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The Finnish Government has proposed significant changes to the unemployment benefits system, including reforms to wage-subsidized work and the introduction of a tiered reduction in earnings-related unemployment allowances. These changes, aimed at encouraging quicker re-entry into the workforce and addressing prolonged unemployment, are slated for parliamentary approval in early 2024 and are expected to be implemented by September 2, 2024.

Under the new proposal, wage-subsidized work, which currently counts towards 75% of the employment requirement for unemployment benefits, will no longer contribute to this requirement in most cases. This adjustment is intended to reflect the nature of wage-subsidized positions more accurately and promote more sustainable employment solutions. Exceptions will be made for individuals with reduced work capacity or those who are long-term unemployed and aged 60 or over, but only after 10 months of employment.

Additionally, the proposal seeks to phase out certain age-related exceptions to unemployment benefit rules, which previously facilitated access to employment-promoting services and opportunities for older unemployed individuals nearing the end of their entitlement period. This move is part of a broader strategy to streamline the unemployment benefits system and ensure a more uniform approach to all age groups.

Perhaps the most impactful change is the gradual reduction of the earnings-related unemployment allowance for those experiencing prolonged periods of joblessness. After receiving benefits for 40 days, the allowance would be reduced by 20%, and after 170 days, it would decrease by an additional 25% from the original amount. This tiered reduction aims to incentivize job-seeking efforts and mitigate the financial strain on the unemployment benefits system.

The proposed reforms are a significant shift in Finland's approach to unemployment benefits and labor market policies. They reflect a growing emphasis on encouraging employment and adjusting benefits to better match the current economic and labor market conditions. As these changes are expected to take effect in September 2024, they mark a critical point in Finland's ongoing efforts to balance social welfare with economic sustainability.

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