Executive Summary

Centenary as independent country reached
Finland celebrated its centenary as an independent country on 6 December 2017. Its first decades as a nation were marked by severe difficulties. Its independence was not confirmed until after a brutal civil war had been fought between Soviet-backed socialists and “white” conservatives, with the conservatives emerging victorious from the war in May 1918. In the period 1939 – 1944, the country fought two wars against the Soviet Union and only barely managed to retain its independence. However, the war-torn country was forced to pay war reparations to the Soviet Union amounting to $226.5 million at 1938 prices. The last payment was made in 1952.
Democratic even in darkest days
Despite these hardships, the country has been able to uphold its democratic system of government. Although measuring the level of democracy is a cumbersome task, comparisons of data and classifications provided by reputable sources (e.g., Polity IV and V-dem) indicate that Finland could be classified as a democracy even in the darkest and most difficult moments in its history.
Well-developed, transparent governance
On the whole, Finland’s system of governance is well-developed, efficient and transparent, and the country has steadily improved its position in many international rankings. Since 1989, Freedom House has awarded Finland the highest possible ranking for political liberties and civil rights. Since 2008, the country has on several occasions also topped Reporters Without Borders’ World Press Freedom Index. In recent years, however, the trend has been slightly negative. Finland ranked third in 2017 and fourth in the most recent compilation, trailing behind Norway, Sweden and the Netherlands.
Minimal corruption
despite exceptions
The level of corruption has generally been low in Finland, but here too Finland has lost some ground in recent years. Finland’s reputation as a corruption-free country was soiled in a 2008 following scandal concerning party and electoral campaign financing. However, measures were swiftly taken to curb corruption in Finnish political financing. In 2009, a law requiring the disclosure of donations to candidates and parties was adopted. In 2017, the country ranked third on Transparency International’s Corruption Perceptions Index, behind New Zealand and Denmark. Other significant reforms over recent years include a reform of the electoral system in 2012, which reduced the number of electoral districts and thereby enhanced the proportionality of the electoral system. Additionally, a participatory mechanism introduced in 2012 now enables citizens to propose legislative reforms online.
Economy recovering
after recession
The Finnish economy is improving after a recession which lasted several years. The economy is projected to grow by almost 3% in 2018 and the debt ratio is projected to fall below 60% of GDP in 2019. Optimistic forecasts notwithstanding, unemployment, particularly youth unemployment, is high. The Sipilä government has reformed the unemployment benefit system in a number of ways, which has included reducing the duration of earnings-related unemployment benefits and setting stricter conditions on accepting job offers for unemployed people. These reforms have marked a shift from passive to more active labor-market policies.
Mainstream skeptical toward immigration
As elsewhere in Europe, the issue of immigration has been widely debated in Finland ever since the large inflow of refugees in 2015. The main political parties have generally taken a rather restrictive attitude toward immigration. Public support for the Finns Party, which is far more negative toward accepting refugees than Finland’s other political parties, has diminished under the current government.
Conservative coalition shrinks after split
The most recent parliamentary elections took place in April 2015. Following these elections, a conservative coalition government – comprising the Center Party, National Coalition Party and Finns Party, and led by Prime Minister Juha Sipilä – was installed. Initially, the government had a stable majority, commanding 124 out of 200 seats in parliament. However, as a consequence of a split within the Finns Party in June 2017, the government’s majority has shrunk to 105 out of 200 seats.
Clashes over direction
of economic policy
Given the fact that the Sipilä government is made up of center-right parties, it is not surprising that the government and labor market organizations have clashed over the direction of economic policy. The largest controversy has concerned a major social and health care reform (SOTE), which will transfer responsibilities for social welfare and health care services from municipalities to 18 larger governmental entities (counties). The reform has been postponed on several occasions, but is expected to come into force in January 2021.
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