Shrinking smartly and sustainably in Finland

Finland is at the forefront of demographic change, with one of the world’s fastest-ageing populations and many of its regions and municipalities already facing strong and sustained population decline. This paper explores how the country is adapting its governance, fiscal, and service delivery systems to manage the realities of demographic shrinking while sustaining quality of life and territorial cohesion. The paper analyses how recent reforms – including the creation of Well-being Services Counties and the transfer of employment services to municipalities – are reshaping the roles and responsibilities across levels of government. It also looks at how municipalities are responding to shrinking tax bases and workforce shortages, developing new revenue sources, repurposing infrastructure, and rethinking how essential services such as education, healthcare and transport are delivered. Drawing on case studies and local innovations from across Finland, the paper highlights lessons for countries facing similar demographic shifts. It offers insights into how multi-level governance, fiscal frameworks and public investment can evolve to ensure resilient local communities in a context of population shrinking.