Government unveils stimulus package

The government has committed itself to implementing a guaranteed pension from the beginning of March 2011. The guaranteed pension will cost EUR 111 million a year, and will raise the smallest pensions by about EUR 100 a month, and will affect about 120,000 Finns.
     The measures are part of a stimulus package that was unveiled as a supplementary budget on Friday. The various measures are set to increase state spending by EUR 1.2 billion.
     
Minimum unemployment benefits, child allowances, support for home care, and support for private care are to be linked to consumer price fluctuations. The first index-linked increase on the benefits is to take effect from the beginning of March 2011.
      The aim of the change is to offset the impact of inflation, and to secure the preservation of the purchasing power of basic social security.
      The government also decided to lift the employers’ mandatory contribution to the Social Insurance Institution (KELA). The payment will be eliminated in stages, and Prime Minister Matti Vanhanen (Centre) said that the shortfall will be made up by raising indirect taxation of industry.
     
Prime Minister Vanhanen estimated that the total impact of the package, including the leverage effect, would amount to EUR two billion.
      He estimated that the package would lead to the creation of 17,000 jobs directly, and 25,000 indirectly this year and next.
      The supplementary budget also includes about EUR 70 million for road and rail maintenance. Funding will be provided for the rail link to Seinäjoki and for the airports of Helsinki and Oulu.
      School repairs will take EUR 77 million.
     
Minister of Finance Jyrki Katainen (Nat. Coalition Party) said that the targets for stimulus spending were selected for their maximum impact on employment.


Previously in HS International Edition:
  Government agrees on “gigantic” support package for corporate finance (28.1.2009)
  Sailas believes that many stimulus proposals by HS readers will be implemented (12.1.2009)

Links:
  Government press release 30.1.2009: Overall impact of Government stimulus package to total EUR 2 billion