Finnish Government Resigns Over Healthcare & Welfare Reform Collapse
Prime Minister of Finland Juha Sipilä announced the resignation of his entire center-right government on Mar. 8, 2019, after it became clear that he would be unable to pass his government’s flagship social welfare, healthcare, and regional government reform package through the Parliament of Finland. With the fall of Sipilä’s government, the decade-long ongoing debate over reforming Finland’s generous healthcare and welfare systems in the face of a looming demographic transition claims another government as a political casualty — a sign of the difficulty in securing political consensus and wide approval for particular wholesale reforms.
Leading his then-opposition Center Party in securing a plurality of seats in the Finnish Parliament at the 2015 parliamentary elections, Sipilä became Prime Minister of Finland heading a three-way non-socialist coalition government between his centrist-agrarian Center Party (Kesk), the eurosceptic and nationalist True Finns (PS), and the then-incumbent center-right National Coalition Party (NCP).
Sipilä’s government, elected amid a heightened economic slump, dedicated a significant amount of its government program towards revitalizing the Finnish economy in the face of shrinking trade with Russia, the decline of Finnish telecommunications giant Nokia, and continued aftershocks of the eurozone crisis. Cuts to labor costs — mainly through wage cuts and longer mandated hours — combined with government spending cuts, most notably in the areas of education and social security, were promulgated by Sipilä’s government by 2016, drawing protests over government austerity. However, the stirrings of economic recovery were observed by 2017, with the Bank of Finland noting that additional measures would be necessary to produce conditions for future growth.
The election of a hardline anti-immigration leader for the True Finns in 2017 threatened to cause a premature dissolution of Sipilä’s government. However, the split of more moderate legislators from the True Finns to form what would eventually become the Blue Reform party (SIN) staved off government collapse.
At present, Finland organizes its healthcare and welfare systems via its 295 local municipalities (save for the autonomous province of Åland), which are responsible for dispensing services and benefits to residents. Critics note the highly decentralized nature of the Finnish welfare state as a chief reason for its relative inefficiency. Finland’s own statistics bureau estimates that by 2030, over a quarter of the Finnish population will aged 65 or older, which heightens the need for reform of the system to curb rising costs.
The reform package proposed by Sipilä’s government stipulates that the responsibility of disbursing healthcare and welfare benefits is to be transferred to a newly established set of 18 elected regional authorities, with guaranteed “freedom of choice” among a range of service providers — including private providers — slated to be introduced by 2019. The latter provision has been a mainstay of the pro-market NCP, which controlled the position of Finance Minister in Sipilä’s government.
However, disagreements over the finer details of the proposed reforms among the three coalition parties ultimately doomed the chances of the reform passing the Finnish Parliament. It was arduously opposed by the socialist opposition parties over the increased role of the private sector.
In a speech delivered by Sipilä justifying his government’s resignation on Mar. 8, the Prime Minister called the collapse of parliamentary support a “major disappointment for me” before restating that the delay of reforms would only expose municipalities to increasing financial risks and widen the disparities in service quality across the country. Noting the “responsibility for words and deeds — yet not doing” in politics, Sipilä went on to assert that he submitted his resignation on behalf of his entire government to “bear my own responsibility” in a deeply “personal decision.”
While his resignation was accepted by President Sauli Niinistö on the same day, Niinistö requested Sipilä’s cabinet continue to serve in a caretaker capacity until the next parliamentary elections, scheduled for Apr. 14, deliver a new Parliament of Finland. The opposition Social Democratic Party (SDP) currently leads the polls with less than a month to elections, with analysts suggesting that a plurality for the SDP could produce a left-wing coalition with the Green Party and the Left Alliance — all three being ardent critics of Sipilä’s austerity policies and labor market reforms — should the electoral math hold.