Products, services and equal competition
Source: Finnish Food Authority
Every grocery store, restaurant, café and establishment that produces foods (food business operator) is a separate target of food control. If a food business operator engages in more than one food business activity, it is registered in the category of its principal activity. The category of “food service” includes cafés, restaurants and mass caterers. Figure 1 presents the number of food control targets. There is annual growth in the number of primary production operators included in the statistics because the registration of this group is still incomplete.
Food control is risk-based and planned
Risk-based food control means that high-risk food business operators are subject to greater control than low-risk operators. For instance, a food establishment that produces meat products is classified as a higher-risk food control target than, say, a kiosk that sells packaged foodstuffs. In food control, the control targets are categorised into various risk categories, and the control frequency of each group is determined on the basis of the risk categorisation. For this reason, some control targets are inspected several times a year, whereas other control targets may go several years between inspections. A total of 30 per cent of all audited targets were inspected last year. Even fewer on-site inspections have been conducted during the coronavirus pandemic, as some inspections have been carried out remotely. Figure 2 presents the sector-specific coverage of inspections in more detail.
Results of food control are easily available online and by the doors of food business operators
Food control is carried out systematically across the country under the OIVA (Finnish Smiley) system. The food control authority inspects selected aspects of the control target during each inspection. The results are published as an OIVA report. There are four possible results: excellent, good, to be corrected and poor.
OIVA scale. Picture: oivahymy.fi/en [.ﬁ]›
The results of OIVA inspections are published at the entrances of inspected food business operators and on their websites. The OIVA results of food business operators can also be found at oivahymy.fi/en [.ﬁ]›.
Results of OIVA inspections based on a scale from A to D
Figure 4 presents a breakdown of the OIVA grades of grocery stores and service locations, as well as the total grades of all inspected food business operators. So far, annual differences between the grades of different operator groups have been minor. Grades have returned to the previous level after the first coronavirus year: approximately 85 per cent of the audited targets received the grade of “excellent” or “good”, while some 15 per cent of targeted operators received the grade of “to be corrected” or “poor”. Even though there are only minor differences between different years, the higher number of on-site inspections during the second coronavirus year most likely increased the percentage of lower grades.
If a food business operator’s result is poor or indicates a need for corrections, the company will be inspected again at a later date.
The alcohol administration combats the shadow economy – in 2021, the prolonged coronavirus pandemic had a significant impact on activities
Source: National Supervisory Authority for Welfare and Health (Valvira)
In 2021, the prolonged coronavirus pandemic continued to have an impact on the activities of the alcohol administration formed by the National Supervisory Authority for Welfare and Health (Valvira) and the Regional State Administrative Agencies. Licensed premises were closed in the spring of 2020 under The Act on Accommodation and Food Service Activities. Ever since, licensed premises have operated with limited opening and serving hours that are regulated in the Communicable Diseases Act and the decree issued under it. The Act was changed several times during the year. The Communicable Diseases Act was supervised partly alongside with the tasks of the Regional State Administrative Agencies’ alcohol inspectors pursuant to the Alcohol Act.
The coronavirus epidemic was reflected in workloads – resources were allocated to the supervision of the Communicable Diseases Act
Due to the exceptional circumstances, resources of licensing and supervisory authorities were allocated not only to the processing of licences and notifications, but also to the supervision of the provisions of the Communicable Diseases Act and to providing guidance for self-employed persons and other parties in the prevention of the pandemic pursuant to the Communicable Diseases Act.
In the years before the comprehensive reform of the Alcohol Act, the Regional State Administrative Agencies processed, on average, roughly 9,000 cases related to serving or retail sales of alcohol. As a result of the reform of the Alcohol Act in 2018, the amount of written guidance by the Regional State Administrative Agencies’ alcohol inspectors increased by several thousands of cases. Even though the number of cases processed decreased in 2019, there were still significantly more cases than in the years preceding the reform. In 2020 and 2021, the number of processed cases decreased to less than 8,000 cases as a result of the exceptional circumstances. This change can partly be explained by the reallocation of alcohol inspectors’ tasks to supervision and prevention activities in accordance with the Communicable Diseases Act. Furthermore, because most events requiring a temporary serving licence were cancelled, no related licence processing was required. (Figure 1)
The number of serving and retail sales licences increased
In the years preceding the reform of the Alcohol Act in 2018, the number of licences to serve alcohol remained fairly stably around 8,300 serving licences, after which the number of licences increased significantly. The quantitative increase slowed in 2020 but continued again in 2021. At the end of 2021, there were a total of 9,630 valid serving licences in Mainland Finland. This figure is 313 higher than at the end of 2019 before the pandemic broke out (Figure 2).
The increase in the number of licences to serve alcohol can likely be explained by the easier requirements for obtaining a licence for serving alcohol; for example, completing an alcohol proficiency certificate is a sufficient qualification for the responsible manager. Furthermore, licences have been applied for as secondary service for other activities, and the licence authorities did not cancel the licences under the exceptional circumstances due to the lack of financial preconditions, for example.
The number of retail sales licences decreased steadily before the reform of the Alcohol Act. With the reform of the Alcohol Act, the total number of alcohol retail sales licences took an upturn. This change can be explained by the granting of retail sales licences together with service licences (for sales of beverages with a maximum alcohol content of 5.5% between 9 am and 9 pm) and to craft beer brewers. At the same time, the number of retail sales licences held by grocery stores has decreased by nearly 600.
At the end of 2021, alcoholic beverages could be purchased for takeaway from a total of 6,441 points of sale in Mainland Finland. Of these, 1,465 were takeaway licences for licensed premises and 83 were craft beer retail sales licences (Figure 2). During the coronavirus period, licensed premises have been able to apply for retail sales licences to support their takeaway sales. General interest in takeaway licences increased especially during the restaurant lockdown in the spring of 2020.
The number of extended service hours stopped increasing
As a result of the reform of the Alcohol Act in 2018, the number of extended service hours (service after 1:30 am) increased considerably. During the years preceding the reform, slightly more than 1,000 restaurants had extended service hours. In 2019, the figure had increased to 1,715 in Mainland Finland. This increase was divided evenly across Mainland Finland at the ratio of the number of licensed premises and can largely be explained by the lighter requirements for extended service hours. The increase has mostly concentrated to pubs and bars that could not continue serving alcohol after 1:30 am under the old Alcohol Act.
In 2020, the number of extended service hours started to decrease, with 1,618 licensed premises having extended service hours at the end of 2021 (Figure 3). The decrease in the number of extended service hours is possibly associated with the exceptional circumstances, as licensed premises cannot have kept their doors open at night due to restrictions.
The coronavirus pandemic has challenged both supervision and self-monitoring
The Regional State Administrative Agencies supervise the serving and retail sales of alcoholic beverages in their area. Valvira attends to nationwide supervision and the provision of guidance for the Regional State Administrative Agencies on supervising the serving and retail sales of alcohol.
The Alcohol Act emphasises the importance of self-monitoring, and requires the licence holder to draw up a self-monitoring plan to support its operations for the serving and retail sales of alcoholic beverages. A good self-monitoring plan can prevent many practical problems, and it is important that the licence holders bear the responsibility of their self-monitoring obligation. Regulations under the exceptional circumstances had to be addressed in self-monitoring plans.
In 2019, the Regional State Administrative Agencies conducted 3,931 inspections of licenced premises and alcohol retail sales outlets. In 2020, the number of inspections decreased to 1,859 due to the clarification of irregularities related to the exceptional circumstances. In 2021, a total of 2,689 inspections were conducted.
In 2019, the Regional State Administrative Agencies sent a total of 366 guidance letters, while the total was 213 for 2020 and 183 for 2021. The number of administrative sanctions issued under the Alcohol Act, such as warnings, sanction fees and licence revocations was 168 in 2019, 144 in 2020, and 124 in 2021.
Regulations that changed regionally many times over set challenges for conducting inspections and for the content and supervision of self-monitoring plans. Considering the exceptional circumstances, operators and supervisors were able to fulfil the requirements set for self-monitoring plans.
The alcohol administration has succeeded in combating the shadow economy
Valvira steers the supervision of the serving and retail sales licences of the Regional State Administrative Agencies nationwide. To assess the impact of measures taken to combat the shadow economy, supervision focuses on such issues as measures to ensure the preconditions for business operations by licence holders.
Shadow economy supervision measures of the Regional State Administrative Agencies in 2021 are presented in Figure 4. The figure shows, by region, the number of requests for clarification sent to licence holders, the payment plans agreed, information on the revocation of licences for the serving or retail sale of alcohol, bankruptcies, debt adjustment or restructuring measures, and the total outstanding taxes paid in euros.
Since 2012, Valvira has compiled statistics of measures related to combating the shadow economy in a comparable way. In the previous years, an average of 164 requests for clarification were made, and as a result, an average of EUR 1.5 million in outstanding taxes were paid. In 2019, a total of 182 requests for clarification were made, and as a result, a record of EUR 2.4 million of outstanding taxes were paid. In 2020, a total of 86 requests for clarification were made as a result of the exceptional regulations due to the pandemic, and as a result, approximately EUR 1.3 million of outstanding taxes were paid. In 2021, a total of 111 requests for clarification were made, and as a result, EUR 631,000 of outstanding taxes were paid.
Combating the shadow economy is only one part of the extensive responsibilities of the alcohol administration. In 2021, the alcohol administration’s activities to combat the shadow economy can be regarded as highly successful, considering the regulations due to the exceptional circumstances and the payment and operating arrangements granted for entrepreneurs, as well as the distribution of the alcohol administration’s tasks and the decrease in personnel resources.
Source: The Ministry of Economic Affairs and Employment
The National Board of Patents and Registration (PRH) is responsible for maintaining and monitoring the accuracy of information submitted to the Trade Register. The number of Trade Register offences brought to light and of Trade Register submissions investigated on a risk basis are indicative of the possible amount of shadow economy activity.
PRH launched enhanced investigations of Trade Register submissions in March 2016, and they were continued in 2017, 2018 and 2019. This practice has helped to prevent irregularities. In 2019, there were no notifications giving reason to suspect a registration offence.
Enhanced control was targeted at notifications of changes in limited liability companies or cooperatives with details of a new Board of Directors, managing director or building manager. The aim of enhanced processing is to identify whether the decision issued is appropriate. If certain criteria were met, PRH requested a copy of the deed of sale of shares to be attached to the notification or called the company to verify the accuracy of the notification.
In 2020, the systematic enhanced control of notifications was discontinued, partly for resource-related reasons, and partly because the use of electronic services increased clearly. In the future, enhanced control will be conducted a few times a year by means of spot checks. During the enhanced control conducted in October 2020, there were no notifications giving reason to suspect a registration offence.
In November 2021, a few cases of misconduct were discovered, as a result of which PRH restarted the enhanced processing of notifications. Enhanced control concerns notifications of changes in limited liability companies or cooperatives with details of a new Board of Directors, managing director or building manager. If certain criteria are met, the registration authority aims to determine the correctness of the notified circumstances by the aforementioned means.
Source: Uusimaa Centre for Economic Development, Transport and the Environment
An entrepreneur’s residence permit is granted in two stages: the Uusimaa Centre for Economic Development, Transport and the Environment (ELY) makes partial decision before the final decision is made by the Finnish Immigration Service. The partial decision is made assessing the profitability of companies and the preconditions for the livelihoods of permit applicants.
In 2021, the Uusimaa ELY Centre made a total of 1,123 partial decisions, of which 45% were negative. The ratio of negative partial decisions decreased by 2% from the previous year. Interim decisions on the first residence permits accounted for 30% and subsequent permits 70% of all interim decisions.
Many reasons for negative decisions
A negative decision is not a direct indication of shadow economy activities, while some of these situations may involve the shadow economy and economic crime as underlying factors. The most common reasons for negative partial decisions include deficiencies in complying with statutory obligations, irregularities in the payment of wages, deficient or erroneous accounting, or a non-viable business idea and lack of profitability, which mean that the applicant cannot ensure their livelihood by means of their business operations.
The Uusimaa ELY Centre works with other authorities to combat the shadow economy and economic crime. Any deficiencies and neglects discovered during the processing of entrepreneurs’ residence permit applications were reported to the Finnish Immigration Service, the Regional State Administrative Agencies, the Finnish Tax Administration and the Police of Finland.
Business activities carried out without a proper permit, external services related to applying for a residence permit and investment activities are phenomena that were highlighted in negative partial decisions. More businesses were started without a residence permit than in the previous year. In its assessment, the ELY Centre cannot consider any activities carried out without a proper permit in favour of the applicant. Services provided by external parties subject to a charge also increased in conjunction with entrepreneurs’ residence permits. Furthermore, applications included business activities that were interpreted to comprise investment activities in practice, and not employment in business activities in accordance with the residence permit type.
Negative partial decisions by nationality
Applications for entrepreneurs’ residence permits were received from citizens of 73 countries. The largest number of applications was received from citizens of Russia, China and Turkey. Like in previous years, Russia and China were the most common citizenships in entrepreneurs’ residence permit applications. Relatively the most negative decisions were made regarding citizens of Nigeria who also made up the fourth largest group of applicants out of all nationalities.
Negative partial decisions by principal activity
Applications for entrepreneurs’ residence permits include companies in a large range of sectors. In 2021, applications included more than 180 different principal activities. In terms of quantity, the largest principal activities were the restaurant sector (restaurants/cafeteria-restaurants), other postal, delivery and courier activities, and property cleaning. During 2021, the number of applications submitted by food couriers, in particular, increased clearly. Figure 3 presents the ten principal activities that had the most negative partial decisions. The percentage of negative interim decisions was the highest in the sectors of other business management consulting and taxi services.