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Finnish income gap creeps wider

Finland’s highest earning ten percent receive about five and a half times the income of the nation's lowest paid. Furthermore, the gap between the top earners and those worst-off continues to grow, despite many claims to the contrary.

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According to Statistics Finland, the top decile of income earners took home an after-tax average of around 55,000 euros last year. The sum indicates that there is not a large group of millionaire high rollers in Finland.

Finland’s bottom ten percent of income earners received around 10,000 euros per year after tax. The most recent information on the distribution of income comes from Statistics Finland’s data on the national population’s 2011 earnings.  

The average Finn gets in hand some 25,000 euros a year, after the states takes its slice of the pie in taxation.

Still a bastion of equality?

By global standards, Finland can still boast that it is the most egalitarian nation in terms of the wage gap between rich and poor. However, the difference is growing. The growth in income disparity can, at least this year, be linked to income from dividends which varies from year to year.

However, as the main graph shows, the income gap is not closing, as some have claimed.

"Yes, it’s growing," says research coordinator Ilpo Suoniemi, from the Labour Institute for Economic Research.

According to Suoniemi, above all, lighter taxation on hefty dividends plays a role in the widening rift. At the same time, the new agreement to keep pay increases at zero will have its impact, likely taking real income into the red.

Tax breaks for all – but less for the poor

In the long term, the Finnish tax burden has been reduced. Taxation on Finland’s "average Joe" earners has dropped by four percentage points since 2000 – in 2011, the taxation on middle-income earners was 20.1 percent. At the same time, the tax burden on high earners fell from 33.7 percent to 30.4 percent.

The lowest decile were also the least likely to benefit from tax breaks – they got the smallest cut, with the state taking on average ten percent – only 3 percent less than previous figures.

Overall, the statistics show that the wage gaps appears to be creeping steadily wider.

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