Functions of municipalities and joint municipal authorities

Regional and economic development

Bicyclist in an urban landscape

Finland has 18 regions and the autonomous province of the Åland Islands. There are 309 municipalities and cities: 293 in continental Finland and 16 in the Åland Islands.    

Local authorities cooperate on a voluntary basis in various thematic areas that support regional development, for example in planning land use, promoting business, strengthening competence and organising public transport. The basis for cooperation may be either a functional urban region consisting of several municipalities or a network of cities, municipalities and regions from across Finland.

Regional development means wide-ranging interaction and activities between different administrative levels and public and private operators for promoting wellbeing across Finland’s regions. National legislation on regional development provides that the responsibility for regional development lies with the central government and local authorities.

The Finnish Government draws up a regional development strategy for its four-year term of office, and various ministries are committed to implementing the strategy in their activities. These strategical guidelines are taken into account in the regional development plans prepared by the regional councils.

The regional councils are joint municipal authorities. A municipality must be a member of the regional council in its geographical area. The regional councils involve various stakeholder groups in their development work: the region’s cities and municipalities, representatives of the regional state government (most importantly the Centre for Economic Development, Transport and the Environment), entrepreneurs' organisations and other key organisations, private sector representatives and citizens.

In addition to the strategic work and programming related to regional development, the regional councils are responsible for land use planning and regional interest representation and for any other tasks related to the themes that are important for the region’s cities and municipalities. Read more on regional councils.

Finnish local authorities, ministries and other key operators also pursue strong urban, rural and island policies.

They cooperate and form close partnerships to implement these policies through various development funds and programmes. Major cities cooperate with ministries on the planning and implementation of land use, housing and transport and on promoting various innovation ecosystems.

In Finland, regional development is financed both through national development funds and the EU’s regional and structural policy funds. In addition, many activities of the different administrative branches have considerable impacts on regional development, a good example being the national transport policy.

Industrial policy

Cities and municipalities pursue industrial and employment policies to safeguard the region’s competitiveness and vitality. Local industrial policy supports the conditions for businesses and industry, including the development of city centres, the building of technology hubs, advice on business start-up and business networking projects.

Active industrial policy can also mean developing public services through private service provision, or local authorities cooperating with businesses to improve the area’s readiness to participate in the information society.

The development of industrial policy has become a task for the entire municipal organisation. The policy is implemented through economic development companies, business partnerships, enterprise agencies, or incubators, to name a few. Moreover, local authorities manage EU subsidies in their role as the rural business authority. Many local authorities are also involved in business mentor projects that are aimed at reinforcing local business activities.


Finnish local authorities have so far had a limited statutory responsibility for employment services, but they have voluntarily engaged in wide-ranging and varied activities to promote employment. In recent years, local authorities have increased their financing of and participation in employment projects for young people and the long-term unemployed, workshop activities and employment services for jobseekers with partial work ability.

Local authorities, organisations and the Finnish labour administration have together developed an extensive and highly varied suite of mutually complementary cross-sectoral services. Local authorities’ investments in industrial policy will significantly support the creation of new jobs.

The ongoing reform of the employment and economic development services (TE services) transfers the responsibility for organising employment services from the central government to local authorities. The reform is to enter into force in 2024.

It is a major national service structure reform that will contribute to speedy employment and increase the productivity, availability and effectiveness of the TE services. The reform will also strengthen the role of cities and municipalities in improving local and regional vitality.

The basic public services of municipalities also contribute to improving the employability of citizens. The TE services reform will enable local authorities to harness all areas of their work from infrastructure to innovation for the promotion of employment.