1. UNIVERSITY OF JYVÄSKYLÄ
Recent municipal territorial
reforms in Finland
Pekka Kettunen
(pekka.t.kettunen@jyu.fi)

2. UNIVERSITY OF JYVÄSKYLÄ
Background
 Finnish municipalities have broad tasks and their
position is guarded by legislation
 The tasks cover social and health care, education,
culture, leisure time, waste management,
environmental protection etc.
 The size of the municipalities has varied, but small
municipalities have traditionally co-operated with other
municipalities
 Small municipalities do not provide the same service
level as larger ones

3. UNIVERSITY OF JYVÄSKYLÄ
… background
 Municipal incomes are based on taxation, state
subsidies and fees
 In the mid 1990s the state subsidies were turned into
lump sums in order to encourage municipalities to find
the best ways to provide services
 The growing emphasis on taxation has increased
differences between municipalities and made their
management more competitive
 Small municipalities have amalgamated with others
occasionally, but in 2006 amalgamations became a
national policy issue

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Arguments for the reform
 The government stated that it is often the small
municipalities which are economically weak
 In addition, small social and health care units are
ineffective
 Finally, small municipalities often violate the basic
rights of the citizens
 Hence the municipalities were asked by law to
reorganise their social and health care so that it serves
at least 20 000 inhabitants; the given options were
amalgamations (hurried by additional subsidies) and
municipal co-operation

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Evaluating the reform
 The reform caused a lot of movement at the local level, and
resulted in a few years to a reduction of almost one fourth of the
total amount (in 2002-2011 112 municipalities less, in 2009 67
less)
 There are a number of evaluations going on asking how the goals
of the reform were achieved
 In one of them members of the personnel of social services were
interviewed: they saw as advantages that many social services
require comprehensive expertise and sufficient resources which
small municipalities often do not possess, and as disadvantages
that enlarging municipalities may mean longer distances to reach
the clients, the problems of specialized experts, and the transition
costs.

6. UNIVERSITY OF JYVÄSKYLÄ
The reform: next step
 After reviewing the results of the reform, the
government has continued the reform now aiming at
even more radical cuts
 The arguments are the same as before, however,
some more emphasis on strong municipalities which
are directly responsible for social and health policy
 The current reform has been opposed by many
municipal leaders and politicians, in addition the
government can not force the municipalities to
amalgamations
 At the moment the issue is open

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From 336 to 70 municipalities

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Municipal size and efficiency
 In economic terms it is difficult to judge whether an amalgamation
brings along efficiency and savings
 The Finnish scholars have pointed out that there is no evidence
showing that the larger the municipality the better
 There are some results which suggest that both small and very
big municipalities are ineffective
 However, amalgamation may bring along temporary benefits
(broader shoulders)
 The broader issue is how to maintain strong municipalities across
the country
 In the following map, the areas marked by red color are the
growth areas (they are urban areas)

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A wider look at municipalities
 Regional policy belongs to the core policies of the
state (most policies have a regional dimension)
 It is about the division of resources between the
different parts of the country, or, the concerted efforts
to guarantee the citizens equal living conditions
 If, as it often is, the markets do not create balanced
development, the state has to intervene
 The Finnish regional policy has transferred from
“support the weakest” to “support the strongest”, i.e.
the current emphasis is on growth and innovations

11. UNIVERSITY OF JYVÄSKYLÄ
In whose interests is it to keep the
the whole country populated?
 The private sector: depending on the markets (paper
and wood industry, Nokia, IT-sector, agriculture,
mining, tourism)
 The public sector: in principle yes, but centralization,
cuts
 Politics: a few political parties defend: Center,
TrueFinns, Swedish party – in between Communists -
against Conservatives, Social democrats
 The people (not everybody can move to Helsinki): old
vs. youg, educated vs. uneducated etc.

12. UNIVERSITY OF JYVÄSKYLÄ
Municipal political economy
 The municipalities know very well that the best basis
for collecting incomes is one consisting of prospereous
enterprises of various sorts and well-to-do inhabitants
 To a certain degree these can be affected, on the
other hand these resources are not evenly distributed
 The government is already now redistributing tax
incomes from rich to poor municipalities
 There are limits what can be done when the markets
and demographic change show the way

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Conclusions
 Without private enterprise activity, it is almost
impossible to maintain the whole country populated
 Is the global economy an iron gage which limits the
opportunities for policy-making?
 Perhaps more decentralization would be the solution,
i.e. letting the local people find the best ways to cope
with the external challenges
 The size on a municipality correlates with some
beneficial features, but municipal strenght is
determined largely by markets. Do we let the markets
determine?