Orpo Government’s Social Security Cuts Drive Down Incomes for Unemployed People and Wage Earners

Abstract

The study examines the effects of the Orpo Government’s social security cuts on the livelihoods of unemployed people and employees who combine earnings with social benefits. It draws on microsimulation estimates produced using the SISU model as well as register-based and statistical analyses of observed data. The simulation compares the tax-benefit system in force in April 2026 with the pre-reform 2023 system, applying both systems to the same 2026 population base.

According to the simulation, the cuts affect in particular, low-paid and part-time employees. Under the April 2026 system, the number of employed people living in low-income households is approximately 28,000 higher than it would be under the 2023 tax-benefit system. Average monthly disposable income among recipients of adjusted unemployment benefits is approximately EUR 130 lower.
The register and statistical data show that both the proportion of employees receiving housing and unemployment benefits and the average amounts paid generally declined between February 2024 and February 2025. The average reductions in benefit amounts were, for the most part, approximately twice as large among part-time employees as among full-time employees. Among unemployed people, average unemployment benefits declined between March 2024 and January 2026, while the share of unemployment benefit recipients receiving earnings-related unemployment allowance fell from approximately 40 per cent at the beginning of 2024 to 33 per cent in January 2026. The poverty rate among unemployed people rose from 49.4 per cent in 2023 to approximately 56 per cent in 2025.

Overall, the simulation indicates that under the April 2026 system, the number of people living on low incomes is nearly 100,000 higher than it would be without the Orpo Government’s social security and tax changes. The changes also increase income inequality: annual disposable income among the lowest earning five per cent is, on average, nearly EUR 1,000 lower, while among the highest-income five per cent it is more than EUR 2,000 higher than under the 2023 system.

Publikationsinformation

Kauhanen, M. & Nyyssölä, M. (2026), Orpon hallituksen sosiaaliturvan leikkaukset iskevät työttömien ja palkansaajien toimeentuloon. In Finér, L. & Systä, J. (eds. 2026),  Eriarvoisuuden tila Suomessa 2026, Vastapaino.