Last year, welfare regions and municipalities in Finland experienced an exceptional spike in layoffs, with nearly 1,300 individuals dismissed from welfare regions and an estimated 340 from municipalities, according to a recent survey by the Association of Municipal and Welfare Employers, KT. This marked a twofold increase in layoffs compared to the predictions made for the previous year, reminiscent of the high layoff numbers observed during the economic recession of the 1990s. The majority of these layoffs were concentrated in a few welfare regions, indicating uneven impacts across the country.

According to KT's chief economist, Juho Ruskoaho, these layoffs were largely anticipated due to the challenging economic circumstances faced by the welfare regions. Additionally, structural changes in the population within municipalities are necessitating reductions in the service network, which further exacerbates the situation. In 2025, approximately 600 people were laid off in municipalities while about 12,200 were subjected to layoff arrangements in welfare regions, highlighting the extensive impact of fiscal constraints on local employment.

Looking forward, municipalities are forecasting significantly fewer layoffs this year, yet the outlook for welfare regions remains grim, with expectations of increasing terminations. This situation underscores the ongoing struggle for welfare regions to stabilize their finances while adapting to demographic shifts and seeking overall efficiencies. Local leaders and policymakers face tough decisions as the balance between providing essential services and managing fiscal responsibilities becomes increasingly precarious.