  skills  will  be 
required in renewable energy production, electrical 
grids,  industry-scale  wood  construction  and  the 
hydrogen  economy (254).  Finland  has  also  one  of 
the  highest  shares  in  the  EU  of  employees 
participating  in  education  and  training  in  energy-
intensive  industries  (22%  vs  11.7%  in  the  EU  on 
average in 2024). 

Almost  two  thirds  (64%)  of  Finnish  people 
believe that they have the necessary skills to 
contribute to the  green  transition.  This  figure 
is significantly above the EU average of 54% (255). 
38%  of  Finnish  respondents  find  education, 
training  and  life-long  learning  important  to  build 
skills  for  green  and  digital  jobs,  above  the  EU 
average  of  32%  (256).  All  levels  of  the  education 
system  have  a  role  to  play  in  developing  green 
skills and competencies, as both life-long learning 
and  the  formal  education  offer  should  contribute 
to  meet  the  short-  and  medium-term  needs  of 
industry.  Structured  dialogue  between  education 
providers  and  industry  should  be  considered  to 
ensure  that  the  skills  profile  of  graduates  meets 
the needs of local labour markets. 

Finland has one of the highest levels of basic 
and  advanced  digital  skills  among  adults  at 
EU  level.  In  2023,  82%  of  the  population  aged 
16-74 had at least basic digital skills, and 94% of 
those aged 16-24; both well above the EU average 
of  55.6%  and  70%.  Some  88.9%  of  the  working 
population (aged 25-64) have at least basic digital 
skills. Finland has one of the highest proportions in 
the  EU  of  graduates  in  STEM  subjects  (science, 
technology,  engineering  and  mathematics)  per 
1 000  of  population  aged  20-29  (26.5%  in  2022 
vs 23% EU average). 

The  share  of  women  ICT  graduates  and  ICT 
specialists is below that for men. The share of 
female STEM graduates in Finland is below the EU 
average (32.2% of all STEM graduates vs 35.4% in 

(253) Source: European Labour Authority 2025 EURES Report on 
labour shortages and surpluses 2024, based on data from 
EURES National Coordination Offices. Skills and knowledge 
requirements align with the ESCO taxonomy on skills for the 
green transition, with examples analysed using the ESCO 
green intensity index. 

(254) Prime Minister’s Office 2023: Vihreän siirtymän osaamis- ja 

koulutustarpeet VISIOS. 
(255)Special Eurobarometer 527. 
(256)Social Europe - April 2024 - Eurobarometer survey 

2022).  ICT  graduates  represent  8.1%  of  total 
tertiary  graduates  (EU  average:  4.5%),  but  only 
2.1% of total are female tertiary graduates (above 
the  EU  average  of  1.0%).  The  enrolment  in  STEM 
for  medium-level  VET  was  31.3%  in  Finland  in 
2022,  compared  to  36.2%  EU  wide.  In  2023,  ICT 
specialists  accounted  for  7.6%  of  the  total 
population  employed  (EU  average  4.8%).  Only 
22% of these were women, although this rate was 
also above the EU average (19.4%). Companies in 
Finland  report  slightly  fewer  difficulties  than  the 
EU average in finding staff with the right skills on 
cybersecurity (257). 

ESF+ 

force. 

include 

European  funds  help  promote 
life-long 
learning  and  upskilling  and  reskilling  of  the 
investments  worth 
labour 
EUR 183 million  are  supporting  future  challenges, 
such  as  digital  skills.  The  supported  activities 
create  comprehensive  life-long  training  services 
and make education and training more accessible. 
Measures 
increasing  the  provision  of 
tailored,  time-  and  place-independent  continuous 
learning, 
reskilling, 
including  upskilling  and 
specialisation and development of basic skills, and 
promoting  and  developing  the  recognition  and 
identification  of  skills  and  qualifications  obtained 
abroad.  Approximately  EUR 20 million  is  being 
invested through the Just Transition Fund in skills 
development  for  smart  specialisation,  industrial 
transition and entrepreneurship in regions that are 
hit  hardest  by  the  adverse  effects  of  the  low-
carbon transition. The objective is that 320 people 
gain  a  qualification  by  participating  in  a  JTF-
funded activity. The RRF is also supporting reforms 
such  as  the  creation  of  the  Service  Centre  for 
Continuous 
further 
opportunities for upskilling and reskilling courses. 

Learning 

provide 

to 

(257) Cyberskills - May 2024 - Eurobarometer survey 

89 

 
 
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Finland 

(1) Update of 5 May 2025. 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 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

90 

51,89,682,09,80,73,7377,08,41,8107,816,817,346,420,45,448,28,5Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketSocial Scoreboard for FinlandBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2024)Young people not in employment, education or training(% of the population aged 15-29, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)Employment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2023)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024) 
 
 
 
  
 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

system 

Finland’s 
health 
performs 
faces 
comparatively  well.  However, 
it 
challenges  that  need  to  be  addressed  if  the 
country  is  to  improve  the  health  of  its 
fairness,  while 
social 
population  and 
boosting the competitiveness of its economy. 
Limited  access  to  healthcare  poses  a  significant 
challenge,  mainly  related  to:  (i)  shortages  of 
healthcare  workers;  (ii)  an  uneven  geographical 
distribution 
(iii) 
healthcare 
fragmentation  in  care  delivery;  and  (iv)  increasing 
demand for services due to population ageing. The 
issue  is  further  exacerbated  by  the  ‘wellbeing 
services  counties’  being  asked  to 
implement 
radical  budget  savings,  often  leading  them  to 
reduce  care  provision 
improve 
efficiency. 

resources; 

rather 

than 

of 

Life expectancy at birth in Finland, which has 
yet  to  fully  rebound  to  its  pre-COVID-19 
level,  was  higher  than  the  EU  average  in 
2023. There is a striking gender gap, with women 
expected  to  live  5.3  years  longer  than  men.  That 
said,  women  are  expected  to  spend  around  2.9 
fewer  years  in  good  health  than  men.  Treatable 
mortality  in  Finland  is  relatively  low,  pointing  to 
the  overall  effectiveness  of  the  health  system. 
Diseases of the circulatory system (‘cardiovascular 
diseases’)  and  cancer  are  the  leading  causes  of 
death, but  with mortality rates  lower than  the  EU 
average. Finland participates in several EU4Health-
funded joint actions aimed at reducing the burden 
of  cardiovascular  diseases,  cancer,  diabetes  and 
respiratory diseases, and improving mental health. 

Graph A14.1: Life expectancy at birth, years 

of 

444), 

illustrates 

publicly  funded.  The  largest  share  of  health 
expenditure was directed at outpatient care, with a 
share above the EU average. This, together with a 
relatively  low  number  of  hospital  beds  (231  per 
100 000  population  in  2022,  lower  than  the  EU 
Finland’s 
average 
organisational focus on primary care. This matches 
the health system reform trend observed in other 
countries.  Out-of-pocket  payments  account  for  a 
greater proportion of spending on health in Finland 
than  the  EU  average  (16.1%  in  2022  vs  14.3%) 
(258). The largest shares of out-of-pocket payments 
go  towards  outpatient  medical  goods,  long-term 
care and outpatient care (general and dental care), 
in that order. In 2021, Finland reformed the Act on 
user charges in health and social services to lower 
co-payments  for  public  care.  However,  customer 
fees increased again at the beginning of 2025 due 
to  budget  cuts.  These  cuts  also  led  to  the 
maximum  waiting  time  for  primary  care  being 
extended,  the  closure  of  several  specialist  care 
units  (particularly  nighttime  emergency  services), 
and  restrictions  on  service  coverage.  Funding 
under  Finland’s  recovery  and  resilience  plan  (RRP) 
is being used to: (i) clear the backlog in social and 
health services due to COVID-19; (ii) support equal 
access  to  healthcare;  (iii)  strengthen  primary 
healthcare;  (iv)  overhaul  service  delivery  models; 
and  (v)  increase  the  digitalisation  of  the  health 
system.  In  2022,  investments  in  health  capital 
formation  as  a  share  of  total  health  expenditure, 
were lower than the EU average (259). 

Graph A14.2: Treatable mortality 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

(258) OECD/European Commission (2024), Health at a Glance: 

Europe 2024 - State of Health in the EU Cycle, pp.186-187. 
(259) see Health at a Glance Europe 2018, 2020, 2022 and 2024. 

Source: Eurostat (demo_mlexpec) 

Health  expenditure  in  Finland  is  slightly 
below  the  EU  average,  as  is  the  share  of 
health  costs  supported  by  public  funds.  In 
2022,  health  spending  per  inhabitant  in  Finland 
(adjusted for differences in purchasing power) was 
close to the EU average, and about 80% of it was 

91 

82.182.081.981.281.681.380.480.180.681.420192020202120222023FinlandEU71.169.171.369.870.991.389.291.793.389.720182019202020212022per 100 000 populationFinlandEU 
 
        
        
 
 
 
 
As  regards  public  health,  Finland  places  a 
focus  on  disease 
comparatively  high 
prevention.  In  2022,  spending  on  prevention  in 
Finland  accounted  for  6.4%  of  total  public 
spending on health, higher than the EU average of 
5.5%.  While  the  rate  of  preventable  mortality  in 
Finland is among the lowest in the EU, nearly one 
third  of  deaths  are  linked  to  behavioural  risk 
factors.  Although  progress  has  been  made  on 
reducing  tobacco  and  alcohol  consumption,  rates 
of  obesity  and  overweight  are  a  growing  public 
health concern. Finland is introducing measures to 
improve  disease  prevention,  also  with  support 
from its RRP. The new measures aim to strengthen 
prevention  and  identify  health  problems  early  by 
rolling out regional integrated multi-sector service 
management  models  (bundling  healthcare  with 
other  services) 
in  the  22  wellbeing  services 
counties  set  up  as  part  of  the  social  welfare  and 
healthcare reform.  

(defined  as  60%  of 

Finland  faces  challenges  with  access  to 
healthcare,  with  high  unmet  needs  for 
medical  care.  In  2024,  8.5%  of  the  Finnish 
population  reported  having  unmet  needs  for 
medical care, much higher than the EU average of 
2.5%.  Long  waiting  times  are  the  main  reason, 
with  lower  income  groups  affected  the  most.  The 
difference in unmet needs between income groups 
in  Finland  is  among  the  highest  in  the  EU.  The 
gender  gap  is  also  among  the  highest  in  the  EU, 
with  2.8  percentage  points  more  forgone  care 
reported by women than by men. Furthermore, and 
specifically  among  people  who  declare  having 
needs  for  medical  care,  the  gap  in  unmet  needs 
between  people  below  and  above  the  poverty 
threshold 
the  median 
equivalised income) is much higher in Finland than 
the  EU  average.  Regarding  access  to  healthcare 
facilities in rural areas, Finland generally performs 
better  than  the  EU  average  (see  Annex  17). 
Employment-based  healthcare  coverage  is  the 
norm  in  Finland.  However,  it  creates  a  parallel 
system, with employed people having quicker and 
free-of-charge  access  to  services,  and  municipal 
healthcare  users  facing  co-payments  and  long 
waiting times. In June 2021, Parliament adopted a 
long-awaited administrative reform to: (i) improve 
access  to  healthcare;  (ii)  reduce  inequalities;  (iii) 
improve  the  quality  of  health  services;  and  (iv) 
address  geographical  imbalances.  Consequently, 
22  wellbeing  services  counties  were  set  up  to 
organise health and social services as from 2023. 
In  relation  to  this,  Finland  received  a  country-
specific  recommendation  in  2024  to  ‘ensure  that 

the  reform  of  social  and  healthcare  services 
improves  access  to  and  delivery  of  services  and 
tackles  inefficiencies’  (see  Annex  16).  In  January 
2023, a new law was enacted to tighten the care 
guarantee for non-urgent primary care by reducing 
it  was 
waiting  times  to  7  days.  However, 
withdrawn  in  April  2024  and  replaced  with  a 
proposal  setting  the  maximum  wait time  at  three 
months  for  individuals  aged  23  and  over,  while 
maintaining  a  14-day  limit  for  those  under  23. 
Finland’s  RRP  supports  healthcare  and  social 
services  reforms,  as  well  as  the  care  guarantee. 
The  government  increased  the  social  insurance 
reimbursement  (Kela  reimbursement)  rate  for 
private health services in 2024 in order to reduce 
the  demand  for  public  primary  healthcare  and,  in 
turn,  waiting  times.  The  KELA  reimbursement 
model  will  be  updated  in  the  course  of  2025. 
Saving  policies  of  the  newly-created  wellbeing 
services  counties  risk  to  affect  access  in  a 
negative way. 

Finland  faces  shortages  of  health  sector 
workers,  and  an  uneven  distribution  across 
in  healthcare  fell 
the  country.  Employment 
between  the  first  quarter  of  2020  and  the  third 
quarter  of  2024  (while  it  increased  in  the  EU  on 
average by more than 11%). The average number 
of  doctors  per  inhabitant  in  Finland  is  below  the 
EU  average  (4.0  vs  4.2  per  1 000 population  in 
2022). However, as Eurostat only provides data on 
the  number  of  doctors  licensed  to  practice,  the 
actual  number  is  probably  lower.  Although  the 
number  of  nurses  per  1 000 population  is  well 
above the EU average (12.9 vs 7.6 in 2022), rising 
demand  for  nursing  has  led  to  an  increasing 
shortage in recent years (see Annex 10). According 
to  the  Ministry  of  Social  Affairs  and  Health,  all 
shortages  (measured  as  a  number  of  open  job 
vacancies) have decreased since 2023- especially 
among nurses. They remain however significant.  A 
significant  proportion  of  doctors  and  nurses  are 
aged 55 and over, raising concerns about the long-
term  accessibility  of  health  services.  Working 
for  health  professionals  are  a 
conditions 
significant 
low  pay  acting  as  a 
issue,  with 
deterrent to working in healthcare, particularly for 
nurses. Importantly, in October 2022, a long-term 
agreement  was  reached  on  substantial  raises  in 
nurses’  pay.  The  uneven  geographical  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 

92 

 
healthcare  and  social  welfare  e-services  and 
developing  digital  methods  to  support  a  ‘care 
guarantee’  in  social  care  and  healthcare.  Further 
measures  aim  to  help  care  staff  improve  their 
digital  skills  and  increase  their  use  of  digital 
solutions.  Investments  under  the  RRP  will  be 
complemented  by  2021-2027  cohesion  policy 
funds,  with  Finland  planning  to  invest  in  the 
development 
and 
applications, of which 58% will be co-financed by 
the  EU.  In  addition,  Finland  participates  in  joint 
actions  and  benefits  from  direct  grants  under 
semantic 
improve 
EU4Health 
interoperability  of  health  data  and  facilitate  the 
implementation  of  the  European  Health  Data 
Space. 

telehealth 

services 

the 

of 

to 

working to address workforce shortages for many 
years.  Measures  include:  (i)  expanding  enrolment 
for  training  in  medical  schools;  (ii)  making  a 
stronger  commitment  to  recruit  foreign  workers; 
(iii) introducing novel skill-mix solutions to increase 
employment in nursing; and (iv) improving the use 
of technology to boost workforce productivity and 
overcome geographical barriers. The role of nurses 
has  expanded  to  include:  (i)  patient  consultations 
(ii) 
for  acute  and  chronic  health  conditions; 
prescribing  and  care  coordination  in  primary  care; 
(iii) outpatient  consultations;  and  (iv)  advanced 
roles in operating theatres. In addition, in 2023 the 
Finnish  government  launched  the  ‘good  work’ 
the 
programme,  which  focuses  on  ensuring 
sufficiency  and  availability  of  personnel 
in 
healthcare, social welfare and rescue services. Key 
objectives include: (i) improving working conditions 
to  retain  and  attract  professionals;  (ii)  enhancing 
training  and  education  pathways  for  healthcare 
implementing 
and  social  welfare 
recruitment  and  retention  strategies,  especially  in 
underserved  regions;  and  (iv)  supporting  mental 
wellbeing  and  occupational  health  for  existing 
staff.  

roles; 

(iii) 

foster 

innovation  and 

The potential of the Finnish health system to 
drive 
industrial 
development  in  the  EU  medical  sector  is  not 
being  fully  exploited.  Finland  is  among  the 
Member  States  that  report  considerable  public 
spending  on  health  research  and  development. 
This  is  reflected  in  the  high  number  of  European 
patents granted: 87 in 2023 in the combined areas 
of  pharmaceuticals,  biotechnologies  and  medical 
technologies,  well  above  the  EU-level  median  of 
29  (260).  Clinical  trial  activity  in  Finland  is  limited 
(261). 

Finland aims to scale up the digitalisation of 
its  health  system,  with  support  from  EU 
programmes.  The  shares  of  people  accessing 
their  personal  health  records  online  and  using 
online health services (excluding phone) instead of 
in-person  consultations,  are  both  among  the 
highest  in  the  EU  (although  the  latter  dropped 
slightly  between  2022  and  2024).  Investments  to 
boost  the  digital  transformation  of  the  health 
sector  in  Finland  are  planned  under  the  RRP. 
Measures  focus  on  increasing  the  public’s  use  of 

(260) European Patent Office, Data to download | epo.org.  
(261) EMA (2024), Monitoring the European clinical trials 

environment, p. 9. 

93 

 
 
 
HORIZONTAL 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  Annex  assesses  Finland’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. 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 
inequalities  and  tackle  climate 
poverty,  fight 
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. 
Graph  A1.1  is  based  on  the  EU  SDG  indicator  set 
developed to monitor progress on the SDGs in the 
EU. 

Finland is making progress and performs well 
on  one  SDG  related  to  competitiveness,  SGD 
9  (industry  innovation  and  infrastructure), 
but  is  moving  away  from  SDG  4  (Quality 
education)  and  SDG  8  (Decent  work  and 

Graph A15.1: Progress towards the SDGs in Finland 

economic  growth).  While  Finland’s  employment 
rate (SDG 8) rose from 76.2% in 2019 to 77% in 
2024,  this  positive  trend  has  weakened  in  recent 
years.  In  turn,  the  long-term  unemployment  rate 
has increased, now standing slightly just below EU 
average  as  well  as  an  increase  in  young  people 
neither  in  employment  nor  in  education  and 
training  (NEET).  While  one  of  the  best  performers 
in the % of adults with at least basic digital skills, 
in terms of basic skills (SDG 4), low achieving 15-
increased  by 
year-olds 
almost 10p.p. between 2018 and 2022, while still 
below  the  EU  average.  Finland  has  increased 
spending  on  R&D  from  2.78%  of  GDP  in  2018 to 
3.09%  in  2023  and  has  set  a  national  target  of 
4% (SDG 9). The recovery and resilience plan (RRP) 
includes  measures  to  further  improve  Finland’s 
productivity by boosting spending on R&D through 
funding packages to promote the green and digital 
transitions, notably in components P3C3 (Research 
infrastructure) 
(Strengthening 
competitiveness) of the plan. 

in  mathematics  have 

P3C4 

and 

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 
five 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 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

94 

 
 
 
 
 
 
 
it  needs  to  slightly  catch  up  for  SDG 17.  In 
addition,  Finland  is  moving  aways  from  the 
goals  on  these  three  SGDs  (8,  16  and  17). 
Finland’s  real  GDP  per  capita  remains  well  above 
the  EU  average  but  slightly  decreased  between 
2019 and 2024, from EUR 43 910 to EUR 43 070 
(SDG  80).  Finland  performs  very  well  on  the 
perceived independence of the justice system and 
the  Corruption  Perceptions  Index  (SDG 16).  The 
share of environmental taxes in total tax revenues 
has  decreased  from  6.9%  in  2018  to  5.3%  in 
2023, just 0.1pp above the EU average.  

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

Finland is improving on some SDGs related to 
sustainability  (2,  6,  7,  9,  12,  13,  15),  but  is 
moving  away  from  SDG  11  (Sustainable 
cities  and  communities),  and  SDG 14  (Life 
below  water).  While  Finland  performs  above  the 
EU  average  on  most  SDGs  in  this  area,  there  are 
some  negative  trends  that  deserve  attention.  For 
instance,  recycling  rates  remain  below  the  EU 
average  (SDG 11).  The  need  for  improvement  is 
most  pronounced  for  SDG 14  (Life  below  water), 
which 
is  both  below  the  EU  average  and 
deteriorating.  At  the  same  time,  the  share  of 
energy 
renewable 
consumption  (SDG 7)  has  continued  to  increase, 
from 40.9% in 2017 to 50.8% in 2023, more than 
double the EU average. In addition, energy  import 
dependency has drastically decreased, from 43.9% 
in  2017  to  29.6%  in  2023,  in  a  country  with  a 
relatively  high  energy  consumption  per  capita, 
almost double the EU average. The first strand of 
the  RRP  includes  investments  in  clean  energy 
(SDG 7),  decarbonisation  of  industry  (SDG 9)  and 
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. 

in  gross 

energy 

final 

Finland  performs  well  on  most  SDGs  related 
to  social  fairness  (SDGs 1,  4,  5,  8,  10),  but 
needs  to  catch  up  with  the  EU  average  on 
SDGS  3  and  7.  The  country  is  above  the  EU 
average  for  several  fairness-related  indicators, 
such  as  people  at  risk  of  poverty  or  social 
exclusion (SDG 1; 15.8% of population in 2023, vs 
21.3% in the EU) or the share of population unable 
to keep their home adequately warm (SDG 7: 2.6% 
in  2023;  EU:  10.6%).  On  gender  equality,  the 
gender employment gap has narrowed to 0.7% in 
2024, vs 3.8% in 2018 and an EU average of 10% 
in  2024)  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 20% in 2017 to 
15%  in  2023.  However,  there  is  still  room  for 
improvement  in  other  indicators,  such  as  healthy 
life  years  at  birth  (57.9  years  in  2022),  which  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 healthcare services). 

While Finland performs well on SDGs related 
to  macroeconomic  stability  (SDGs 8  and  16), 

95 

 
 
 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

society.  Project  selection  under  the  2021-2027 
cohesion  policy  programmes  has  accelerated  and 
implementation  of  selected  projects  has  gained 
momentum.  

The Finnish RRP contains 40 investments and 
19  reforms to stimulate  sustainable  growth. 
The  reforms  address  bottlenecks  for  lasting  and 
sustainable  growth,  while  the  investments  aim  to 
accelerate the digital transformation, research and 
investment  in  the  green  transition,  to  promote 
employment  and  improvement  of  skills,  and  to 
improve access to healthcare and social services. A 
year  before  the  end  of  the  RRF  timespan, 
implementation 
is  progressing  with  EUR  877 
million  funds  disbursed.  At  present,  Finland  has 
fulfilled  33%  of  the  milestones  and  targets  in  its 
RRP  (266).  Increased  efforts  are  needed  to  ensure 
completion  of  all  RRP  measures  by  31  August 
2026.  

Finland  also  receives  funding  from  several 
other  EU  instruments,  including  those  listed  in 
Table A16.1. The common agricultural policy (CAP) 
provides  Finland  with  an  EU  contribution  of 
EUR 4.4 billion under the CAP strategic plan 2023-
2027  (267).  Operations  amounting  to  EUR  972 
million  (268)  have  been  signed  under  the  InvestEU 
instrument backed by the EU guarantee, improving 
access  to  financing  for  riskier  operations 
in 
Finland. 

recommendations 

Finland faces structural challenges in a wide 
range  of  policy  areas,  as  identified  in  the 
country-specific 
(CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.    They  refer,  among  other 
things, 
industry  and 
transport,  supporting  research  and  innovation, 
efficiency  of  and  access  to  social  and  healthcare 
services,  social  security  reform,  tertiary  education 
offer and active labour market policies. 

to  decarbonisation  of 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Finland  to  date  and  the  commitments  in  its 
recovery  and  resilience  plan  (RRP).  At  this 
stage,  Finland  has  made  at  least  ‘some  progress’ 
on 86% of the CSRs (262), and ‘limited progress’ on 
12% (Table A16.2). 

to 

by 

competitiveness, 

EU funding instruments provide considerable 
resources 
supporting 
Finland 
investments  and  structural  reforms  to 
increase 
environmental 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs.  In  addition  to  the  EUR  1.95  billion 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (263) 
are providing EUR 1.9 billion to Finland (amounting 
to  EUR 3.2  billion  with  national  co-financing)  for 
2021-2027 (264) to boost regional competitiveness 
and  growth.  Support  from  these  instruments 
combined  represents  around  1,4%  of  2024  GDP 
(265).  The  contribution  of  these  instruments  to 
different  policy  objectives  is  outlined  in  Graphs 
A16.1  and  A16.2.  This  substantial  support  comes 
on  top  of  financing  provided  to  Finland  under  the 
2014-2020  multiannual 
framework, 
which  financed  projects  until  2023  and  has  had 
significant  benefits  for  the  economy  and  Finnish 

financial 

(262) 14% of the 2019-2024 CSRs have been fully implemented, 
30% substantially implemented, and some progress has 
been made on 42%. 

(263) In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the European Social Fund Plus 
and the Just Transition Fund.  The information on cohesion 
policy included in this annex is based on adopted 
programmes with the cut-off date of 5 May 2025. 

(266) As of mid-May 2025, Finland has submitted two payment 

requests. 

(264) European territorial cooperation (ETC) programmes are 

(267) An overview of Finland’s formally approved strategy to 

excluded from the figure. 

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

applicable.. GDP figures are based on Eurostat data for 
2024. 

implement the EU’s common agricultural policy nationally 
can be found at: https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/finland_en. 

(268) Data reflect the situation on 31.12.2024. 

96 

 
 
 
 
 
 
Graph A16.1: Distribution of RRF funding in Finland 
by policy field 

unemployed  to  make  them  more  employable. 
Another  EUR 182  million  of  ESF+  funds  will  go 
towards  supporting 
learning  and  the 
lifelong 
upskilling  and  reskilling  of  the  labour  force.  The 
aim  is  to  respond  to  skills  needs  arising  from 
changes  in  the  world  of  work,  raise  skills  levels, 
and  help  actors  in  the  education  system  to  be 
better able to respond to the need for continuous 
learning. Part of the funds will be used to promote 
the  recruitment  of  international  talent  in  Finland 
and to ensure that high-skilled immigrants already 
in the country are better integrated into the labour 
market. 

(1) Each RRP measure helps achieve the aims 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 circle 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. 
Source: European Commission 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Finland 

Source: European Commission 

Cohesion  policy  funds  aim  to  increase  the 
productivity  and  competitiveness  of  Finnish 
firms and improve the business environment. 
The  European  Regional  Development  Fund  (ERDF) 
is  enhancing  the  capacity  of  Finnish  businesses 
across  different  regions  of  the  country.  In  the 
clean  economy,  the  ERDF  is  helping  over  1 800 
in  the  digital 
innovate,  while 
businesses  to 
economy  it  is  supporting  over  8 800  businesses. 
The support also extends to over 100 local  public 
introduce  new  digital 
institutions,  which  will 
services  for  the  public  and  businesses.  The 
European  Social  Fund  Plus  (ESF+)  is  investing 
EUR 182 million in increasing the size of the active 
labour  force  in  Finland.  This  is  to  be  achieved  by 
promoting  regional  and  inter-occupational  labour 
mobility,  developing  tailor-made  job  opportunities 
(especially for people with partial work ability and 
migrant backgrounds) and providing training to the 

97 

to 

the 

are 

Finland’s 

contributing 

in  Finland,  for 

to 
Other 
funds 
competitiveness 
instance 
through  open  calls.  The  Connecting  Europe 
Facility  has  financed  strategic  investments  for 
instance  to  support  rail  infrastructure,  aligning 
with 
EU's 
commitment 
decarbonisation objectives, maritime transport and 
the transition to greener road transport by funding 
the development of alternative fuel infrastructure. 
Support 
is  also  provided  for  energy  market 
integration,  decarbonisation  of  the  energy  system 
and security  of energy supply. In particular, it has 
supported  the  diversification  of  natural  gas 
sources  and  routes 
in  Finland.  Furthermore, 
projects  were  supported  to  increase  the  capacity, 
resilience  and  security  of  backbone  infrastructure 
in  Northern  Finland  and  the  Baltic  Sea  and  to 
in  smart 
the  deployment  of  5G 
advance 
communities.  Horizon  Europe  has  supported 
research 
scientific 
innovation, 
breakthroughs  to  scaling  up  innovations,  with 
Digital,  Industry  and  Space,  and  Climate,  Energy 
and  Mobility  as  top  priorities  in  Finland.  In  2024, 
the  Technical  Support  Instrument  (TSI)  supported 
for  instance  the  creation  of  a  transition  strategy 
for Eastern and Southeast Finland’s border regions 
and areas; conducting an auditing sludge for public 
sector transformation; upholding equality and non-
discrimination  in  the  use  of  Artificial  Intelligence 
in  public 
by  equality  bodies  and  regulators 
administrations;  assessing  of  Environmentally 
Harmful  Subsidies  (EHS)  and  the  preparation  of 
national  biodiversity  finance plans, and creating a 
digital finance literacy strategy for Finland. The TSI 
is  also  supporting  Finland  to  develop  its  Social 
Climate  Plan  and  enhance  its  overall  capacity  to 
implement  specific 
investments 
including  by  helping  to 
included 
implement a revised emission trading system.   

reforms  and 

in  its  RRP, 

from 

and 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generationSmarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
      
 
   
in 

education 

participation 

Finland  to  increase  social  inclusion  and  active 
participation,  especially  of  disadvantaged  groups. 
The  aim  is  to  prevent  intergenerational  exclusion 
and poverty by supporting families and promoting 
and 
parents’ 
employment. The goal is for the ESF+ measures to 
reach  approximately  12 000  currently  inactive 
people.  ESF+  is  investing  especially  in  reducing 
child poverty (total funding: EUR 46 million) and is 
supporting  a  structural  reform  of  child  protection 
services  with  an  additional  investment  of  29 
million. Investments are also targeted at the most 
vulnerable: these take the form of payment cards 
worth  EUR 40  that  can  be  used  to  buy  food  and 
basic  materials.  It  is  envisaged  that  600 000 
people will benefit from the assistance. 

Finland’s  RRP  contains  several  reforms  and 
investments  related  to  fairness  and  social 
policies.  Measures  covered  by  the  payment 
request  submitted  over  the  last  year  include  the 
creation  of  new  study  places  in  higher  education 
institutions in Finland and a reform of employment 
services. 

to 

the 

Finland’s  RRP  also  contains  ambitious 
measures 
business 
improve 
environment  and  competitiveness.  As  part  of 
the  measures  covered  by  payment  requests 
submitted  over  the  past  year,  Finland  included 
calls  for  applications  to  support  companies’ 
internationalisation  capabilities,  partnerships  and 
innovation 
the  development  of 
ecosystems, 
infrastructures,  the  renewal  and  development  of 
local and national research infrastructures, as well 
as RDI activities for innovative growth companies.   

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  and 
the  green  transition  in  Finland  during  the 
current  seven-year  EU  budget  (multiannual 
financial  framework).  The  ERDF  focuses  its 
support  particularly  on  innovation:  this  involves 
helping  SMEs  introduce  new  products  to  increase 
the  share  of  renewable  energy  and  improve 
energy  and  resource  efficiency.  Finland’s  CAP 
strategic  plan  2023-2027  allocates  over  EUR 1 
billion  to  environmental  and  climate  objectives 
under  rural  development  (EAFRD),  and  EUR 430 
million  to  eco-schemes  under  direct  payments 
(EAFG). The actions in Finland’s CAP strategic plan 
contribute  both  to  EU  environmental  and  climate 
goals  and  to  supporting  the  Finnish  national  goal 
of  carbon  neutrality  by  2035.  For  example,  the 
plan’s  different 
include  protecting 
peatlands  in  agricultural  areas,  reducing  nutrient 
load in water bodies, and supporting the adoption 
of  new  technologies  and  farming  methods  to 
adapt to climate change. 

strands 

Finland’s  RRP, 
including  the  REPowerEU 
chapter, has a comprehensive set of reforms 
and 
investments  to  support  the  green 
transition.  Measures  covered  by  the  payment 
request submitted over the last year include entry 
into  force  of  the  revised  Climate  Act  setting 
Finland's  ambitious  2035  carbon-neutrality  target 
into  law,  reinforcing  the  country's  commitment  to 
addressing  climate  change  and  aligning  with  the 
European  Green  Deal.  It  also  contained  measures 
to  train  for  green  skills,  support  research  as  well 
as to increase competences of companies in green 
transition.   

Promoting  fairness,  social  cohesion  and 
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Finland.  ESF+  is  investing  EUR 156  million  in 

98 

 
 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

(1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI - Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

99 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)876,9RRF loans0 Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total)1 481,41 940,51 024,5European Regional Development Fund (ERDF) 911,5 870,1 530,4European Social Fund (ESF, ESF+) 569,9 604,7 291,2Just Transition Fund (JTF) 465,7 202,9European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF) 74,4 71,835,9Migration, border management and internal security - AMIF, BMVI and ISF (4) 176,7283,9146,1The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan1 377,4European Agricultural Guarantee Fund (EAGF) 913,0European Fund for Agricultural Development (EAFRD) 464,4Allocation 2023-20274 409,82 637,11 772,8Allocation 2021-2026 1 949,10FisheriesMigration and home affairs 
 
 
      
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

100 

FinlandAssessment in May 2025Relevant 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 anymoreSDG 8, 16Improvethecost-effectivenessofandequalaccesstosocialandhealthcare services.Some progressSDG 3, 8, 162019 CSR 2Some progressImprove incentives to work Some progressSDG 8and enhance skills Some progressSDG 4and enhance active inclusion, notably through well-integrated services for the unemployed and the inactive.Some progressSDG 82019 CSR 3Some progressFocus investment-related economic policy on research and innovation, taking into account regional disparities,Substantial progressSDG 9, 10, 11focus investment-related economic policy on low carbon and energy transition, taking into account regional disparities,Substantial progressSDG 7, 9, 10, 11, 13and focus investment-related economic policy on sustainable transport, taking into account regional disparitiesSome progressSDG 10, 112019 CSR 4 Substantial progressStrengthen the monitoring of household debt Substantial progressSDG 8and establish the credit registry systemSubstantial progressSDG 82020 CSR 1Some progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreSDG 8, 16Addressshortagesofhealthworkerstostrengthentheresilienceofthe health system Some progressSDG 3and improve access to social and health services.Some progressSDG 32020 CSR 2Some progressStrengthen measures to support employment and Some progressSDG 8bolster active labour market policies.Some progressSDG 42020 CSR 3Some progressTake measures to provide liquidity to the real economy, in particular to small and medium-sized enterprises. Full ImplementationSDG 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,Substantial progressSDG 7, 9, 13sustainable and efficient infrastructure Some progressSDG 7, 9, 11, 13as well as research and innovation.Substantial progressSDG 92020 CSR 4Substantial progressEnsureeffectivesupervisionandenforcementoftheanti-moneylaundering framework.Substantial progressSDG 8, 162021 CSR 1Not relevant anymoreIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment. Not relevant anymoreSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Not relevant anymoreSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Not relevant anymoreSDG 8, 16 
 
 
  
 
Table (continued) 

(Continued on the next page) 

101 

Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreSDG 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.Not relevant anymoreSDG 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. Not relevant anymoreSDG 8, 16For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent medium-term fiscal positions. Not relevant anymoreSDG 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 progressSDG 7, 9, 13Accelerate the deployment of renewables, including by further streamlining permitting procedures, Substantial progressSDG 7, 8, 9, 13and boost investment in the decarbonisation of industry Some progressSDG 7, 9, 13and transport, including electrification of the transport sector. Some progressSDG 11Develop energy infrastructure to increase security of supply.Some progressSDG 7, 9, 132023 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 progressSDG 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 progressSDG 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 implementationSDG 8, 16RRP 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) 

Source: European Commission 

102 

For 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 progressSDG 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 3Some 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.Some progressSDG 42023 CSR 4Some progressReduce overall reliance on fossil fuels bySubstantial progressSDG 7, 9, 13accelerating the deployment of renewables, including by further speeding up permitting procedures, andSubstantial progressSDG 7, 8, 9, 13and boost investment in the decarbonisation of industrySome progressSDG 7, 9, 13transport, including through electrification.Some progressSDG 11Develop energy infrastructure to increase security of supply by strengthening the transmission of electricity.Some progressSDG 7, 9, 13Step up policy efforts aimed at the provision and acquisition of skills and competences needed for the green transition.Limited progressSDG 4, 132024 CSR 1Some ProgressSubmit the medium-term fiscal-structural plan in a timely manner.  Full ImplementationSDG 8, 16In line with the requirements of the reformed Stability and Growth Pact, limit the growth in net expenditure in 2025 to a rate consistent with, inter alia, putting the general government debt on a plausibly downward trajectory over the medium term and reducing the general government deficit below the 3% of GDP Treaty reference value.Full ImplementationSDG 8, 16Pursue the reform of the social security system in order to increase the efficiency of the social benefits system, which would improve incentives to work and support the long-term sustainability of public finances.Limited ProgressSDG 1, 2, 102024 CSR 2Address relevant challenges to allow for continued, swift and effective implementation of the recovery and resilience plan, including the REPowerEU chapter, ensuring completion of reforms and investments by August 2026. Accelerate the implementation of cohesion policy programmes. In the context of the mid-term review continue focusing on the agreed priorities, while considering the opportunities provided by the Strategic Technologies for Europe Platform initiative to improve competitiveness.2024 CSR 3Some 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 ProgressSDG 4, 8Ensure that the reform of social and healthcare services improves access to and delivery of services and tackles inefficiencies.Some ProgressSDG 3, 16RRP 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.RRP 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. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

Despite  the  concentration  of  high-tech 
sectors  in  the  capital  region,  and  modest 
growth  in  most  regions,  all  regions  perform 
well  on 
innovation  and  the  quality  of 
government, which provides a solid basis for 
this  would 
further  development.  However, 
require 
addressing 
and 
skills 
demographic  risks  in  some  regions.  Russia´s  war 
of  aggression  against  Ukraine  potentially  poses 
socio-economic  challenges  for  the  eastern  border 
regions. At present the southeastern regions seem 
to be most affected. 

nurturing 

Finland’s real GDP per capita grew slightly in 
2023  (0.5%),  underperforming  the  EU-27 
average  which  is  1.6%.  Finland  has  also 
diverged from the rest of the EU-27 in the longer 
term,  considering  the  country´s  average  GDP  per 
capita  growth  was  lower  than  the  EU  average 
between  2014  and  2023.  In  terms  of  GDP  per 
capita in purchasing power standard (PPS), Finland 
has declined from 114% in 2013 to 105% of the 
EU average in 2023. 

Internal  disparities  between  the  capital 
region and the rest of the country remain but 
have  decreased.  In  2023,  Helsinki-Uusimaa's 
GDP  per  capita  in  PPS  was  131%  of  the  EU-27 
average, and 14-42 percentage points (pps) higher 
than  in  the  other  regions.  Pohjois-  ja  Itä-Suomi 
had the lowest value, at 89% of the EU average. 

Graph A17.1: Average annual real GDP per head 
growth versus GDP per head in 2013 

regions 
(Graph  A17.1).  The  decrease  was 
particularly  pronounced  in  Åland,  where  average 
annual  growth  in  real  GDP  per  capita  was  -1.1% 
below  the  EU  average  between  2014  and  2023, 
and  Helsinki-Uusimaa  (-0.2%)  while  Länsi-Suomi 
and Etelä-Suomi all grew by around 0.5%. 

The  gap  in  GDP  per  capita  between  the 
capital region  and the rest of  the  country  is 
linked to disparities in labour productivity. In 
2023, national labour productivity, as measured by 
real gross value added (GVA) per hour worked was 
around 30 pps higher than the EU average, slightly 
lower 
The 
the  pre-pandemic 
productivity gap between the capital and the other 
regions  has  narrowed  moderately  between  2010 
and  2022  (Graph  A.17.2),  mainly  due  to  a 
progressive, though somewhat limited, catch-up by 
Pohjois- and Itä-Suomi and Etelä-Suomi. 

level. 

than 

Graph A17.2: Labour productivity per hour in 
Finland 

Source: ARDECO (JRC) 

Human capital (269) is important factor in the 
observed  gap  across  the  country.  At  national 
level,  the  percentage  of  the  population  aged  30-
34 with a tertiary education in 2024 (43.2%) was 
below the EU average (44.3%) and has declined by 
more  than  six  pps  compared  to  2020.  Regional 
differences exist, but they are the smallest in the 
EU.  While  the  capital  region  surpasses  the  EU-27 
average  by  3.4  points,  this  is  a  decrease  in  its 
advantage compared to the previous years. Etelä-
Suomi lags most behind, at 39.0%. 

Source: ARDECO (JRC) 

GDP  per  capita  (in  PPS)  compared  to  the  EU 
average  has  declined  in  all  regions  over  the 
past decade, but in Pohjois- ja Itä-Suomi the 
relative  loss  was  smaller  than  in  the  other 

(269) Human capital encompasses knowledge, skills and 

competences, highlighting the importance of education, 
training and experience in building a workforce that drives 
economic growth, innovation and productivity. 

103 

Helsinki-UusimaaLänsi-SuomiEtelä-SuomiPohjois-ja Itä-Suomi-0,50,00,51,01,52,06080100120140160180200220240GDP per head growth, 2014-2023 (%)GDP per head, 2013 (EU27=100)Capital regionOther NUTS2 regionsLinear (National average)Linear (EU27_2020)3035404550556065201220132014201520162017201820192020202120222015 EUR per hour workedOther NUTS2 regionsCapital regionNational averageEU27 
 
       
        
 
 
 
Table A17.1:Selection of indicators at regional level in Finland 

Source: Eurostat and JRC 

in  knowledge-intensive 

Sectoral  specialisation  in  high-tech  sectors 
shows  a  more  polarised  pattern.  In  2024, 
employment 
services 
exceeded  the  EU  average  (41.5%)  in  all  regions, 
ranging from 53.8% in Helsinki-Uusimaa to 43.0% 
in  Länsi-Suomi.  Employment  in  high-tech  sectors 
in  Helsinki-Uusimaa  (10.7%)  was  double  than  the 
EU  average  (5.2%)  and  more  than  double  that  in 
the rest of the country. 

The  capital  region  stands  out  also  for 
business  sector  R&D  expenditure,  which  in 
2022  was  above  the  EU  average  in  all  regions 
except  Etelä-Suomi  and  Åland.  All  these  factors 
consistently point to a dichotomy: on the one hand, 
the  capital  region  is  well  equipped  to  keep  pace 
with the rest of the EU and even outperform it; on 
the  other  hand, the  non-capital  regions  show  less 
ability  to  harness  growth  trends  in  dynamic  and 
advanced sectors. 

regions  all  perform  well 

Finland´s 
in 
innovation.  The  capital  region  is  classed  as  an 
Innovation 
leader+  (2023  Regional 
innovation 
Scoreboard). The other three mainland regions are 
categorised  as  strong  innovator+.  Finland’s  NATO 
membership could open new opportunities for the 
defence  industry  and  its  subcontracting  networks. 
Defence industry companies are spread across the 
country,  with  the  capital  area,  Tampere  and  Oulu 
in the lead. 

The  capital  region’s  demographic  dynamics 
differ markedly from those in the rest of the 
country.  Average  annual  population  growth  at 
national level between 2014 and 2023 (2.8 people 
per  1 000  inhabitants)  was  well  above  the  EU-27 
average  (1.7).  However,  population  growth  was 
concentrated  in  Helsinki-Uusimaa  (+10.4  people 

ja 

island 

Pohjois- 

Itä-Suomi 

per  1 000  inhabitants  on  average)  while  Länsi-
Suomi grew at a rate of only 1.3 and Etelä-Suomi 
and 
experienced 
depopulation  (-1.1  and  -2.2  respectively).  The 
region  of  Åland  experienced 
small 
significant  growth.  Net  migration  followed  a 
similar  pattern  across  the  country.  In  the  short 
term,  depopulation  could  lead  to  a  shortage  of 
resources  in  certain  sectors  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. 

Labour  market  conditions  are  homogeneous 
across  the  country,  with  no  major  regional 
disparities  at  NUTS 2  level.  Labour  market 
conditions worsened in 2023 and 2024 compared 
with 2022, because of the economic downturn. In 
2024, Finland had an unemployment rate of 8.4%, 
2.5 pps above the EU average and 1.6 pps higher 
than  in  2022.  Unemployment  has  grown  in  all 
regions  in  2024,  except  in  the  NUTS 3  region  of 
Lappi.  At  the  same  time  there  are  mismatches  in 
the  labour  market.  In  Lappi,  investments  in  the 
tourism sector are on the rise and the region faces 
challenges  to  meet  demand  for 
labour.  The 
employment  rate  in  2024,  down  for  the  second 
year  –  to  77.0%,  was  still  higher  than  the  EU 
average in all regions except Pohjois- ja Itä-Suomi. 
In western Finland, there are high expectations for 
green  transition  investment,  but  more  significant 
effects  on  employment  are  not  expected  to 
materialise  until  the  2030s.  The  unemployment 
rate  for  15-24-year-olds  was  18.8%  in  2024, 
3.9 pps  higher  than  the  EU  average.  The  largest 
increase  in  youth  unemployment  was  recorded  in 
the  capital  region,  and  Pohjois-  ja  Itä-Suomi  (by 

104 

GDP per head (PPS)Real GDP growthReal GDP per head growthProductivity - GDP per person employed (PPS)Real productivity growth (per person employed)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)Population aged 30-34 with high educational attainmentInnovation performancePopulation growthEmployment rate 20-64At-risk-of-poverty or social exclusionGreenhouse gas emissionsAir qualityIndex EU-27 = 100Average annual % changeAverage annual % changeIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % change% of population aged 30-34RIS regional performance groupAverage annual change per 1000 residents% of population aged 20-64% of total populationtCO2eq. per personConcentration of PM 2.520232014-20232014-202320232014-202320222013-2022202420232014-20232024202420232021European Union (27 MS)1001,71,61000,61000,944,81,775,821,07,110,1Finland1050,80,5102-0,11090,543,2Innovation leader2,577,016,87,74,2Länsi-Suomi971,00,91000,41010,641,3Strong innovator+1,377,38,33,9Helsinki-Uusimaa1310,9-0,2110-0,81230,548,2Innovation leader+10,478,215,05,64,8Etelä-Suomi930,50,6990,21020,539,0Strong innovator+-1,176,016,79,34,6Pohjois- ja Itä-Suomi890,71,0960,21000,640,5Strong innovator+-2,275,416,58,53,7Åland117-0,5-1,195-0,695-0,4Moderate innovator-6,386,42,23,7 
 
      
 
 
2024,  pushing  up  the  national  average  to  5.4%, 
compared  to  4.3%  in  2021.  Etelä-Suomi  and 
Pohjois- ja Itä-Suomi were both below 5%. 

The  economic  situation 
in  Finland  has 
weakened  since  the  2022  Russian  full-scale 
invasion  of  Ukraine.  The  invasion  has  changed 
the  security  environment  and  potentially  poses 
serious socio-economic challenges, notably for the 
eight NUTS 3 regions or parts of them at or close 
to 
the  border  with  Russia:  Etelä-Karjala, 
Kymenlaakso, Pohjois-Karjala, Etelä-Savo, Pohjois-
Savo,  Kainuu,  Pohjois-Pohjanmaa  and  Lappi  (Map 
A17.1).  The  Commission,  in  cooperation  with  the 
OECD  and  national  and  regional  authorities,  is 
preparing  a  transition  strategy  for  the  territory  in 
question  and  strategies  for  the individual  regions, 
to  be  ready  by  mid-2025.  This  project  is  closely 
linked  to  preparation  of  national  Northern  and 
Eastern  Finland  programmes,  to  be  implemented 
during the current government term up to 2027. 

In  Northern  and  Eastern  Finland,  where  the 
level  of  economic  development  has  for  long 
been  frailer,  the  recent  development  does 
not seem to differ significantly from the rest 
of the country (excluding the capital region), 
except  for  some  industries  and  regions.  The 
hospitality and retail sectors in the NUTS3 regions 
of  Etelä-Karjala  and  Kymenlaakso,  which  had 
significant  border  traffic  in  the  past,  have  fared 
especially  poorly,  diverging  from  the  rest  of  the 
country  and  preceding  local  trends  (271).  Due  to 
data  constraints,  the  report  lacks  2023  data  on 
key  regional 
indicators,  such  as  companies´ 
turnover  and  export.  It  remains  to be  seen if  new 
data  will  affect  the  overall  picture  of  recent 
development. 

6.2  and  5.1  pps,  respectively,  between  2022  and 
2024) to reach 20. 

The  at-risk-of-poverty  gap  nearly  closed  by 
2024  between  the  Helsinki  region  and  the 
non-capital  regions.  Finland’s  at-risk-of-poverty 
rate  (16.8%)  was  notably  below  the  EU  average 
(21.0%) in 2024. At 15.0%, the rate in the capital 
region  was  1.5-1.7 pps  lower  than  in  the  other 
regions (3.6-3.9 pps in 2022). 

of 

quality 

government 

The 
is 
significantly  above  the  EU-27  average  in  all 
Finnish  regions 
the  best 
performance in Åland and Pohjois- ja Itä-Suomi. 

in  2024,  with 

(270) 

On  access  to  healthcare  facilities  in  rural 
areas,  Finnish  regions  generally  perform 
much  better  than  the  EU  average,  and  even 
the  average  of  the  more  developed  EU 
regions.  The  proportion  of  the  population  living 
within  a  10-minute  drive  of  the  nearest  health 
centre 
level, 
compared  with the  EU  average  of  28.8%  and  the 
average for EU more developed regions of 35.9%. 
The  best-performing  region  is  Etelä-Suomi,  at 
53.5%,  and  the  worst  is  Åland,  at  26.2%,  where 
island status is of course a factor. 

is  48.6%  at  national 

in  2023 

As regards access to primary schools in rural 
areas,  Finnish  regions  generally  perform 
evenly,  but  worse  than  the  EU  average,  and 
even the average of the EU's less developed 
regions. The vastness of the territory and the low 
population  density  play  a  role,  together  with  the 
characteristics  of  the  natural  environment.  The 
percentage  of  children  under  15  with  a  primary 
school  within  a  15-minute  walk  in  2023  was 
15.8% at national level, compared to 30.8% in the 
EU and 28.2% in the EU's less developed regions. 
There  is  very  little  regional  variation  in  these 
results  and  all  regions,  including  the  capital  city 
region, perform similarly. 

cost  overburden.  Housing 

Helsinki-Uusimaa  stands  out  in  terms  of 
housing 
cost 
overburden is measured as the percentage of the 
population 
total 
housing  costs  (net  of  housing  allowances)  exceed 
40%  of  disposable 
(net  of  housing 
allowances).  The  capital  region  stood  at  7.1%  in 

in  households  where 

income 

living 

(270) As measured by the Regional Quality of Government Index. 

(271) VATT Institute for Economic Research: Regional economic 
development. Data Room Report 4/2024 (17.12.2024). 

105 

 
 
 
Map A17.1:  GDP per head (in purchasing power 
standard PPS), 2023 

Source: Eurostat 

the 

Finland’s  average  greenhouse  gas  emissions 
per  capita  were  slightly  above  the  EU-27 
average.  Finland  generated  7.7  tonnes  of  CO2 
equivalent,  compared  to  7.1  tonnes  in  the  EU  in 
2023.  However, 
trend  has  significantly 
decreased  over  the  last  decade,  halving  since 
2014. Åland and the capital region were below the 
EU  average.  The  highest  value  was  recorded  in 
Etelä-Suomi.  Pohjois-  ja  Itä-Suomi  and  Länsi-
Suomi  exceed  the  EU  average.  In  the  latter  three 
greater  regions,  14  of the  17  NUTS 3  regions  are 
covered  by 
transition  plans, 
addressing the impact of reducing the use of peat 
for energy. 

territorial 

just 

Finnish people breathe the cleanest air in the 
EU,  even  in  the  most  urban  regions.  The 
country  is  well  below  the  EU  average  for  annual 
average  concentrations  of  particulate  matter  (PM 
2.5),  at  4.2  compared  with  10.1.  The  highest 
concentration  is  in  Helsinki-Uusimaa,  due  to  the 
concentration  of  anthropogenic 
metropolitan 
activities, but is still only 4.8. 

106