Finance Ministry strategist calls for scrutiny of pensions and welfare promises

Olli Kärkkäinen, strategy and research director at Finland’s Ministry of Finance, says the next government’s target of cutting public spending by 8 billion to 11 billion euros will require every sector to be examined, Yle reports. He says pensions and the promise of social and healthcare services must also be considered.

The Ministry of Finance will publish its budget proposal next week, starting discussions on next year’s state budget. Kärkkäinen is looking further ahead, seeking solutions to the adjustment programme expected to face the next government.

He believes changes made over one or two parliamentary terms could put public finances on a stronger footing, so that further spending cuts or tax increases would no longer be needed. At the same time, he acknowledges that the coming years will be difficult for citizens.

“The sums are so large that no sector should be excluded from scrutiny,” Kärkkäinen says. He adds that such extensive savings would inevitably weaken economic growth temporarily.

Kärkkäinen wants politicians in the next parliamentary term to enter negotiations without preconditions. He says even “sacred cows” must be addressed, including the service promise for social and healthcare services and business subsidies.

He points to subsidies for crews on passenger ships as an example of a possible saving that is often ruled out because it is considered a security of supply issue.

“The welfare state does not need to be abandoned, but where, what and how services are available will change,” he says.

Asked whether pensions should also be reviewed, Kärkkäinen replies that they should definitely be included, “also from the perspective of fairness between generations”.

A cautious civil servant

Kärkkäinen, a 43 year old from Tampere, is careful in his public statements. He avoids criticising politicians and does not commit himself to definitive positions. He describes his role as providing background information.

“I see myself more as a support and sparring partner for politicians than as an opposing force,” he says.

In a column published in March, Kärkkäinen stressed the Ministry of Finance’s role as an objective source of information. For him, objectivity means that the information produced by the ministry should be the same regardless of which government is in power. It should also be transparent, including the assumptions used in research designs. The ministry’s assessments may and should be criticised.

“I acknowledge that we have expert power, and that also places a major responsibility on us,” he says.

Kärkkäinen took up his current role at the beginning of the present parliamentary term. In the first part of last year, he also became head of the ministry’s corporate governance unit.

Much of his career has been spent in research. During the past decade, he began doctoral studies and worked as a researcher in the Finnish Parliament. He helped develop a new economist service that, among other things, assists the opposition in preparing alternative budgets.

His doctoral dissertation remained unfinished when working life attracted him and he spent several years as an economist at Nordea. He eventually returned to the public sector.

“I felt that I had spent quite a few years commenting from the outside and wanted to use my skills more to support economic policy,” he says.

Experience on both sides of economic policy

Kärkkäinen’s work as a civil servant has been shaped by crises. He joined the ministry two months before the coronavirus pandemic and has since moved with the state from one crisis to another.

“By now, I have seen many crises. Crises mean that decisions are made quickly and inevitably with incomplete information,” he says.

The experience has made him more humble. While working for a bank, Kärkkäinen actively commented on current economic issues. Almost 10 years ago, Helsingin Sanomat praised his way of posting on Twitter.

From outside political offices, issues always seemed simpler than they really were, he says.