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18.07.2023 13:50

Incomes of low-income earners to deteriorate

The government plans to put its hand in low income-earners’ pockets, among other things by raising VAT rates and cutting housing allowances.

Low income-earners will lose out further, is how Risto Kalliorinne, Organisation Director at Service Union United PAM, sums up the impacts of Petteri Orpo’s new government programme.

– The cuts will mostly hit low-income workers and the unemployed, but the well-off will escape the cuts, he says.

Kalliorinne picked out some of the cuts in the programme that will hit low income-earners.

350 million to be shaved off housing allowance

The government is cutting housing allowance in many ways. For example, the basic deductible in general housing allowance is going up from 42 per cent to 50 per cent. The amount of the deductible is affected by among other things household size and gross income.

The government’s planned 300 euro earned income deduction would also be a big change. Now Kela does not take that amount into account when calculating income affecting housing allowance.

– The government has insisted that it is not cutting housing allowance for the lowest earners. But those on the lowest incomes are precisely the ones who get housing allowance, Kalliorinne points out.

He points out that PAM also has members who are on housing allowance.

Waiting period for first day of sick leave

In future the first day of sick leave will be unpaid for absences of less than five days.

According to Kalliorinne, this planned change by the government would be an occupational safety risk since it could increase working while ill. Infections would spread to both coworkers and customers.

If, on the other hand, an employee is ill at home, the waiting period means a drop in income.

– It could also be that absences increase if employees apply for a week’s sick leave for their illness.

Many PAM collective agreements now contain provisions on sick pay. That could change, however.

– This waiting day is likely to be a bone of contention in future collective agreement negotiations, Kalliorinne believes.

Further conditions being added to social assistance

Social assistance is intended as last-resort security. Some low-paid PAM members are also recipients of social assistance.

There will be a 5 per cent deductible for housing expenses in basic social assistance. The government is exploring how assets could affect the granting of social assistance more generally.

The government is planning integration allowance for immigrants to replace social assistance and labour market subsidy.

– What does the new allowance mean? How will it affect the lives of PAM members who have come to Finland from other countries? That remains to be seen, Kalliorinne reflects.

VAT to rise on medicines and accommodation services

The government plans to increase VAT on, among others, medicines, books, sports services, movie shows, entry charges for culture and entertainment events and accommodation services from 10 per cent to 14 per cent.

– Raising the VAT rate will reduce opportunities for the less well-off to consume these services. Raising the tax rate could also affect PAM members through employment. For example, the accommodation sector has criticised the move. Higher prices could drive customers away, and jobs in the sector could be hit, Kalliorinne says.

Text: Anu Vallinkoski


income politics