Minister of Finance proposes to help families with child benefits

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The minister suggested giving families with children a one-time bonus at the end of the year, but the children’s ombudsman says that is not enough for the most vulnerable in Finland.

Social insurance company Kela pays benefits to children who are permanently resident in the country until they turn 17. Image: Tiina Jutila / Yle

In light of the rising cost of living, the Minister of Finance, Annika Saarikko (Cen), has proposed that families with children receive a one-time allowance at the end of the year.

The minister first brought the idea forward on Wednesday evening in Yle TV’s current affairs program A-studio and then told more about the suggestion on Twitter.

“Families with children are a group that needs attention. After the situation with the coronavirus improved, the birth rate in Finland was unusually low. We cannot afford to make families feel unwell – we have to take care of every child,” said Saarikko at A-studio.

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This week, the Ministry of Finance started working out the state budget for next year.

The minister said families with children are particularly hard hit amid growing food, energy and transport costs.

Annika Saarikko Image: Sakari Piippo / Yle

“Most of their income is spent on maintaining their daily lives,” she tweeted Wednesday evening.

Saarikko noted that Finnish child support payments, to which families of all children are entitled, are not indexed. This means that payments will not increase if inflation rises.

She said the bonus payment would be a one-time payment, suggesting the state doesn’t need to borrow money to implement it.

For families with many children, the bonuses can mean up to hundreds of euros in extra money, as the benefits increase with each additional child. For example, a first child is eligible for a monthly amount of approximately 94 euros, the second child 104 euros, while a third child is entitled to 133 euros.

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‘Not enough for poorest families’

But the Ombudsman for Children Elina Pekkarinensaid the bonus wouldn’t be enough to really help the country’s poorest families.

She pointed out that inflation has weakened the purchasing power of the benefit, pointing out that the benefit is estimated to have declined by as much as 30 percent of its original value.

Converted to the current value of the euro, the average child benefit in 1995 was about 145 euro per month. In 2014, after the benefit was cut, it was valued at 122 euros.

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Elina Pekkarinen Image: Niko Mannonen / Yle

However, Pekkarinen agreed that bonuses in the hundreds of euros would be a major incentive for families. She said distributing the allowance to all families would be a way to help everyone, including those who don’t need it.

She described the minister’s suggestion as a symbolic gesture for all families in Finland.

But to properly manage the bonuses, she said, the country’s poorest families need more targeted measures, such as additional and other income support and aid from organizations.

Despite this, Pekkarinen said she agreed to general bonus payments as all families face rising costs.

However, Pekkarinen noted that the additional payments will not affect Finland’s lagging birth rate.

“Government subsidies alone are not enough to increase the birth rate. That requires major changes in work and family life and a child- and family-friendly atmosphere,” said the Ombudsman for Children.

Citing estimates from the Ministry of Finance, STT news agency reported that distributing the bonuses to all families with children would cost the state about $112 million.