SY presents multi-billion-euro fiscal consolidation plan

Suomen Yrittäjät, the Finnish SME association, presented its consolidation programme for the next parliamentary term on 30 September. The programme is based on curbing expenditure, reforming the public sector, and growth reforms. It aims to stabilize public finances without raising taxes on work or entrepreneurship. The consolidation programme is estimated to boost public finances by €5.7–8.6 billion.

SY proposes measures including a broad index cut, improvements to the pension system, a reduction in the remit and structures of wellbeing service counties, and a reform of vocational education structures.

“We must hold the line on the debt brake. A chronically indebted, high-tax Finland is wasting tax revenue on interest payments. For businesses, it’s absolutely essential that public finances are put on a sustainable path,” says Suomen Yrittäjät Chair Petri Salminen.

“Fiscal consolidation must not clip the wings of nascent growth. Our consolidation programme shows that public finances can be strengthened without raising taxes on work or entrepreneurship,” CEO Mikael Pentikäinen adds.

Spending cuts main focus

The consolidation programme focuses primarily on reducing spending. It comprises €3.4–5.9 billion in spending cuts, €1.8 billion in revenue-side measures, and €0.5–0.8 billion in reforms to business subsidies and tax expenditures.

Significant savings would come from the central government transfers system for municipalities, making wellbeing service counties more efficient, and reforming public procurement.

“Wellbeing service counties play an important role in public finances. A multi-provider model could improve efficiency by giving SMEs a more prominent role in service provision. At the same time, we have to reassess the counties’ remits and structure,” Salminen says.

Reforms to social security, taxation, and labour markets

The programme also covers reforms to social security, taxation, and labour markets. Suomen Yrittäjät proposes additional revenue from measures such as lower income thresholds for early childhood education fees, reforming transport taxation, and introducing tuition fees for second higher-education degrees.

“Our biggest tax measure is an overhaul of transport taxation, which we expect to raise €1 billion.” We also consider it important to cut business subsidies and tax expenditures,” says Päivi Puonti, a Vice President and the Chief Economist at Suomen Yrittäjät.

Suomen Yrittäjät also proposes reforms to the social security and pension systems. These include making the automatic index increases to social security indices discretionary, improving the efficiency of the earnings-related pension system, and limiting pension accrual during periods without pay.

“Part of our consolidation programme is about improving the efficiency of the pension system and harmonizing the pension schemes for the self-employed. Pension contributions have a major impact on purchasing power and employment – and through those, on growth across the whole economy,” Puonti says.

The Suomen Yrittäjät programme also includes structural reforms to support growth. It proposes extending working hours and making broader use of AI and automation in the public sector.