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Poor getting poorer in Finland, rich getting richer, think-tank finds

Both income and wealth inequality are growing in Finland, according to a fresh study.

Hurstin valinnan leipäjono Helsingissä.
People queuing up at a food bank in Helsinki's Kallio district. Image: Pasi Peiponen / Yle

Economic inequality is growing in Finland, according to a report published on Tuesday by the Kalevi Sorsa Foundation, a Social Democratic think-tank.

The foundation's project manager Maija Mattila said she hoped the findings would help raise societal awareness regarding growing inequality in Finland.

"The state of inequality in Finland 2020" was authored by 20 researchers from the universities of Helsinki, Turku, Tampere and Jyväskylä as well as the VATT Institute for Economic Research and the Finnish Institute for Health and Welfare, THL.

The report argues that while Finland built up its welfare state in the 30-year time period spanning from the mid-1960s to around 1990, wealth began trickling upwards in the mid-1990s. This is when the income gap between low and high earners began growing--a trend that's gathering pace today, as wealth is increasingly concentrated in the hands of a small group.

A previous study showed that the richest ten percent of Finnish households owned nearly half of all net wealth.

The researchers noted that taxation policies had not helped change this trend.

"From the perspective of narrowing income and wealth gaps, it makes sense to get rid of different tax classes for earned and capital income and instead make the whole tax system progressive," VATT researcher Marja Riihelä and Tampere University economics professor Matti Tuomala explained.

Education helps narrow gap

However, education has had a major impact on minimising inequality, according to the study.

"Higher education lowers both the risk of becoming unemployed and also shortens any jobless periods," Mattila explained, adding that education was also linked to better health and pay.

The report, however, found higher education to have a very strong hereditary component.

"In the last few years the hereditary aspect of education has grown stronger, and this trend is especially apparent in the correlation between the educational levels of parents and the likelihood of children graduating from high school," the report stated.

To help even the playing field, researchers suggested extending compulsory schooling so every child would get a secondary school diploma. They highlighted the need for pupils to have good access to student counselling services in order for them to be able to make informed decisions about their future.

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