Demographic time-bomb: Finland sends a warning to Europe

Richard Milne:

Yet finding answers has proved nigh on impossible. Finland’s three-party coalition government collapsed last month over its failure to pass landmark healthcare and local government reforms before an election on April 14. The only long-term issue related to demographic trends that has been addressed in two decades of trying has been pension reform.

For Europe, Finland may be a warning about the intractable political problems that lie ahead. Its population is ageing faster than any other European country, although Germany and Italy will have bigger peaks of older people later on this century. The lesson from Finland may be that trying to make health and elderly care costs sustainable involves the types of political choices few governments are willing to make, raising questions about long-term economic growth and the health of public finances for increasingly cash-strapped governments across Europe.

While parts of the rest of Europe face what researchers at the Robert Schuman Foundation have called “demographic suicide”, the lessons from the Finnish experience are complex. Breaking the omertà around ageing — as the foundation argued for — has not particularly helped in Finland. “In European terms we have been preparing early but only a little has been done,” says Marja Vaarama, a professor of social work at the University of Eastern Finland.