International review of approaches to tackling child poverty: Finland

Executive Summary

In comparison to Scotland and much of Europe, Finland has low rates of relative child poverty. In 2024, 11.6% of children in Finland lived in relative poverty (before housing costs), compared to 19.4% of children in Scotland in 2023-24.^[1] Finland has maintained a low rate of child poverty over a long period of time, following a notable decrease in relative child poverty during the 1970s and 1980s. In 1994, child poverty in Finland was just 4.3%. Since then, despite a slight upward trend, rates have remained relatively low at below 12% of the child population.

However, child poverty itself has not been a major political priority in Finland. Instead, Finnish society is primarily concerned with the overall wellbeing of children, and views itself as having a shared responsibility to provide for children. This is underpinned by Finland’s written constitution which states public authorities should ensure parents are able to guarantee the wellbeing and development of their children. Family policy in Finland has also shaped the labour market, with a strong emphasis on gender equality and a cultural norm around dual full-time earners, motivating a right to subsidised municipal childcare.

The key factors that contribute to low child poverty rates in Finland are high levels of parental labour market participation and full-time work, combined with a redistributive tax system that works in the favour of families, a comprehensive system of social insurance, and generous social assistance. However, the historical trajectory of these policies has not been without challenge and retrenchment.

The key chronology and specific policies that this case study focuses on are illustrated below:

1. Foundations of the Finnish Welfare State (1917-1968)

• Child Welfare Act 1927
• Universal child allowance
• Free school meals

2. Economic development and growth of comprehensive welfare state (1969-1989)

• Increased generosity of child benefits
• Housing allowance
• Child Day Care Act
• Parental and childcare leave
• Unemployment benefits

3. Post-recession cuts to public spending (1990-2004)

• Austerity measures
• Child home care allowance

4. Recent changes to work and structural reforms (2005-2024)

• Reduction in childcare entitlements
• Unemployment benefit reforms
• Reduction in value of housing and child allowances

During the 1970s and 1980s, rates of relative child poverty declined in Finland. This was primarily due to increasing household income as a result of economic development and industrialisation of the Finnish economy, alongside expansions in social insurance and assistance. Key to this was the increased generosity of child benefits, the introduction of a right to childcare facilitating women’s labour market participation, and the expansion of housing allowance to all low-income families.

However, following a deep recession in Finland in the early 1990s, political tensions about the sustainability of welfare spending increased. Initially, child poverty continued to decline, but from 1995 the trend reversed and child poverty rates began to increase, peaking at 12.2% in 2007. The 1990s and early 2000s saw an extended period of austerity measures and a new emphasis on active labour market policies such as job training programmes, subsidised employment schemes and sanctions, designed to lower unemployment rates after the recession.

Tensions about the sustainability of Finnish public spending continue to this day, with cuts to entitlements and payment amounts for unemployment benefits and housing allowance implemented in 2025. There is now also growing concern in Finland that some groups disproportionately experience poverty, including single parents, migrant families and minority ethnic groups like the Sámi and Roma communities.

There are four key lessons for Scotland that can be drawn from Finland’s experience:

1. The most significant contributing factor to the low levels of child poverty experienced in Finland is the level of redistribution and transfers benefiting families with children. This underlines the importance of Scotland’s efforts to increase financial support for children and low-income families through the Scottish Child Payment. Core to the success of Finland’s system is a generous universal child benefit, where payment amounts increase for each subsequent child and there are higher value payments for single parents. This is an approach that could be considered in Scotland within the existing social security system. The Scottish Government is already taking forward this approach with plans to mitigate the impact of the two-child limit. However, the challenge Scotland faces here is that welfare and tax policy are not fully devolved, and Scotland has a higher prevalence of single parent families which would increase the cost of providing more generous payments for such families.

2. Related to this first lesson is financing more widely. There is a higher general acceptance of the state playing a significant role in wealth redistribution and the provision of services in Nordic countries, including Finland. The social insurance system in Finland also means that employers, employees and the state share in the financing of unemployment and sickness benefits, which helps facilitate a greater level of income replacement. The transferability to Scotland here is potentially limited due to fundamentally different set-ups of the welfare system and political histories, as well as the elements of policy-making that are decided at UK level. Nevertheless, Scotland has powers in this space that can and have been exercised in efforts to reduce child poverty, for example through the Scottish Child Payment. However, the impact is currently limited against a backdrop of cuts and eligibility restrictions in the UK welfare system.

3. The Finnish experience also underlines the challenges of funding generous and universal benefits in modern economies, and the importance of economic growth to facilitate increases in welfare spending. Sustained economic growth was a major facilitator of increasing welfare expenditure in the ‘golden age’ of the Finnish welfare state. For Finland, poor economic performance and political ideologies now threaten the maintenance of a welfare system that has traditionally minimised experiences of child poverty. Scotland, in contrast, may find it more challenging to secure the necessary political and social consensus to comprehensively address child poverty through new policies and welfare provision without the path dependence that helped to enable Finland’s welfare state expansion in the 1970s and 1980s, and in the context of the UK’s challenges around economic growth and the sustainability of public finances.

4. Scotland’s focus on tackling child poverty can have the greatest impact where it is combined with other policy objectives. This is already underway through the driver-led approach in Scotland’s Tackling Child Poverty Delivery Plan, which highlights the importance of access to childcare, income from social security, and employment support, amongst wider action to tackle child poverty. Finland’s experience underlines the opportunity for joined-up work to tackle poverty through policies that have a positive impact by supporting broader outcomes such as economic growth, gender equality and labour market participation, and income equality. Key to this work is childcare provision and, in a Finnish context, collective bargaining and a stronger cultural norm for full-time work. The greater prevalence of low-paid and part-time work in Scotland may be a barrier to reducing child poverty rates through active labour market policies, as families may be less likely to take on more paid work and work may not provide the same level of protection from poverty as it has done in Finland.