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Economic growth not reflected in households drawing income support

Finland's recent economic growth has not improved the situation of people receiving basic social assistance, according to the state benefits agency.

Opiskelijoita vallatun Porthania-rakennuksen edustalla
Young people drawing student loans no longer quality for income support. Image: Riikka Luukkanen / Yle
Yle News

State benefits administrator Kela reports that the share of people receiving basic social assistance, the last-resort form of financial assistance in Finland, has fallen in the last year. According to Kela figures, the number of households receiving income support declined by three percent between July 2017 and the same period this year.

However, Kela researcher Tuija Korpela says that the decline is due to many students no longer being eligible for the temporary support.

"Changes were made a year ago August about how students receive aid, and this has become clear in income support statistics. In other words, the number of student households receiving basic social assistance has fallen and this explains the decline," Korpela says.

A policy change last year entitled students in Finland to year-round subsidies from the state for meeting their housing expenses, in effect transferring the processing of student financial aid to the auspices of the housing benefit system. The monthly state guarantee for student loans was also increased at this time, in an effort to encourage more students to take student loans instead of relying on financial aid from the state.

Because a loan is considered income when applying for income support, people who have taken out state-guaranteed student loans rarely qualify for basic assistance anymore.

Korpela says that the stagnant situation beyond the student exodus is not surprising and that improvements to national finances are rarely seen at low-income levels of society.

"A bump in the economy isn't reflected very much in the numbers of people who receive social assistance. There are a lot of long-term unemployed and other such groups that aren't affected by economic upturns," says Korpela.

No impact yet from activation model

On the other hand, Korpela says the activation model introduced by the government last year has also not contributed to an increase in the overall number of people drawing temporary income support, as many opponents of the new policy had feared.

"The activation model may cause more people to enter basic social assistance circles in the long run. But for those people who are already receiving income support, steps have already been taken to make up for the effects of the cuts. This development can only be seen in state income support expenses," Korpela says.

The Kela researcher admits that the stigma and paperwork involved with applying for basic social assistance in Finland can be a burden. It can also prohibit some people that would otherwise qualify from submitting their applications in the first place.

"Completing the application can be very difficult. It requires that people are very forthcoming about themselves and their situation, which many people can find humiliating," she says.

According to Kela's website, in 2018 the basic amount of temporary income support in Finland for persons living alone is 491 euros per month. The money is meant for covering basic expenses such as food, clothing, personal hygiene and public transport. Other forms of aid are available for housing, child care and unemployment, for example.

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