OECD Economic Surveys: Finland 2018

Annex. Progress in structural reform

Abstract

This table reviews action taken on key recommendations from previous Surveys. Recommendations that are new in this Survey are listed at the end of the relevant chapter.

 

Recommendations in previous Surveys	Action taken since February 2016
A. Pension reform
Increase the minimum pension age gradually, with some linking of both the retirement age and the benefits to life expectancy.	A pension reform which came into force in 2017 will raise the retirement age to 65 by 2027, and will thereafter link it to life expectancy. Benefits are also linked to life expectancy.
Phase out the option to extend unemployment benefits until retirement, and limit rights to disability pensions to medical reasons only. Adjust the new pension scheme for those in demanding jobs to life expectancy.	The age threshold for extended unemployment benefits will, conditional on agreement between the social partners, rise from 61 to 62 years as from 2023 as part of the 2017 pension reform.
B. Health care reform
Rationalise the organisation of health services to achieve a better balance between primary and specialised care.	A reform of health, social services and regional government set to enter into force on 1 January 2020 will shift most responsibilities for service provision from municipalities to new autonomous regions, creating opportunities for economies of scale and more equal access to services.
Drawing on existing experiences in some municipalities, a purchaser-provider split should be adopted in areas where the population base and the level of complexity of treatment allow meaningful competition.	Municipalities have considerable autonomy in how they provide the required health services and the use of purchaser-provider split is expanding. The new social welfare and health care areas will be allowed to use private or third-sector service providers. Competitive neutrality between different providers will be emphasised. A scorecard will be prepared for assessing the efficiency and quality of service provision.
Continue to develop electronic tools to promote evidence-based medicine and health-provider benchmarking.	Progress is ongoing and digitalisation of public services is high on the government agenda.
Continue to encourage the development of home care to limit dependence on institutional care and explore possibilities to expand the use of vouchers for buying services needed to support independent living at home.	Developing home care for the elderly further is part of the government programme.
C. Labour market reform
Reduce the combined duration of parental leave and the homecare allowance to encourage female labour market participation.	No action taken.
Shorten the duration of the unemployment benefit and reduce benefits over the unemployment spell. Systematically enforce mandatory job-search and reporting requirements starting early in the unemployment spell.	The unemployment benefit duration has been cut by 100 days, and mandatory job-search and activation requirements introduced.
Strengthen the roles of the state mediator and of the local level of unions in the wage setting process to raise local flexibility without compromising competitiveness.	Legislation to increase the scope for local-level agreements has been passed. As part of the competitiveness pact, coordinated sector-wise bargaining is set to replace the tri-partite central agreement as the main wage-setting model.
Strengthen foundation skills in vocational education and training (VET).	A new core curriculum puts more emphasis on foundation skills, the VET programme structure has been reformed, with fewer and broader qualifications, and a new structure of modular qualifications is to be implemented in VET, universities and universities of applied science.
D. Productivity-enhancing reforms
Streamline regulations in retail trade, transport and construction.	The size limit for large retail units has been raised from 2000 to 4000 m2. Rail passenger transport will be open to competition in the early 2020s. A new Act on Transport Services will be implemented in steps and will facilitate interactions between different transport modes. A reform to increase the flexibility of postal services has been initiated. New legislation on freedom of choice in health care is expected in 2018. Changes to the regulation of pharmacies are being discussed.
Use funding criteria for higher-education institutions or R&D vouchers, to reinforce co-operation between companies, particularly start-ups, and universities.	As of 2018, Business Finland will facilitate the creation of network projects responding to business needs and contribute to financing them.
E. Green growth
To reduce greenhouse gas emissions further, phase out environ-mentally harmful subsidies and better align the tax rate on emissions across sectors.	Some energy, CO2 and vehicle taxes have been increased, the tax exemption on liquefied petroleum gas has been removed and allowances to deduct commuting expenses have been reduced.
F. Tax reform
Reduce taxes on labour to improve work incentives, and raise recurrent taxes on personal immovable property and indirect taxes.	Income taxes and social contributions have been reduced. Excise duties and property tax rates have been increased.
Phase out mortgage interest deductibility.	Mortgage interest deductibility is being reduced in steps.
Raise the revenue efficiency of the VAT by eliminating reduced VAT rates.	No action taken.