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 33% of all audited targets were inspected last year. 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. More than 85% of the audited targets received the grade of excellent or good last year, while fewer than 15% of targeted operators received the grade of to be corrected or poor
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.
Source: National Supervisory Authority for Welfare and Health (Valvira)
The coronavirus pandemic extended until the beginning of 2022 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. During the exceptional circumstances, licensed premises operated with limited opening and serving hours that were regulated in the Communicable Diseases Act and the decree issued under it. The Act was changed several times during the years. The Communicable Diseases Act was supervised partly alongside with the tasks of the Regional State Administrative Agencies’ alcohol inspectors pursuant to the Alcohol Act.
Processing volumes in the alcohol administration returned to the pre-coronavirus level in 2022
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. In 2020–2021, the number of processed cases decreased to fewer than 8,000. 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. In 2022, the number of processed cases returned to the level preceding the comprehensive reform. It is still too early to say whether the number of processed cases has stabilised or whether the uncertainties related to activities still affect licence applications. (Figure 1)
The number of serving licences increased and that of retail sales licences decreased
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 and 2022. At the end of 2022, there were a total of 9,716 valid serving licences in Mainland Finland. This figure is 399 higher than at the end of 2019 before the pandemic broke out (Figure 2).
The increase in the number of serving licences can likely be explained by the easier requirements for obtaining a licence and serving alcohol. For example, completing an alcohol proficiency certificate is a sufficient qualification for the responsible manager. The licence authorities did not cancel any licences under the exceptional circumstances due to the lack of financial preconditions, for example. Furthermore, licences have been applied for as secondary service for other activities.
The number of retail sales licences (sales of alcoholic beverages of at most 5.5% between 9 am and 9 pm) 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. The change can be explained by the granting of retail sales licences together with service licences and to farm wine makers.
At the end of 2022, alcoholic beverages could be purchased for takeaway from a total of 6,317 points of sale in Mainland Finland. Of these, 1,444 were takeaway licences for licensed premises, and 81 were retail sales licences for craft beer and 33 for farm wine. General interest in takeaway licences increased especially during the restaurant lockdown in the spring of 2020. The decrease in the number of retail sales outlets can partly be explained by the discontinued use of takeaway licences.
The number of extended service hours stopped increasing
Before the reform of the Alcohol Act, some 1,000 restaurants had extended serving hours (serving after 1:30 am), and the number increased significantly after the 2018 reform. 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 1,585 licensed premises having extended service hours at the end of 2022 (Figure 3). The decrease in the number of extended service hours is possibly associated with the exceptional circumstances, during which licensed premises could not keep their doors open at night due to restrictions.
Towards systematic self-monitoring and its supervision
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. The number of inspections was 2,689 in 2021 and 2,947 in 2022.
In 2019, the Regional State Administrative Agencies sent a total of 366 guidance letters, while the total was 213 in 2020, 183 in 2021, and 211 in 2022. 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, 124 in 2021, and 209 in 2022.
Regulations that changed regionally many times over set challenges for conducting inspections and for the content and supervision of self-monitoring plans. Nevertheless, operators and supervisors were able to fulfil the requirements set for self-monitoring plans.
The alcohol administration has succeeded in combating the shadow economy – updated statistics
To assess the impact of combating the shadow economy, supervision focuses on such issues as measures to ensure the preconditions for business operations by licence holders. Between 2012 and 2021, Valvira compiled comparable statistics on measures to combat the shadow economy. At the beginning of 2022, we updated the data batches of the statistics to correspond to the content of the valid Alcohol Act.
Shadow economy supervision measures of the Regional State Administrative Agencies in 2022 are presented in Summary 1. The summary illustrates the number of supervision measures opened to identify financial preconditions by region. In addition, it indicates the number of measures related to the investigation of supervision measures and their results, including requests for clarification sent to licence holders, deadlines set and guidance issued, the cancellation of serving and/or retail sales licences, and payment arrangements and plans agreed as a result of supervision measures, as well as outstanding taxes paid.
Previously, an average of 164 requests for clarification were made per year, 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 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. In 2022, a total of 97 supervision cases were opened, 89 of which led to requests for clarification, as a result of which roughly EUR 663,000 of outstanding taxes were paid.
Combating the shadow economy is part of the extensive responsibilities of the alcohol administration. In 2022, the alcohol administration’s activities to combat the shadow economy can be regarded as highly successful, considering the impact of 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. Enhanced control was 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.
In 2022, the enhanced control of notifications was continued using criteria defined based on risks. 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. A few more abuse cases were discovered than in the previous year. Targeted control helped prevent any incorrect data from being registered.
Neglect of statutory obligations, non-compliance with law, and labour exploitation discovered daily by the authorities
Source: Uusimaa Centre for Economic Development, Transport and the Environment
In the residence permit process for entrepreneurs, the Uusimaa Centre for Economic Development, Transport and the Environment (ELY Centre) assesses the prerequisites for profitable business activities and whether business activities guarantee each self-employed individual’s livelihood. When considering partial decisions, it is ensured that business activities take place in a company registered in Finland, the company has sufficient resources to carry out business activities, and statutory tax and payment obligations have not been neglected significantly in business activities.
Foreigners arriving in Finland as self-employed individuals (from outside the EU/EEA) must apply for a residence permit for an entrepreneur. Applications are processed centrally by the Uusimaa ELY Centre. An entrepreneur’s residence permit is granted in two stages: the ELY Centre makes a partial decision before the final decision is made by the Finnish Immigration Service.
In 2022, the Uusimaa ELY Centre made a total of 1,178 partial decisions, of which 60% were positive. The ratio of positive partial decisions increased by 5% from the previous year. partial decisions on the first residence permits accounted for 33% and extended permits 67% of all partial decisions.
A negative decision is not a direct indication of shadow economy activities, while these situations may involve the shadow economy and economic crime as underlying factors. The most common causes of a negative partial decision include deficiencies in the fulfilment of statutory obligations, unclear payments of wages, incomplete or inaccurate accounting, the lack of profitability, and generally insufficient clarifications of the personal situation.
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, the Social Insurance Institution of Finland (Kela), and the Police of Finland.
Combating foreign labour exploitation, human trafficking, the shadow economy and economic crime
Combating labour exploitation as part of labour migration policy is part of Prime Minister Sanna Marin’s Government Programme, and measures to prevent and combat exploitation have been intensified. The Finnish Government saw that labour migration policy cannot be developed sustainably, unless it is also ensured that foreign employees are not victims of exploitation. The effective identification of high-risk cases and the combating of exploitation are part of the development activities aimed to make residence permit processes smoother. This can also be seen in the activities of the Uusimaa ELY Centre through increased findings and the better recognition of signs of this phenomenon. In 2022, focus was on identifying the features and characteristics of exploitation, and the results of cooperation between multiple authorities can already be seen.
The ELY Centre’s key means to tackle labour exploitation, neglected statutory obligations or non-compliance with legislation include registering findings, issuing any negative partial decision, and reporting the case to other competent authorities. In assessing entrepreneur’s residence permits, the ELY Centre makes findings of victims of exploitation and those who exploit them.
The ELY Centre’s limited authority to intervene in exploitation may lead to situations where the authorities’ measures may first be targeted at the victim of exploitation in the short term, and not sufficiently at the exploiter. As a result, it is vital that law offers a sufficiently broad range of means, including confiscating criminal proceeds, bringing the perpetrators to justice, and fulfilling legal persons’ criminal liability. Most importantly, further measures to help victims of exploitation and protect their rights must be addressed.
“Katsaus työperäisen ihmiskaupan vastaisen toiminnan kehitykseen Suomessa” (Review of the development of activities combating labour trafficking in Finland) (Jokinen, Ollus & Pekkarinen 2022) by the European Institute for Crime Prevention and Control (HEUNI) discusses labour trafficking and the exploitation of foreign employees and highlights certain sectors in which such cases have especially been discovered, including the cleaning, transport, restaurant and construction sectors. Labour exploitation is considered to be linked to the shadow economy, in which the aim is financial gain by neglecting statutory obligations and payments.
Applications for entrepreneurs’ residence permits include companies in a large range of sectors. In 2022, applications included more than 180 different principal activities. Quantitatively, the largest principal activities were the restaurant sector, and postal, delivery and courier services. They were followed by the cleaning and construction sectors. Figure 3 presents ten principal activities for residence permit applications and the number of their negative interim decisions. The percentage of negative interim decisions was the highest in the restaurant, cleaning and construction sectors, and vehicle servicing and repair. The same sectors are highlighted in HEUNI’s review, and a straightforward link to findings can be seen. The underpayment of self-employed individuals, undefined minimum terms of commission relationships, and employment relationships disguised as entrepreneurship are discovered increasingly all the time. Labour exploitation is no new phenomenon, but it appears to be growing. The ELY Centre’s statistics show that findings are made and they may result in negative partial decisions. Negative partial decisions can be issued for various reasons. In 2022, ambiguity and abuse related to wages and commissioning contracts were regrettably common.
When examining negative partial decisions by nationality, Figure 2 shows that citizens of Russia, Turkey and Pakistan submitted more applications than others. Iranian citizens received relatively the most negative decisions.
In 2022, the ELY Centre’s processing activities especially highlighted increased findings of the use of undeclared work in the restaurant sector and employment relationships disguised as self-employment in the cleaning sector. Findings show that the phenomenon in which the employer intentionally blurs the line between an employment and commission relationship and transfers their obligations to employees is increasing and also exploits the residence permit system. When employees arrive in the country, an employee’s residence permit may be applied for them, while it is soon afterwards replaced by self-employment, and any employment relationship is very short or non-existent. This is regarded as a broad phenomenon by various authorities.
Combating neglected obligations and labour exploitation based on data
In processing residence permits for entrepreneurs, the ELY Centre has access not only to the data provided by customers, but also to data collected from the data repositories of different authorities, of which compliance reports are key in assessing the profitability of business activities and the fulfilment of statutory obligations. They provide key information about companies and applicants, therefore improving the efficiency of processing.
In preventing labour exploitation, the most blatant cases, including neglected wage payments, may already be identified from compliance reports. More demanding cases, in which several companies are connected or various weak signals are identified, require the use of data obtained from several authorities and its cross-analysis. Examples include arrival arrangements, labour exploitation, the shadow economy and economic crime.