• The Rise of Anti-Poverty Policies in Finland

  • By Susan Kuivalainen , Mikko Niemelä | 25 May 09
  • Welfare states everywhere are changing. Over the past decades, many states in the western world have entered a phase of rethinking, retrenchment and reconstruction. A number of studies have examined and explained these changes. Recently, scholars have turned to study ideas in the explanation of policy change in the welfare state (e.g. Campbell 1998; Cox 1998; Blyth 2001; Schmidt 2001; Béland 2007). They have outlined the importance of studying agendas, frames and policy paradigms for a fuller understanding of policy change. This article seeks to analyse when, how and why the policy paradigm regarding to poverty changed in Finland.

    The principle of universalism is one of the most important ideas in the Nordic welfare states, which are characterised by a low degree of selectivity, high coverage of social protection and universal, publicly provided services. In the universalistic countries, selective policy measures have had only a marginal role in providing social benefits and welfare services. Targeted anti-poverty policies, for example, have not been considered as specific aims of social policy in the Nordic countries (Korpi & Palme 1998).

    The situation altered in Finland in the 1990s, when as the result of a deep economic recession lasting from 1990 to 1993, GDP declined by 13 percent and unemployment rose to 18 percent. In 1994 the Finnish economy started to recover from the recession. However, in spite of the recovery, the country was not the same as before the economic slump. Persistent unemployment and widening inequality emerged as new problems. Income poverty measured by Eurostat standards increased from 6 % to 12 % during the period 1994-2004 and child poverty increased from 4 percent to 12 percent during the same period.

    As John W. Kingdon (1995) has noted, policies are often changed in major ways within relatively short “windows of opportunity” during which conditions are temporarily ripe for increased attention and action. During the 1990s various actors placed poverty on their agendas, and new ideas about how to deal with the problem of poverty emerged. The paradigm has undergone a stage-by-stage change, and there is now a new element in the Finnish welfare state that can be called “anti-poverty policy”. It can be understood as supplementing or replacing policy whereby measures – contrary to the idea of universalism – are targeted at the poor.

    In this article we focus on the ideas put forward by different key actors with regard to poverty from the mid 1990s to 2007. The overall aim of the paper is to describe the rise of anti-poverty policies in Finland. It includes an empirical analysis of the documents produced by various key actors. The key political actors studied are government, political parties, church and nongovernmental organisations.

    The Rise of Anti-Poverty Policies in Finland. The Church and the Non-Governmental Social Welfare Organisations

    In Finland, it was the Lutheran church and the non-governmental social welfare organisations who first took up the issue of poverty. The church in particular started initiatives to deliver food aid and organised other measures for people in the most vulnerable positions during the economic recession. The church has tried to influence political decision-makers, by setting an example by its own activity. It also took the initiative to call together an expert group to discuss the issue of poverty. A group known as the “Hunger Group”, established in 1997, had a broad and influential representation from various institutions, such as parliament, labour market organisations, and the Association of Finnish Local and Regional Authorities. Also, it had an advisory board consisting of researchers, civil servants and members from non-governmental organisations. The main purpose of the group was to spark debate on poverty. Its message was targeted at state authorities and, above all, the incoming government after the parliamentary election of 1999. The group argued that the incoming government would have to draw up and carry out a programme to fight poverty by addressing the question of poverty and social exclusion in the government programme.

    The non-governmental social welfare organisations also took an active role in raising the issue of poverty during the 1990s. The Finnish branch of the European Anti-Poverty Network (EAPN-Fin), established in 1994, has been a chief actor in this field. Its goal is to act against poverty and social exclusion and to serve as a platform for various actors. EAPN-Fin has over the years issued a number of statements on poverty – alone and with other non-governmental organisations – and has proposed many means to combat poverty.

    The inadequate level of basic security benefits and the unsatisfactory functioning of these schemes were identified by the church and the non-governmental organisations as the most important reasons for poverty. Moreover, they have strongly criticised the policy practiced and have asserted that Finland has compromised the principles of the Nordic welfare state and that Finnish society is moving from the universal social policy model towards the residual model.

    The church and the non-governmental social welfare organisations have emphasised the importance of upholding the legacy and principles of the Nordic welfare state model. They argue that the primary aim of social policy is to guarantee a decent standard of living for all citizens. Nonetheless, they also make a case for targeted measures, but for slightly different reasons. The church considers the increase in the use of targeted measures to result from diminishing resources; hence, the resources must from now on be targeted more carefully at fewer people. The non-governmental organisations favour targeting in cases where individually planned measures are needed. Both delivered concrete assistance during the deepest recession of the early 1990s, and then, in the latter half of that decade, made the issue of poverty part of their official agendas. The clearest evidence of their dominant role is the report by the “Hunger Group”, which influenced the poverty-related policies contained in the programme of Prime Minister Paavo Lipponen’s second government.

    Government

    The new government (1999 – 2003), headed by social democratic Prime Minister Paavo Lipponen, released its programme in April, in which it stated that “the Government’s key area of emphasis is to promote activities which prevent and reduce serious poverty problems, social exclusion and the accumulation of deprivation”. The programme represents a turning point in Finnish policy. For the first time in history, poverty was mentioned in a government programme. The government programme is a key policy agenda in Finland, and as such it addresses the issues and problems perceived as significant at a given time. Every government programme after Prime Minister Paavo Lipponen’s second government has given particular attention to poverty. This underlines the importance of poverty as a significant issue that merits serious attention and can also be seen as a sign of continuity in the changed policy.

    The present government programme of Prime Minister Matti Vanhanen’s second government (2007 – 2011) declares on page one that “the individual’s basic social security must be strengthened. Social services and aid should target people in greatest need of assistance”. Poverty and social exclusion receive more attention than in the previous programmes. The principle underlying the programme is the strengthening of citizens’ basic social security. In the economic strategy section the government defines as its key goals the spreading of the benefits of well-being to all and the slashing poverty. Similar to the other programmes, work is seen as the most important tool in the fight against poverty. The goal is to increase work incentives and to decrease disincentives. The government’s key initiative is to reform the social protection system. The goal of the social protection reform is to offer more incentives for work, alleviate poverty and provide an adequate level of social protection in all life situations. A commission on social security reform was set up in June 2007.

    The government has laid out persuasively its premise in social policy, which is the preservation of Nordic welfare society. More than in the government programmes, this premise appears in the Finnish National Action Plans on poverty and social exclusion. In the National Action Plans it is frequently stated that the Finnish social security system rests on the basic principles of universal social welfare and health services and a comprehensive income security system. A key tool in the prevention of social exclusion is adherence to the principle of universality. It is strongly stated that policies aimed at combating poverty and social exclusion will rely first and foremost on the development of the universal system.

    Nonetheless, the government has also put forward targeted measures. Specially targeted measures were seen as critical owing to the increase in problems stemming from social exclusion. By targeted measures the government mainly refers to the measures taken in accordance with the Government’s budget proposals for 2002, 2006 and 2007. Measures labelled by the public as “packages for the poor” were new measures to improve the well-being of families and the status of persons with the lowest incomes. The increase in the child maintenance allowance by approximately EUR 6 per month per child is an example of such measures. These targeted measures diverge considerably from the core idea of universalism, in which benefits are intended equally for all citizens and benefit levels in general are to be kept at a high enough level to obviate the need for targeted measures.

    Political Parties

    It was not until the end of the 1990s that poverty was first mentioned in political party programmes. Improving employment was seen as the main objective for each party in the mid 1990s, and poverty or social exclusion were scarcely mentioned in the documents.

    Some differences can be observed between the parties in terms of the timing of the addition of poverty to the policy agenda. The first party to put poverty on its policy agenda was the Centre Party. In 1998, it issued a report that began with the following statement: the goal of the reformed policy is to bring about a new society where poverty and social exclusion are eradicated. The party was in opposition from 1995 to 2003, during which time it strongly criticised the practiced policy. The opposition position allowed the party to present alternative solutions to the issue of poverty, such as a guaranteed basic income. The Left Alliance introduced its own anti-poverty programme in 1999. Like the Centre Party, it too saw the widened income inequality as the core of the poverty problem. The Greens refer to poverty for the first time in their family policy programme of 1999. The Social Democratic Party and the Conservative Party addressed the issue of poverty in 2002. A statement issued by the Social Democratic Party congress called for special attention to be paid to preventing and alleviating poverty and social exclusion. The growth of social exclusion was regarded as a future challenge. Unlike the Social Democratic Party, the Conservative Party has not assigned any significant role to poverty in its later programmes. All in all, it is worth noting that poverty has – somewhat predictably – been given more emphasis by the left-wing than the right-wing parties. The Centre Party, though classified as a rightist party, has a strong tradition in stressing the issue of poverty. Poverty has been a central political issue among the parties that took up the issue in the first place. In the parliamentary election of 2007, poverty was a key theme for the Centre Party, the Left Alliance and the Greens.

    During the latter part of the 1990s each party under consideration in this paper regarded unemployment as the main societal problem and the key goal was thus to decrease the unemployment rate. All proposed measures (mainly means of active social policy) were geared towards that goal. Work is considered as the best way to reduce poverty. Concerns over the level of social security became more widespread at the turn of the decade. Each party put emphasis on the principle of the Nordic welfare model, all being in support of it. However, emphasis on the means to be employed varied. While the rightist parties stressed the role of services, the parties of the left underscored the role of social transfers and the adequacy of benefits. The first expression in a policy agenda of the need to target benefits thus occurred at the beginning of this decade. On the whole, the measures proposed largely correspond to those outlined in the “packages for the poor”. The proposals were small and incremental and were designed to help people in the weakest position. They were, first and foremost, targeted improvements.

    Conclusion

    We have described above the rise of anti-poverty policies in Finland. The programmes such as the National Action Plans against poverty and social exclusion themselves indicate that there is a new and separate element in the Finnish social policy. The paradigm has undergone a stage-by-stage shift, and there is now a new element in the Finnish welfare state that can be called “anti-poverty policy”. It can be understood as supplementing or replacing policy, so as to target it to the poor, contrary to the principles of universalism.

    The most fundamental symbols of Finnish antipoverty policy have been the legislative “packages for the poor”. They have included a selection of measures which made minor improvements to the level of certain allowances. From the ideational perspective of policy-making, it is important that these packages illuminate the core of the paradigm change from the idea of universalism to the idea of selectivism – packages for the poor were targeted “to the neediest”. The packages for the poor have meant reforms which take categorical rights and target them at a select sub-set of the group. In addition, from the “ideas as frames” perspective, “packages for the poor” are the most obvious examples of how political actors have framed policy alternatives in order to justify targeted and selective policy measures.

    In response to rising social spending, many countries have turned towards more targeting. As the demands for sustainability and affordability increase, targeting of benefits becomes appealing. Targeted benefits are favoured for the benefit of greater efficiency and lower costs. They are defended through the well-known argument that targeting benefits to those most in need is more effective and efficient at closing poverty gaps than universal payments, where there is a spillover to those who do not need benefits (e.g. Whiteford 1997, 45). As the resources available to the welfare state shrink, the argument that higher income groups can look after themselves becomes more appealing; resources should be used to help the needy rather than lavished indiscriminately on all citizens.

    Targeting usually through means-testing involves, however, many questionable aspects. Because benefits are targeted at the neediest groups of society, benefits easily become labelled as services for the poor. Applying for these benefits, a person factualises his / her insufficient resources, and hence portrays him/herself as poor. And this indicates deviance from the norms of society. Partly for these reasons, stigmatisation is often associated with targeted and means-tested benefits. This can lead to a situation where people do not want to apply for benefits even though they would be entitled to support based on their income. Low take-up rates also characterise these benefits. The rules governing such assistance and determining entitlement can be complicated and unclear, which may lead to a situation where people are unaware of their entitlement. Some people may have difficulties in securing their entitlements because of infirmity or low education. From a social rights point of view, an important requirement is that those who are entitled to benefits know what their rights are and that they are able to lay claim to them. High administration costs and high effective marginal tax rates are also associated with targeted benefits. Because need-tested benefits always involve a test of means and need, administrative costs are high. Means-tested benefits also encounter problems with respect to work and can create poverty traps. Most often, earned income reduces the amount of benefit paid. The more earnings are taken into account the higher the effective marginal tax rate is.

    There are many who argue that targeted benefits are not necessarily the most efficient method of reducing poverty, quite the contrary. The well-known study by Korpi and Palme came to conclusion “the more we target benefits to the poor…the less likely we are to reduce poverty and inequality” (1998, 681-682). Because targeted benefits are directed at the low-income people, there is no rational base for a coalition between those above and those below the poverty line. Targeted programs thus have a narrower support and political base, and the amount transferred via targeted programs is likely to be much lower than via universal programs. According to the middle-class inclusion thesis, programs that respond to the demand for income security among the middle- and higher-income groups promote support of the overall system to allow the provision of high levels of economic protection to lower income groups as well.

     

    References

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    Kingdon, John W. (1995) Agendas, Alternatives, and Public Policies. New York: HarperCollins.

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    Whiteford, Peter (1997) Targeting Welfare. A comment, The Economic Record, Vol. 73, No. 220: 45-50.