Welfare regions in Finland face €1.25 billion deficit as cost-cutting measures are implemented

Various welfare regions in Finland are looking to counteract substantial deficits projected to exceed €1.25 billion this year—significantly higher than previous estimates of €860 million. Measures to cut costs include reducing purchased services, freezing investments, and increasing client fees.

Welfare region leaders have attributed the growing deficits to factors such as the rising costs associated with temporary labor and service purchases. For instance, in Central Uusimaa, the increase in service procurement costs and temporary staffing expenses have been cited as contributors to this year’s financial struggles. The North Savo welfare region has forecasted spending on purchased services to be €59 million higher than expected.

Cutting costs is a priority for many regions. The Central Ostrobothnia welfare region plans to save by reducing reliance on purchased services and making cuts in investments. Similarly, the North Karelian welfare region aims to limit purchased services and encourage staff to take vacation time to reduce vacation pay liabilities.

Despite these efforts, there are concerns about the ability to stabilize finances by the 2026 deadline mandated by law. Some leaders, like Lapland’s council head Tapani Melaluoto, note that achieving fiscal health is unrealistic within this timeframe, partly due to appeal processes related to decisions made in the management of welfare services.

Moreover, criticisms have emerged regarding state funding mechanisms. Leaders from various welfare regions, such as Jan Tollet from Central Finland, argue that inadequate state grants are insufficient to meet operational needs, complicating efforts to balance budgets while also managing rising personnel costs and service fees.