Espoo plans layoffs despite 111 million euro surplus

Espoo plans to begin restructuring talks in September, with the city seeking to cut 300 person-years and save about 10 million euros, Yle reports.

The proposed talks could affect around 3,000 employees. Staff working in schools and daycare centres, numbering about 8,000 people, would be excluded. Espoo employs approximately 11,000 people in total.

Kai Liistokki, the chief shop steward for the trade union JHL in Espoo, said employees had been shocked by the scale of the proposed cuts and feared for their jobs.

Liistokki said he had received several calls from concerned employees since the city announced the restructuring talks. He estimated that the jobs of dozens, or possibly hundreds, of JHL members could be at risk.

He also warned that uncertainty over continued employment could undermine employees’ ability to cope at work and increase sickness absences if the situation continued.

Espoo Mayor Kai Mykkänen said education and early childhood staff were being excluded because the growing city must safeguard its statutory services.

“If we are to continue having the resources to hire teachers and early childhood educators and keep the world’s best schools operating, we must reduce mainly administration and support services,” Mykkänen said.

He said Espoo would hire more than 100 additional teachers this year.

Secretaries expected cuts

Katja Vidgren, chair of the Jyty Espoo region trade union, said the scale of the possible layoffs had also come as a complete surprise to her. Secretaries, however, had already anticipated cuts, she said.

Vidgren said employees had been certain that secretaries would lose their jobs because artificial intelligence was being introduced. She questioned whether artificial intelligence would also be used to make official decisions by public officials and whether the issue had been fully considered.

According to Vidgren, many employees are already close to retirement age. At the city’s urban engineering centre, for example, almost half of permanent staff are over 55.

Some employees have therefore wondered whether the city could have waited until they reached the actual retirement age, Vidgren said.

City seeks to curb rising debt

Mykkänen said the staff reductions were needed to stop Espoo’s debt per resident from increasing. The city’s expenditure has grown faster than its revenue, he said.

“Expenditure has grown structurally by four to six per cent a year, while revenue has grown by only one to two per cent a year,” Mykkänen said.

Espoo’s debt is currently about 2,200 euros per resident.

In April, the city council groups agreed on measures to balance Espoo’s finances between 2027 and 2029. The total adjustment need over that period is approximately 220 million euros. The city aims to save around 10 million euros annually in personnel costs.

Mykkänen said that without the adjustment measures approved by the council, debt would risk growing by 50 per cent over the next three years.

Surplus raises questions

The planned layoffs have caused mixed feelings among staff because Espoo’s finances are currently in surplus. The city recorded a positive result of 111 million euros last year.

Liistokki said the layoffs were difficult to understand when the city nevertheless had money available.

Mykkänen said the previous financial year’s profit would not even cover the city’s investments. The number of children and young people in Espoo is growing, and the city is building 20 schools and daycare centres as well as a light rail line this year, he said.

In addition, the state has cut central government transfers to municipalities and their share of corporate tax revenue, creating a need for tens of millions of euros in additional savings, Mykkänen said.

Vidgren criticised the situation and questioned why the municipal tax rate was not being raised if the city did not have enough money for its services.