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Kela: 62k more households in Finland fall into poverty

Those households include around 16,000 families with children, according to Social Insurance Institution Kela.

A Helsinki church offering food to people in need, photo taken in September 2020 Image: Jorge Gonzalez YLE
Yle News

Ballooning prices for energy and food have caused about 62,000 additional households to fall into poverty, according to Finland's benefits administrator, the Social Insurance Institution (Kela).

Those households included roughly 16,000 families with children, Kela said in a statement issued on Wednesday.

According to modelling by researchers, the poverty rate has risen by a total of 2.5 percentage points as a direct result of the war in Ukraine as well as the energy crisis.

"The rising cost of energy is particularly difficult for many families with children because it is difficult to reduce its consumption," said Tapio Räsänen, a Kela researcher. He noted there are no other affordable forms of energy available.

Benefit changes "not enough"

According to researchers, previously-announced proposed changes to Finland's child benefit system would have little impact on the levels of poverty among families with children, Kela noted, adding that some suggested changes could worsen the situation.

The researchers said that a 10 percent increase in child allowance would only reduce the child poverty rate by one half of a percentage point, the researchers found, and would have limited effect on the purchasing power of low-income families with children.

A half of a percentage point would correspond to about 5,000 children, the researchers said.

Social insurance agency Kela pays child benefits (siirryt toiseen palveluun) to kids until the age of 17. The payments, which start at just under 95 euros per month for a single child, slightly increase (siirryt toiseen palveluun) for each additional child.

Meanwhile, the researchers found that increasing child allowances for single-parent households would reduce poverty levels of families with children by only a tenth of a percentage point, the researchers said.

"The child benefit is subject to a lot of discussion and expectations. However, it only covers a small part of children's expenses and its moderate increase alone would not be enough to correct the weakened purchasing power," said Tiina Ristikari, a research professor from the Itla Children’s Foundation.

She added that solutions for poverty among families with children should also be sought from targeted benefits and services.

Due to rising prices over the summer, Minister of Finance Annika Saarikko (Cen) suggested that families with children should receive a one-time supplementary allowance payment at the end of the year.

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