International review of approaches to tackling child poverty: Finland

Overview of relevant policies in Finland today

As discussed in the previous section, the welfare state in Finland has expanded over time into a comprehensive system, covering many elements, as shown in Table 1. Many of these policies have been reformed and adjusted over time as the political and economic context in Finland has shifted. This section presents the current eligibility and rates of policies most important for reducing child poverty and families in Finland today and, where relevant, compared to equivalent policies in Scotland.

Components of Finnish welfare provision for families and children include:

• Income security: All forms of social insurance (sickness, unemployment, work-related injury) include child allowances
• Financial or in-kind assistance for families: Child benefit, housing allowance, social assistance, individual taxation, child maintenance allowance, maternity package or grant, and free school meals
• Childcare and parental leave: Parental leave and allowance, childcare leave, childcare provision, child home care allowance, partial care allowance, and before- and after-school activities
• Healthcare and disability support: Child health clinics, school health care, dental care for children, disability allowance and special care allowance, special services and assistance for children with disabilities and their families
• Child welfare: Child guidance and family counselling, non-residential services and assistance, care and foster care

Tax system

In Finland today, households with children typically receive a greater proportion of their gross wage as take-home pay (after taxes and benefits) compared to those without children. This is a similar pattern to the UK, although the tax burden is higher across the board in Finland. For example:

• The average single worker had a net average tax rate of 31.6% in Finland in 2023, compared to 23.7% in the UK and an OECD average of 24.9%. This meant that their take-home pay, after tax and benefits, was 68.4% of their gross wage (compared to 76.3% in the UK and an OECD average of 75.1%).^[119]
• For an average married worker with two children, the net average tax rate was 27.1%, the second highest in the OECD, compared to 18.8% in the UK and an OECD average of 14.2%. Their take-home pay, after tax and family benefits, was 72.9% of their gross wage, compared to 81.2% in the UK and 85.8% for the OECD average.^[120]

The progressivity of Finland’s tax system means people on very low incomes pay very little or no income taxation, helping prevent low-earning workers from being pulled below the poverty line. Municipal taxes are flat-rate but involve tax deductions, which means that low-income individuals do not pay municipal income taxes.^[121]

Financial assistance for families

Child benefit

Currently, child benefit is paid by the state for every child under the age of 17 who lives in Finland. The amount paid increases with the number of children in the household, with higher amounts paid for each additional child, as shown in Table 2 below. In addition, an additional €26 per month is paid for each child under three years old, and single parents receive a supplement of €73.30 per month.

Note: In Finland, higher rates of child benefit apply in the Åland Islands. In Scotland, low-income families can also apply for a means-tested Scottish Child Payment which from 1 April 2025 is £108.60 (€128.07) every four weeks per child.

Housing allowance

Housing allowance pays eligible low-income households up to 70% of ‘acceptable’ housing costs up to a maximum limit. The maximum limits vary by municipality and by household size, for example in Helsinki the maximum limit for a one-person household is €563 per month, and €1,188 for a four-person household.^[123] In 2023, 404,662 households in Finland received general housing allowance, covering on average 46% of their housing costs.^[124]

Basic social assistance

The national social security institution, Kela, provides ‘basic social assistance’ which pays the difference between the household income and the ‘acceptable expenses allowance’ to support households ineligible for other forms of payments and whose income does not cover their essential daily expenses. In 2023, 6.3% (263,355) of households in Finland received basic social assistance, of whom 18% were families with children.^[125] The allowance is calculated based on the household size, with an additional amount added for each child, and a higher rate for single parents as shown in Table 3 below.

Local authorities can also provide ‘supplementary or preventative social assistance’ for types of expenses not covered by basic social assistance. This is assessed on a case-by-case basis - 56,703 and 35,721 households received supplementary and preventative social assistance respectively in 2023.^[126] Examples of the types of expenses that can be covered are activities for children with special educational needs, housing costs for households at risk of homelessness, and helping households who are in unmanageable debt.

Note: In the UK, a lower rate of standard allowance applies to adults under 25 years old and an additional amount is only paid for the first and second child unless an exception to the two-child limit applies. A higher rate of child element is paid for children born before 6 April 2017.

Child maintenance

Kela administers a state-funded child maintenance allowance of up to €198 per month paid to the parent or guardian of a child under 18 who does not receive enough child support from a liable parent. For children aged over 15 living independently, the allowance can be paid directly to the child. Overall, a child maintenance allowance is paid for 8.9% of children in Finland, and 78% of families in receipt of the allowance receive the full rate.^[128] Child support arrangements are also reviewed annually against the cost-of-living index. As a result, the full allowance has increased consistently over time - for example, from €148 per month in 2012 to €198 per month in 2025.^[129]

Social insurance

Social insurance in Finland provides income security and protection for households facing adverse circumstances through earnings-related benefits. Social insurance schemes are largely provided by private insurance companies, but employers and employees are required to pay in set levels of contributions by law.

Unemployment insurance

Unemployment insurance currently provides workers who have been a member of a fund and earned at least €930 a month for 12 months or more a minimum of €800 a month or a graduated earnings-related allowance (equivalent to approximately 50-65% of salary before unemployment). After 40 days, 80% of the initial allowance is paid, and this drops to 75% after 170 days, with payments made for a maximum of 300, 400 or 500 days, depending on work history.^[130]

Health insurance

Health insurance remains a benefit provided to all permanent residents in Finland, and covers sickness insurance and parental leave payments. Sickness insurance can be paid for up to 300 working days after a waiting period which varies based on the circumstances of the claim.^[131] Payments are earnings-related (70% of earnings up to €28,241 and 55% of earnings over this threshold), with a minimum payment of €31.99 per working day.^[132]

Parental leave and childcare

The Finnish system today includes several different parental leave entitlements and forms of childcare provision. Complemented by financial assistance, these entitlements help support women’s labour market participation and full-time work.

Shared parental leave

Shared parental leave replaced separate maternity and paternity leave arrangements in 2022, and this was extended to 160 days per parent, with an accompanying 40-day pregnancy allowance for the birthing parent. Up to 63 days of parental allowance can be transferred to the other parent, and 18 days of pregnancy or parental leave can be taken at the same time as the other parent. Parental allowance payments are financed by the employer using employees’ sickness and health insurance contributions, and these are earnings-related. If the parent is not employed or their income does not exceed €13,712 per year, a minimum allowance is paid equivalent to €31.99 per working day. This is similar to the maternity allowance in the UK which is paid at £36.80 (€44) per working day. That said, to be eligible for the UK maternity allowance someone must have worked at least 26 weeks in the 66 weeks prior to the baby’s due date.

Childcare leave

Childcare leave can also be taken in Finland after parental leave until the child is three years old. During this time, the employer is not obliged to remunerate the employee. Instead, the household can claim child home care allowance (see below). After the leave period, the employee is entitled to return to their previous job.

Childcare

Currently, in Finland there are three forms of Government-assisted childcare available to families; municipal day care, private day care, or child home care allowance. The majority of families opt for municipal services (81% of children in early childhood education attend a municipal childcare service) and fees are typically lower for these services than private alternatives.^[133] All parents with children under school age are entitled to place their child in municipal day care regardless of their work or financial status. Fees are charged based on the family’s income and size, with the amount payable for subsequent children lower than for the first. These services are heavily subsidised, and typically parents pay around 14% of the cost.^[134] Families on low incomes are also exempted from paying fees.

Those that opt for private day care can claim a private day care allowance from the state which is paid directly to the day care provider to subsidise the cost. In 2025, this payment was €192.28 per month, and an additional care supplement of up to €265.85 per month is also paid on a means-tested basis. In some cases, the municipality also pays an additional supplement to low-income families.

Child home care allowance

Child home care allowance can be claimed by parents caring for a child under the age of three at home. The payment amount depends on the number of children in the household and their ages, with a higher amount paid for the first child (see Table 4).

Before and after school activities

Before and after school activities are also common in Finland, which help provide childcare for working parents with school-aged children. Central Government provides funding for local Government to deliver these services. Local authorities are not legally obliged to do so and can also charge reasonable fees to parents to fund such activities.^[136]