Average Wage in Finland: A Comparative Study

Employee costs and taxes differ per country and industry in Europe, making it complex for North American employers to hire in Europe. In previous blogs, we have looked at the true cost of employment in several other European countries.

But what are the costs of hiring employees in Finland?

In this blog, we will review the employment costs and average wage in Finland.

Understanding the Cost of Employment in Finland

The cost of employment is a combination of short-term, monthly recurring costs directly related to the employment of personnel and costs that may or may not be incurred some years later. These "down-the-road" costs largely depend on whether an employee decides to move on or is being made redundant.

While this blog does not deal with the subject of redundancy, it is worth reading a blog about some of the not-so-obvious costs employers face when hiring, but more importantly, firing an employee in Europe: Pitfalls of US Employers in Europe.

Insights on Finland's Economy

Often referred to as “the land of a thousand lakes”, Finland is a sparsely populated country with roughly one lake (there are 187,888 lakes at last count) available for every 26 people.

Finland has a highly industrialized, largely free-market economy with a per capita GDP almost as high as that of Austria and the Netherlands and slightly above that of Germany and Belgium.

Trade is important, with exports accounting for over one-third of GDP in recent years. Finland is competitive in manufacturing, particularly in the wood, metals, engineering, telecommunications, and electronics industries.

While many Europeans speak two or three languages, few of them can boast Finnish as a second or third language because it is rather complicated. To give but one example, the language does not have a future tense, and that could prove difficult if you want to start in Finland as a wedding planner.

Costs of Hiring Finland

Hiring an employee in Finland is not much different than in other European countries, but there are some peculiarities that few other countries have in common, and that is the way the Employee and Employer’s social contributions are contracted and paid.

Employer's social premiums and insurance

Most European countries have laws and regulations governing the percentage that needs to be paid for certain mandatory employee benefits and/or insurance. Payments are typically made to a central or regional tax office and/or agency.

In Finland, however, many insurances are contracted by the employer through commercial insurance companies, and the employer withholds the employee part of this insurance from the wages and pays it to the insurance company. Typical insurances that are contracted through a commercial insurance company are:

• Worker's compensation insurance,
• Unemployment insurance,
• Life insurance,
• Pension insurance,
• Occupational health insurance (not mandatory).

In 2021, the total cost of an employer’s social premiums and insurance is 17.9% of gross wages. This means that a monthly wage of EUR 5,000 sees an employer’s social premiums and insurance cost of EUR 895, making an employee’s annual gross wage of 60K, costing just under 71K to the employer. The accrual of vacation days with associated social premiums is not included in this figure, and for the salary mentioned above, this comes to about 18% of gross wages.

The average wage Finland

Finland ranks among the European countries with a high standard of living, which is reflected in its wage levels. Furthermore, the average wage amount may vary within Finland, depending on the industry, education and skill level, or geographic location.

The yearly average wage in Finland is $45,498.00 approximately.

Although it is high among other European countries, the average wage in Finland is lower than in the United States ($65,836.00) and Canada ($53,198.00).

Holiday Entitlement in Finland

The vacation year in Finland runs from 1^st April to 31^st March, and an employee typically accrues 2.5 days per month, except for the first year of his/her employment, during which the monthly accrual is 2 days per month.

The employee is not allowed to take any holidays until the start of the new holiday year, so the date of hiring has implications for the holiday plans of an employee. Hiring someone on 2^nd April means the employee accrues 2 days per month until 1^st April the following year but cannot take any of these accrued days for 12 months.

In conclusion, an employee in Finland has at least 24 vacation days. After his first year of employment, this can lead to up to 30 vacation days. To learn more about vacation days in Europe, read our blog on Paid Vacation Days in Europe 2023. 

Summary

Finland is an attractive place to live and work, as it is known for its strong social welfare system, quality healthcare and education, and high living standard reflected in increased wages.

In Finland, monthly salary-related expenses are about 18% of the gross wage.

When hiring in Finland, it is important to note various factors contributing to average wage expenses. Please note that there will be variations for different industries and that collective bargaining agreements may affect the employer’s cost.

How we can help

If you are considering hiring internationally, EuroDev is your partner for PEO/EOR, payroll, and consultancy services in Finland. Don't hesitate to contact us for more information concerning our HR Outsourcing solutions.

Bonus read:

Cost of Employment in Spain, Portugal, and France

DACH Region Total Cost of Employment: Germany, Switzerland, and Austria

Employment Costs & Benefits in the Benelux Countries Explained

Sources: OECD