The Government has made reductions, cuts, downgrades, punishments and savings.
- The Government has decided to reduce the staff allocation for round-the-clock elderly care from 0.65 to 0.6. This means that the number of nurses in relation to the number of those needing care will become lower.
- The previous Government’s target to raise the staff allocation to 0.7 by 2028 was cancelled.
- The Government has made cuts to vocational education totalling EUR 120 million. This will affect the education of practical nurses in particular and, consequently, the availability of the workforce in the sector in the future.
- For the female-dominated sector, the cancellation of the adult education allowance was a devastating decision and the model that replaced the allowance has proven completely inadequate.
- In the Government Programme, it has been outlined that the pay raises in the public sector, including nurses, may not exceed the pay raises in the export sectors. This limits the opportunities of nurses to receive larger pay raises than other sectors.
- The Government has decided on cuts of EUR 1.4 billion to the financing of wellbeing services counties.
- As its latest manoeuvre, the Government has proposed additional savings of EUR 170 million in the social and healthcare services of wellbeing services counties, which target both child protection services and services for the disabled.
Savings have led to significant dismissals of nurses
The savings in the social and healthcare sector have led to several cooperation negotiations concerning nurses in the wellbeing services counties. The reduction of nurses will lead to an increased workload for the remaining workforce, which will increase time pressure and compromise patient safety. In the long term, the shortage of nurses will become worse as fixed-term employment contracts will not be extended.
The reduction of care services will increase the load on emergency and rescue services and the inpatient wards of hospitals, which will in turn increase expenses and reduce the effectiveness of the services.
Transferring the responsibility for care to relatives and loved ones will increase the demand for unpaid care. Unpaid care, in turn, will increase the load of relatives and loved ones, which may lead to poorer work performance and financial losses.
Social and healthcare sector cuts compromise security of supply
Defence expenses are being raised to 3% of the gross national product but, at the same time, the cabinet of Petteri Orpo will compromise security of supply by making cuts to social and healthcare services. Safety is the inclusion of everyone in society and making high-quality healthcare services available to everyone. Disaster preparedness must also be ensured.
Increases to defence expenses are probably inevitable in these geopolitical circumstances, but they cannot be financed at the expense of social and healthcare services. Instead, the cuts need to target other areas or having more national debt must be tolerated.
Tax cuts for the rich may even slow down economic growth
The Government has also suggested cutting the taxes on earned income for medium and high income earners and corporate taxes. According to the traditional trickle-down economics suggested by the supply side, tax cuts increase the incentives to work, save and invest.
However, studies show that the effect of tax cuts for high income earners on growth is very small or nonexistent. For example, according to the studies carried out by the International Monetary Fund IMF and the Organisation for Economic Co-operation and Development OECD, no strong evidence of tax cuts for the rich significantly increasing the number of jobs or investments was found. These cuts would reduce the tax revenue of the state by hundreds of millions of euros.
Tax cuts for the rich increase the income gap as the benefits are provided to the upper class. This may lead to social inequality and reduced consumption as the rich are more likely to save their money. Inequality in itself may slow down economic growth over the long term.
The marginal propensity to consume of those earning high income is lower than the propensity of those with low income. If the aim is to increase demand, providing the rich with tax cuts is not a sensible method. Supporting those with low income and public investments typically boost demand better.
The economy can be balanced more fairly
Every economic policy enforced is a value-based choice, and the Government is set on its course to make cuts to the welfare state. There are other alternatives for balancing the economy than social and healthcare sector cuts.
For example, according to an estimate by the Ministry of Finance in 2017, the abolishment of the dividend income tax relief for non-listed companies could bring about EUR 430 million in tax revenue.
Furthermore, the Ministry of Finance’s estimate suggests that a reform of the taxation of dividend and property earnings of tax-exempt organisations could generate hundreds of millions in tax revenue.
The options are there, but there must also be a willingness to enforce fairer economic policies.