Ministry says municipal mergers are needed to reshape Finland

Finland’s Ministry of Finance considers municipal mergers necessary to reform the country’s municipal structure, Yle reported. The number of municipalities will decrease in one way or another, according to Jussi Virsunen, a director general at the ministry.

The ministry estimates that mergers could generate savings of up to 220 million euros. The figure is based on reducing the number of municipalities with fewer than 10,000 residents.

Virsunen stressed that the ministry has no specific target for the number of municipalities and is not seeking to reduce small municipalities in particular.

“We already have around 40 municipalities where fewer than 10 children are born each year. That creates a challenge, because if education is provided through lower secondary school, organizing it becomes difficult,” he said.

Total savings could reach hundreds of millions

The ministry’s estimate of 220 million euros covers the administrative costs and overlapping duties of municipalities that might merge. The actual savings could be considerably larger.

“Savings will increase if services are combined and artificial intelligence is used more. Investments could also produce better results if they are made by one new merged city rather than through several separate investments,” Virsunen said.

He estimated that total savings could reach hundreds of millions of euros if many mergers take place.

Ministry proposes higher merger grants

The Ministry of Finance proposes a clear increase in merger grants to start a wave of municipal mergers.

“This model could be neutral in the relationship between municipalities and the state. The amount of merger support would be increased, but it would come out of municipalities’ central government transfers,” Virsunen said.

He said that around 100 million euros could be reserved for merger support. If the money were not used, it would be returned to central government transfers.

According to Virsunen, the increase could be funded by transferring 100 million to 200 million euros from central government transfers to merger grants.

No forced mergers planned

Virsunen stressed that municipalities would retain their autonomy and that forced mergers are not being planned.

“There could, however, be criteria that would trigger an assessment procedure to safeguard basic services. The number of children in a municipality, for example, could be considered as one criterion,” he said.

He noted that criteria for assessing municipalities in financial crisis already exist and can be used to launch a procedure when necessary.

Services decline as populations shrink

Concern about services in remote regions is one of the most difficult issues in the merger debate. Virsunen said that municipal mergers are not the reason services are declining.

“Even independent municipalities have not been able to preserve services in every village and area. The number of schools has fallen and services have been cut because services are located where people are,” he said.

He said that when a region’s population declines, services are closed for reasons other than municipal mergers.

Virsunen said it was now time to begin discussing mergers across Finland, as the population is declining in most parts of the country and growth is concentrated in only a few urban centres.