County government reform redistributes power and responsibility

The ongoing health, social services and regional government reform will involve substantial changes to the relationship of power and responsibility between the state and the regions. With the establishment of the new autonomous counties Finland will have a third level of government between the central and local government, and a substantial number of duties will be transferred to this new level.

The county government reform will be centralising or decentralising duties, depending on one’s point of view. From the point of view of regions, the counties will inherit duties relating to employment promotion, regional development and the improving of conditions for businesses and entrepreneurs, for example, from the existing centres for economic development, transport and the environment (ELY centres), the employment and economic development offices (TE offices), the regional councils and the municipalities. Bringing all these duties under the same roof can be seen as a positive development from a regional perspective. On the other hand, the existing structure has already some efficient elements. For example, some duties of ELY centres have already now been centralised, and in these matters a couple of ELY centres serve the whole country. The reform means that these centralised duties will be decentralised into the new counties, involving a number of great risks related to staff numbers and skills. The study shows that when current practices are efficient they should be included in further preparations of the reform.

The Finnish regional development system can be characterised as territorially fixed: regional development takes shape through administrative boundaries. It seems that the new counties will reinforce territorialisation. According to the study, Finland should actively seek network solutions across regional and administrative boundaries where relations between municipalities, counties and the state are determined based on focus areas. Organisation into networks could improve the conditions for serving the national overall interest in terms of employment, innovation and industrial and business policies, for example. The study indicates that there is a risk that counties crawl into their shells, doing a disservice to the national overall interest and spurring regional differentiation development.

The focus in the county government reform has been on the integration of the duties of the ELY centres, TE offices and regional councils. The new counties will also inherit duties and obligations from the municipalities even beyond health and social services. At the same time the existing link between municipalities and regional councils is severed, and the relationship between municipalities and the new counties will take completely new forms. The study shows that further preparations of the reform should take into account the links between municipalities and counties in terms of the role and duties of the municipalities. Managing different kinds of interfaces in the new structure plays a key role both for clients and for cost-effectiveness.

The new counties will have county councils, elected by direct popular vote, who are responsible for decision-making in the counties. A representative system would appear to be the only basic criterion of self-government realised in the county government reform. The counties would not have the right to levy taxes or the right to acquire funds to perform political tasks. Moreover, they would not have any general mandate. All this mean that the counties will have only limited self-government, according to the study. Over time the counties will, however, have the means to develop into operators with genuine self-government.

Redistribution of power and responsibilities. Report on the effects of the county government reform on the duties of ELY centres and TE offices and on the regional development system (in Finnish)

This publication, the final report of the VAAKA project, is part of the implementation of the 2016 Government plan for analysis, assessment and research ( The project was carried out by a consortium led by MDI Consultancy for Regional Development. Other members of the consortium included Melkior Oy and Tempo Economics Oy. The study aims to find out how the county government reform affects the regional development system and the client-orientation, cost-effectiveness and social impact of the ELY centres’ and TE offices’ services. The study was carried out at the initiative of the Ministry of Economic Affairs and Employment, and its progress was guided by an intersectoral steering group.