Juhani Nokela: Three points about the budget session – the good, the promising and the bad

Blog post

The government's budget session has been wrapped up. There are good things to say about RDI, both good and bad about the funding for education, and something to criticize in the discussion concerning the reduction of insurance contributions.

The government managed to wrap up its budget session ahead of time in one day and there are many things that could be addressed here. The exact numbers will not be published until later, so for now, here are three quick observations about the decisions. All these are to some extent based on the Government Programme, but we also gained some new insight into the government's intentions.

We at TEK consider the government's first policies on the use of RDI increases to be absolutely the right decision. This is a priority through which the government can genuinely help pursue a forward-looking policy. We believe that the increases in funding have been allocated fairly well. In the proposal of the Ministry of Finance, the investments in universities looked like they might be too small, but now the government is properly and wisely committed to the doctoral education pilot. In order for companies to make investments, we need more doctors to conduct RDI activities. In other respects, the increases in RDI funding are also steps in the right direction and, for example, the investments for VTT for the Kvanttinova piloting environment are exactly the kind of moves we need.

At the same time, it has to be said that our level of education has to be improved across the board. In its programme, the government has made a commitment to ensure that half of all young adults would have a higher education degree by 2030. Measures towards this goal include increasing the intake of higher education and allocating 11.7 million euros to this goal next year. However, the reality is that if we genuinely want to achieve this goal, we should add at least another zero to that number. In this regard, the government's actions are therefore promising steps in the right direction, but still insufficient.

We believe that the increases in RDI funding have been allocated fairly well.

The government receives a lower score for its response to the proposal of the Employment Fund to reduce insurance contributions by 1.4 percentage units. This reduction would have a direct effect on the bank accounts of both salary earners and employers, because insurance contributions are parafiscal. However, the government is planning to transfer 0.2 percentage units of this to an increase in personal income taxation. This is the part that, according to estimates, is a direct consequence of the government’s cuts in unemployment security and the suspension of adult education allowance.

We at TEK believe that the government should not take this money from the pockets of salary earners. However, if the government does transfer this share, which it considers as savings, the proposed method of implementing this change is not fair. In practice, insurance contributions are divided 50/50 between salary earners and employers. In the government’s plans, 100 per cent of the reduction to that discount will be taken from the pockets of salary earners. This is not right.