I spent 10 years running Kuntarahoitus Oy and learnt a great deal about the municipal sector. It is a fundamental part of Finland that manages the basic services rather well. Teachers, nurses, doctors, engineers, technicians, social workers and administrators do their work so that private companies can employ the right people and get on with producing goods and services. But like many important institutions things go wrong as life changes. The 3 big changes, globalization, the euro and our aging population have changed what we need and what we can afford.
Private companies adjust by cutting costs, improving productivity or by closing down. The public sector is always slow to react because it does not have the same inbuilt system of renewal when things change. But all 3 big changes require that the public sector cuts costs and improves productivity. Closing down is not an option.
The biggest way to cut costs is to reduce the number of municipalities and reduce bureaucracy. There are just too many municipalities and too many people in administration. It is time to cut costs and improve productivity by reducing the numbers to same relative size as Sweden and Denmark:
Denmark 98 municipalities – population 5 700 000
Sweden 290 municipalities – population 9 700 000
Finland 317 municipalities – population 5 500 000
My proposal is that 100 municipalities would be more than enough for Finland today. This should be a top priority for the new government. The SOTE reform is a secondary reform that will be much easier to execute afterwards.
