Minister of Social Affairs and Health in Finland, Pirkko Mattila, explains how The Economy of Wellbeing is a means to taking a holistic approach to tackle future challenges
Currently, many countries are tackling the challenges of the provision of sufficient and sustainable funding for the wellbeing of their citizens. This is very easy to understand since public spending on wellbeing, namely social, health, education and employment expenditure, constitutes a major part of national budgets.
Often the dominating tendency in reforms is to cut these expenditures in order to search for fiscal consolidation in the short term. Arrangements for wellbeing are mainly considered as costs and something we cannot afford, especially during difficult economic times.
It is clear that a broader approach is needed. We need a better understanding of the interplay between economic dynamics and wellbeing solutions. The very foundation of our societies and economies is human potential. We need to look into ways how to utilise the endless possibilities of our population.
The very foundation of our societies and economies is human potential.
Economy and wellbeing are in the best cases closely interlinked and mutually reinforcing.
Economic growth improves people’s wellbeing, whereas wellbeing and health of the population enhance economic growth and stability. This interlinkage must be better recognised. In Finland, we are putting forward a holistic approach to this question that requires horizontal thinking and cross-sectoral co-operation. We call this approach, the Economy of Wellbeing.
The Economy of Wellbeing is a horizontal approach, emphasising the importance of cross-sectoral cooperation. It is about understanding the role of social, gender, health, employment, education and environmental aspects in relation to economic growth, as well as the stability of economy and societies. It also contributes to the implementation of the UN Agenda 2030, which highlights the balance between economic, social and environmental policies.
A more holistic approach would be useful as we look for sustainable solutions to the current challenges of societies. This approach highlights the importance of evaluating how different policy measures may affect the health and wellbeing and thus employability, as well as the productivity of people. It can also increase our understanding of how investments in wellbeing generate savings, efficiency, productivity, and economic growth. The recent Word Bank Human Capital index, released in October, provides results supporting this.
Investment in human capital and wellbeing can provide direct and clear results, for example, investments in health, including mental health, education, occupational health and safety, as well as gender equality. Together with sound public finances, they are relevant from both macro and micro-economic perspectives.
Let us take an example. Should women increase their paid working hours so that gender gaps, in both participation and working hours, disappear completely by 2040, it would boost the economy by an additional 15-30% GDP per capita growth in the Nordic countries – an estimation made by the OECD.
Assessment and monitoring the long-term consequences of budgetary policies on both wellbeing and the macroeconomic situation is crucial. We also need to develop concrete tools to integrate gender perspectives into budgetary policies and the whole process of public finance management.
The Economy of Wellbeing also involves microeconomics, for example, the role of medicinal products. In the EU context, it is vital to understand how wellbeing can benefit from and contribute to the internal market. Digitalisation and new technologies will create the ground for innovations and growing businesses, which will help to promote public health and the availability of new medicines.
This is relevant also from the perspective of the ageing population. Longevity is one of the successes of our policies, strongly and increasingly shaping our societies and economies. Ageing of the populations has strong impacts on economic growth, productivity, public finances, the financial sector, as well as wealth and income distribution.
We also need to develop concrete tools to integrate gender perspectives into budgetary policies
We have a lot of data on the relevance of wellbeing to economic growth and stability. However, we also need to take into account some results, which are not so easily calculable. Even stable and high economic growth does not bring all the citizens along. Paying attention to inclusive growth is, therefore, very important. Social justice and fair treatment are key elements affecting people’s experiences of wellbeing.
The Economy of Wellbeing is relevant to social stability and security as well. When building safe societies, it is vital to building a sense of security for the people. Sound social protection and access to services, as well as overall societal inclusion, are at the heart of each citizen’s personal security, while at the same time allow and support everyone to actively participate in the society.
As with anything worthwhile, we need efforts and time to gain results. Finding solutions require long-term, patient and continuous work.
The Economy of Wellbeing is multidimensional, cross-sectoral and above all topical from global, regional and local perspectives. It is an approach we need in order to meet our future challenges. It’s time we engage in open discussion on how to use it – and make our future challenges today’s opportunities.
Minister of Social Affairs and Health, Finland
Tel: +358 295 16001