VATT study: Significant regional pay gaps in public social and healthcare services
Social and healthcare service salaries are largest in Eastern Uusimaa and smallest in South Savonia. In basic healthcare, salaries in Helsinki are near lowest in the country, based on the VATT study published today.
Pay gaps between different wellbeing service counties were the focus of the VATT Institute for Economic Research study. The study was intended to produce information to the Government for improving the funding model of the counties.
Pay gap between wellbeing service counties up to 6 percent
The study material, which covers the salaries of 460,000 people across the country, shows the pay gap between the personnel of different wellbeing service counties: “Kymenlaakso county sets the country’s average, with the deviation being 4% upward and 2% downward. Overall, the greatest differences in the salaries of personnel that transfer to the wellbeing service counties have a maximum difference of six percent in hourly wages,” summarises VATT chief researcher Teemu Lyytikäinen.
“As labour costs account for 69% of social and healthcare services’ €20 billion production costs, pay gaps may result in significant differences in the price of service production in different counties,” says Lyytikäinen about the importance of the study’s results regarding the healthcare package.
Regional pay gaps in basic and specialist healthcare
The study also covered inter-sector pay gaps between the wellbeing service counties: “With the exception of Pirkanmaa, basic healthcare personnel receive higher salaries in every other county than Helsinki. Salaries in Helsinki lag roughly six percent behind Eastern Uusimaa and Lapland,” says Lyytikäinen.
“These results provide a clue into the availability issues of basic healthcare personnel outside of the Helsinki region, which indicate that the measures taken to solve the issue have been overtime and better salaries,” says Lyytikäinen.
In specialist healthcare, what’s true is the opposite. With the exception of Uusimaa county, specialist salaries in the country are lower than those of Helsinki.
There are also significant pay gaps in social services: “In elderly care and other social assistance, Helsinki and Uusimaa have the highest salaries with the rest of the country's hourly salaries lagging behind by up to four percent,” Lyytikäinen says about the social services’ results.
Observations of the private sector’s pay gaps, it appears that in Helsinki, private sector salaries for social and healthcare personnel are roughly five percent higher than the rest of the country.
Conflict between regional equality and cost control
Pay gaps complicate the achievement of the key goals of the social and healthcare reform package: “Ignoring these pay gaps would be an issue for equality between the regions. Making considerations for the pay gaps, on the other hand, is an issue for cost control.
Were the state to fully compensate for the pay gap, the result would be that the wellbeing service counties no longer be incentivised towards moderation in salaries,” Lyytikäinen explains the issue.
The Government is currently preparing improvements to the funding model of the wellbeing service counties.
Study report available for media
The VATT research team (Teemu Lyytikäinen, Tanja Saxell, Markku Siikanen and Max Toikka) surveyed the regional pay gaps in the public sector’s social and healthcare services based on a data set comprising the payroll data of 460,000 people from 2016–2018. This data set includes nearly all social and healthcare workers that transfer to the wellbeing services counties. Reference groups included social and healthcare workers in the private sector as well as workers from other areas of the public sector, among others. The study was commissioned by the Ministry of Social Affairs and Health and is a part of a wider study that is being conducted in cooperation with the Institute for Health and Welfare.
Media representatives may request the full report from Torsti Grönberg at VATT communications (contact details below).
Download the study
VATT chief researcher, research advisor Teemu Lyytikäinen (+358 295 519 431 and [email protected])
VATT communications / Torsti Grönberg (+358 50 4636 859 and [email protected]).