Finland has run out of other people’s money.
Long held by the European-Socialists as a darling of how things work, Finland is finally succumbing to reality:
(Reuters) – Finland’s government announced a long-term plan to start scaling back its welfare system, one of the most generous in the world, aiming to preserve its triple-A credit rating in the face of a slower economy and aging population.
The inevitability of the reforms is such that surprise can only be allowed for those who are surprised. With taxes rates that are nearly the highest in the world and benefits that are seen as some of the most generous, it’s no wonder that people feel little reason to work:
Finnish taxes are already among the highest in the world at 44.1 percent of GDP, meaning changes need to come from cutting benefits or encouraging people to work longer.
OECD data shows Finland’s average job participation rate, or the proportion of active workers to the total labor force, was 75 percent last year, lower than a range of 78 to 80 percent among Sweden, Denmark and Norway.
The government’s plan also includes cutting financial benefits for students to encourage them to look for work earlier.
It is also proposing changing childcare leave policies to encourage mothers to return to work sooner.
Under the existing system, parents of children under 3 can take paid leave beyond the initial, parental leave period of 9 months. The planned change would force parents to split the second leave period, drawing mothers back to work sooner but also encouraging more fathers to take leave.
It’ll be fun to watch Finland specifically and the Nordic states in general as they begin to fail under the weight of their systems.