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Today marks the commencement of parliamentary deliberations on amendments affecting the tiered structure of earnings-related unemployment benefits in Finland. These adjustments could slash benefits by hundreds of euros, with some members of unemployment funds potentially losing up to half of their entitlement when considering additional cuts implemented at the beginning of the year.

The Finnish government has proposed a tiered system for earnings-related unemployment benefits.

Under this system, full benefits would be paid for only two months, followed by a 20% reduction after the two-month period and a further 5% drop eight months from the start of the benefit period.

Additionally, the government intends to remove certain age-related exceptions from the law. These exceptions have previously facilitated the employment of older long-term unemployed individuals, making it easier for them to maintain eligibility for earnings-related benefits.

Beyond the changes now under parliamentary consideration, unemployment benefits have already been subjected to several reductions. "The cumulative impact of these cuts is significant, particularly worsening the situation for families with children and those partially employed. Our calculations indicate that the benefits for a part-time employed parent of two could drop to less than half of the previous amount," states Aki Villman, Director of the Federation of Unemployment Funds in Finland.

"The situation for older unemployed individuals will also deteriorate in several ways. The duration of unemployment tends to be longer among the elderly, and finding employment in the open market can be challenging after a certain age. While public employment efforts have previously facilitated employment, the proposal seeks to abandon these. Essentially, more older unemployed individuals will fall back on labor market support or receive significantly reduced earnings-related benefits. It's also important to note that the tiering will be permanent for those on additional days, known as the 'unemployment tunnel'; even re-employment will not restore the benefit amount to its full level," Villman continues.

The proposal makes no exceptions for applying the tiering. Therefore, it would affect those receiving earnings-related benefits for additional days, partially employed individuals, and entrepreneurs receiving unemployment benefits. However, the changes would be implemented in such a way as to not affect ongoing benefit periods. According to the government's proposal, the tiering would apply to earnings-related benefits paid based on work performed on or after September 2, 2024.

In practice, the changes would start affecting benefits in November, allowing for 40 benefit days to accumulate for those first subject to the new tiering system.

The Finnish Parliament is set to discuss this second package of unemployment benefit cuts proposed by the government. The tiering implies that after 40 benefit days (approximately two months), the amount would decrease by 20%, and after 170 days (about eight months), by 25%. Additionally, the government proposes the removal of certain age-related exceptions from the unemployment security law, affecting older long-term unemployed individuals' eligibility for benefits and protection of their benefit level. The right to accrue entitlements through subsidized employment would also generally be removed.

HT

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