Social security or welfare in Finland is very comprehensive compared to what almost all other countries provide. In the late 1980s, Finland had one of the world's most advanced welfare systems, which guaranteed decent living conditions to all Finns. Created almost entirely during the first three decades after World War II, the social security system was an outgrowth of the traditional Nordic belief that the state is not inherently hostile to the well-being of its citizens and can intervene benevolently on their behalf. According to some social historians, the basis of this belief was a relatively benign history that had allowed the gradual emergence of a free and independent peasantry in the Nordic countries and had curtailed the dominance of the nobility and the subsequent formation of a powerful right wing. Although Finland's history was harsher than the histories of the other Nordic countries, this did not prevent the country from following their path of social development.Text from PD source: US Library of Congress: A Country Study: Finland, Library of Congress Call Number DL1012 .A74 1990.
History
In the last years of the nineteenth century, Finnish social policy had as its goal the lessening of class friction. The few existing pieces of social legislation addressed the needs of specific groups rather than of society as a whole. In the first two decades after the Finnish Civil War in 1918, little was accomplished in welfare legislation except the "Tenant Farmer Act" (torpparilaki, torparlagen), which gave tenant farmers the possibility to buy the land they used and thus get a more secure living. A woefully insufficient national pension plan was set up in 1937, as were measures to aid mothers in need. It was only after World War II that Finnish social policy acquired the characteristics that in the next decades made it similar to other Nordic systems of social welfare.
According to the Finnish sociologist Erik Allardt, the hallmark of the Nordic welfare systems is their comprehensiveness. Unlike the welfare systems of the United States or most West European countries, those of the Nordic countries cover most of the entire population, and they are not limited to those groups unable to care for themselves. Examples of this universality of coverage are national flat-rate pensions available to all once they reach a certain age, regardless of what they paid into the plan, and national health plans based on medical needs rather than financial means. In addition, the citizens of the Nordic countries have the legal right to the benefits provided by their welfare systems, the provisions of which are designed to meet what is perceived as the collective responsibility to ensure everyone a decent standard of living. The Nordic system is also distinguished by the many aspects of people's lives it affects.
The Finnish welfare system differs from those of other Nordic countries mainly in that its benefits are lower in some categories, such as sickness and unemployment payments; otherwise, the Finnish system fits into the Nordic conception of social welfare. Finnish social expenditures constituted about 7 percent of the country's gross domestic product in 1950, roughly equal to what Sweden, Denmark, and Norway were spending. By the mid-1980s, Finland's social expenditures had risen to about 24 percent of GDP, compared with the other countries' respective 35, 30, and 22 percent. Less than 10 percent of these expenditures were paid for by Finnish wage earners; the remainder came roughly equally from the state and from employers. Until the second half of the 1970s, Finnish employers had paid a higher share of social outlays than their counterparts in the other Nordic countries. In response to the slowdown of the world economy after 1973, there was some shifting of social burdens to the state, which improved the competitiveness of Finnish companies abroad.
Finland's welfare system also differed from those of its neighbors in that it was put in place slightly later, and it was only fully developed in the decade after the coalition government in 1966 between the Social Democrat and the agrarian Centre Party.Manuel Alvarez Rivera, "Election Resources on the Internet: Elections to the Finnish Eduskunta (Parliament)" http://electionresources.org/fi/ After World War II, the Finns directed their attention to maternal and child care. In 1957 the government established an improved national pension plan and supplemented it in the early 1960s with private pension funds. Unemployment aid was organized in 1959 and in 1960, and it was reformed in 1972. Legislation of the 1950s and the 1960s also mandated the construction of a network of hospitals, the education of more medical personnel, and from 1963 to the early 1970s, the establishment of a health insurance system. The housing allowance system expanded during the 1960s to reach ever-widening circles of the population. Health-care officials turned their focus away from hospital care in the 1970s, and they began to emphasize the use of smaller local clinics. By the 1980s, the Finnish welfare system was up to Nordic standards and had the support of most Finns. All major political parties were committed to maintaining it, and its role in Finnish society seemed secure for the coming decades.
At the end of 2017, the Social Insurance Institution of Finland (KELA) provided refunds of medical expenses to 3,764,362 people and child expense refunds to 1,003,635 people as well as 643,153 pensions, 268,537 disability benefits and 286,630 sickness allowances.
Organization In the late 1980s, the Ministry of Social Affairs and Health directed the welfare system through five departments: social insurance, social welfare, health care, temperance and alcohol policy, and labor. According to Finland's administrative tradition, it is the task of a ministry and its departments to determine policy, which is then administered by central boards. In the case of social policy, there were three central boards for social welfare, health, and labor protection. An exception to this administrative division was the Social Security Institute, which supervised the national pension plan and health insurance for the Eduskunta and the Council of State.
The actual supplier of social care is usually the local government—-the municipality—-supervised by authorities at the provincial level. In the early 1980s, funds from the state made up about 30 percent of the money spent on all social services and pensions, while employers supplied about 40 percent; local governments, 15 percent; and the recipients of services, the remainder.
Income security programmes classified as social insurance
Finland, like the other Nordic countries, divides most of its social programmes into those that guarantee income security and those that provide social and health services. Income security programmes come in two categories: social insurance, which provides income despite old age, illness, pregnancy, unemployment, or work-related injuries; and income security classified as welfare, which consists of income transfers to aid families through measures such as child payments, maternity grants, payments to war victims and their survivors, and financial aid to those afflicted by disability or pressing needs. Programs of the first category, income security guarantees, take some 80 percent of the funds expended for social welfare.
National pension plan Finland's first national old-age pension plan dates from 1937, but it was so poorly funded that a new National Pensions Act was put into effect in 1957. In the late 1980s, this law, somewhat reformed, was still the basis of Finland's National Pension Plan, which was open to all residents over the age of sixteen, even to those who had never paid into it. Even those foreigners not from the Nordic countries were entitled to this pension if they had resided in Finland for at least five years. Those who left for residence in a country outside Nordic Europe, even those who were Finnish citizens, could receive the pension for only one year. The flat-rate national pension could be paid as an old-age pension, once a person reached the age of sixty five; as an invalidity pension (either full or partial) to those between the ages of sixteen and sixty-four who were no longer able to work; or, in some cases, to the long-term unemployed who were in their late fifties or early sixties. In addition to these classes of beneficiaries, survivors of those eligible for national pensions who were not themselves eligible for the pensions could receive pensions under the terms of the Survivor's Pension Plan. Also tied to the National Pension Plan were payments for handicapped children living at home and for some combat veterans of World War II.
Payments of the national pension are uniform for everyone. To this amount the assistance payment was added, which varied according to a pensioner's marital status, the cost of living in his or her locality, and other pensions that he or she received. Other supplementary payments could be made for dependent children, for degree of disability, and for housing costs, as well as for veterans of the Civil War and of World War II. National pensions are indexed, and they increase in value each year. Since reforms of the early 1980s, national pensions became non-taxable if they were the sole source of income. Pensions were no longer affected by a spouse's earnings or pension income, and the national pension could only be reduced by income from other pensions. The National Pension Plan was funded by the beneficiary's own contributions, about 2 percent of his or her locally taxable income, and by employer contributions of 4 to 5 percent of the insured person's wages.
Employee pension plans The Employees' Pensions Act was passed in 1961 to supplement the National Pension Plan which, while adequate for Finns living in the countryside–a majority of the population until the 1960s–did not provide enough benefits for city dwellers. During the next decade, other compulsory wage-related pension plans were enacted into law for temporary employees, for national and local government employees, for those working for a state church, and for the self-employed. At the end of the decade, a supplementary plan was created for farmers as well. Seamen had had an income-based plan since 1956, and, as of 1986, those active in freelance professions such as acting and writing also obtained coverage. These employment pension plans were completely funded by the employers, private or public, who paid contributions, equal on the average to about 10 percent of a worker's earnings, into funds managed by seven large insurance companies or who set up funds on their own. Self-employed persons had to choose a fund. The Central Pension Security Institute was responsible for keeping records about employment and benefits.
The normal age of pensionable retirement was sixty-five, and the pension paid was based on the average earnings one had received in the last four years of work ending two years before retirement. One could receive up to 60 percent of private-sector earnings and up to 66 percent of public-sector earnings. Older employees, at work before these pension plans became effective, were guaranteed a minimum pension of at least 29 percent if they retired before 1975, and 37 percent if they retired after this date. Like the national pension, wage-related pensions were indexed, and they increased each year. In addition, there were provisions relating to disability, early or late retirement, and survivors' benefits similar to those in effect for the National Pension Plan.
Sickness insurance