This report forms part of a series of country reviews undertaken by the OECD to help countries assess their public governance arrangements from an international comparative perspective in terms of their ability to deliver on government objectives, in particular for the whole-of-government, and preparedness to meet current and future challenges.

The Finnish government has a strong track record in responding to difficult economic situations, and it may now be facing its biggest challenge. Since the mid-1990s, and prior to the current global economic downturn, Finland enjoyed strong GDP growth in a low-inflation environment, with rising employment and a sound fiscal position. The public administration has been critical to this success, both in supporting Finland’s remarkable transformation from an economy specialised in traditional industries to a diversified and modern economy, and in helping the country navigate the Nordic economic crisis of the early 1990s. As a result, the Finnish citizenry today trusts the public administration as a key partner for economic development and service delivery, as well as the mechanism to realise many Finnish values of social solidarity and equality.

Since 1987, successive Finnish governments have focused on the modernisation of government, with public management reforms receiving strong political support. The public administration’s 200th anniversary, in 2009, provided an opportunity for Finland to review its public sector institutions and arrangements. Part of the Finnish success story is due to a willingness to innovate and to look beyond borders for examples of international best practice.

Since the mid-1990s, and prior to the current global economic downturn, Finland has enjoyed an encouraging economic position. GDP has grown strongly in a low-inflation environment, with rising employment and a sound fiscal position. Critical to this success was the public administration’s role in supporting Finland’s remarkable transformation from an economy specialised in traditional industries to a diversified and modern economy, and in helping the country to navigate the Nordic economic crisis of the early 1990s. As a result, the Finnish citizenry today has a high level of trust in its public administration and sees it as a key partner for service delivery and economic development, as well as the mechanism to realise key Finnish values of social solidarity and equality through its crucial re-distributive role.

As discussed in Chapter 2, the Finnish government is facing a number of complex challenges which threaten the sustainability of the Nordic model: demographic changes due to an ageing population; increased urbanisation; higher expectations for the quality and accessibility of public services provided to citizens and businesses; globalisation; and fiscal pressures compounded by the recent global economic and financial crisis. Because a country’s public governance arrangements are a determining factor in the successful implementation of government programmes and reforms, examining these arrangements both provides the context in which the government and public administration operate and helps to identify the challenges faced by the administration in implementing the government’s agenda.

One of government’s key roles is to act on behalf of society as a whole as the steward of its patrimony, resources, and values (see Table 4.1). Towards this end, governments are expected to clearly and publicly articulate their vision and programme, to anticipate and prepare for changes, and to act in order to achieve both short- and long-term objectives. While many of these responsibilities fall on the shoulders of elected officials, the public administration plays a vital role in supporting these efforts and increasingly has its own responsibility in developing a vision for society.

Strategic insight enables governments to create a shared vision and policy agenda that takes into account current and future contexts and that draws from expertise and information from a wide variety of actors. However, in order to adapt to the changing and increasingly complex policy environment, governments need to build collective commitment among key stakeholders to coherently implement such a shared vision. Agreement and commitment to a common agenda also provide a framework allowing all societal actors to identify the subsidiary actions needed to realise the vision, and thus ensure that it comes to fruition.

In the wake of the global economic and financial crisis, governments are now looking at how they can improve their capacity to anticipate and manage risks, and to react quickly to complex problems in changing environments. Traditionally, government fiscal and budget frameworks and human resource practices have been rigid as a means of ensuring accountability of spending. However, in an increasingly complex policy environment governments need the capacity for resource flexibility – or the ability to flexibly re-allocate resources to changing priorities when and as needed.

As discussed in Chapter 2, the elderly dependency rate in Finland is relatively high compared to other OECD countries, and it will become higher as the population ages. Between 40% and 50% of current municipal employees in Finland’s regions are expected to retire by 2020, which might present particular problems for remote areas where both retirement rates and public employment shares are higher. In addition, the ageing population will create new needs for welfare services. Finally, there are internal migration trends towards urban centres in Finland; population growth is concentrated in urban regions in central and southwest Finland, and even within remote regions the population growth in cities is significant.

Finland is one of the early adopters of e-government within the OECD, and has achieved impressive results based on international comparisons.1 A number of specific strengths have placed it in a favourable position for relatively fast development of e-government. Its basic culture is open to change and modernisation, and its citizens are, on average, well-educated and ready to use new information and communication technology (ICT) and e-services. Finland is the home of Nokia, one of the global leaders in mobile communications, along with many competent and competitive software enterprises. Its citizens have traditionally trusted their government, which uses unique identifiers and shared databases for residents, companies and corporations, vehicles and real estate in order to improve the quality and efficiency of public service delivery. Historically, Finland was able to use these strengths to become a world leader in e-government.

In January 2009, the Government of Finland commissioned a major review of the Finnish public administration, undertaken by the OECD. The objectives of this review were to examine how a whole-of-government perspective can be fostered in public management areas such as e-government, accountable and open government, the structure of government and multi-level governance relations in order to promote a better-performing, more forward-looking government that is better prepared to meet current and future challenges.