THE FINNISH GOVERNMENT on Friday announced it has reached an agreement on the last set of employment measures for this electoral term.
“The government has committed to making decisions that increase the number of the employed by roughly 80,000 and raise the employment rate to 75 per cent by the midway point of the decade,” said Minister of Employment Tuula Haatainen (SDP).
“We have previously made decisions on measures that increase employment by about 80,000 people.”
The Ministry of Finance estimated that the last set of measures will strengthen the public economy by a minimum of 110 million euros and raise the number of the employed by 5,100.
The government expects to strengthen public finances by roughly 54 million euros and grow the ranks of the employed by 1,500 by making the earnings-related unemployment allowance conditional on earnings rather than working time. The allowance is presently available to people who worked a minimum of 18 hours a week for 26 weeks over a 28-month monitoring period before becoming unemployed, with those not meeting the criteria being eligible for the labour market subsidy.
The allowance is to become available to anyone who earned more than 844 euros a month in at least six of the 28 months in the monitoring period, regardless of working time. Monthly earnings of 422–843 euros are to be counted as a half a month toward the six-month requirement.
“The employment condition can be satisfied not based on working time but based on earnings,” Haatainen in a news conference in Helsinki on Friday.
She pointed out that the amendment would have an impact not only on work incentives, by making it more beneficial to accept irregular, short-term jobs, but also on the processing of allowance applications, as all the necessary information could typically be obtained from the incomes register.
Helsingin Sanomat wrote that there are about 2,800 unemployed people who did not work the requisite number of weeks with at least 18 working hours but satisfy the earnings-based requirement. The anticipated employment impact of the revamp, it added, stems from a decline in the unemployment benefits of some intermittent workers.
People who racked up the requisite hours every other week but did not work in others, for example, were previously entitled to a monthly allowance of 1,261 euros. The allowance will going forward be 830 euros a month regardless of the distribution of earnings within any month when the recipient satisfied the earnings criterion.
Students will be encouraged to work more by permanently raising the income limits for student financial aid by 50 per cent from the level of 2021 as of January 2023, said Haatainen. The annual limit depends on the number of months a student receives the aid in a single year, with the limit for a month of aid rising to nearly 1,045 euros and month of no aid to 3,120 euros next year.
Although the raise would increase student financial aid costs by roughly 24 million euros a year, its impact on tax revenues and other benefit costs would outweigh the bump in student aid costs by about 12 million euros, according to the Ministry of Finance. The estimate is based on the assumption that raising the income limits will not delay graduation.
“Raising the income limit is an attempt to support integration into working life during studies and [utilise] students to balance the difficult labour market situation,” commented Haatainen.
The measure is expected to increase the number of the employed by about 2,500.
People studying with unemployment benefits, meanwhile, will be brought within the scope of an employment services scheme that will enter into force later this year, obliging most of them to apply for four jobs a month in order to remain eligible for the benefits. The scheme was initially to oblige such students to apply for only three jobs a month.
Students lacking occupational skills are not affected by the adjustment, meaning they can retain their eligibility for unemployment benefits by applying for three jobs a month. The obligation can be lowered or not imposed on a case-by-case basis as in the case of other unemployed job seekers.
The adjustment is to grow public finances by 41 million euros and the ranks of the employed by 1,100 people.
Another 10 million euros is expected to arise from a limitation that is to be introduced to the use of the full wage subsidy by the largest corporations engaged in economic activity. The use of the subsidy, the government said, must be limited to comply with regulations on state subsidies in the EU.
“The possibility to receive the subsidy at 100 per cent would simultaneously expand to new employers that have previously not been able to receive it. The wage subsidy would benefit a growing number of employers after this,” said Haatainen.
The government also announced a number of other employment-related measures, such as appointing a task force to weigh up means to promote continuous learning, revamping the occupational safety act to support the ability of people to work and remain in working life, and improving student mental health services.
No estimates of the economic impact of the other measures were provided.
Jukka Haapakoski, the executive director at the Finnish National Organisation for the Unemployed, told Helsingin Sanomat that the government appears to be making the kind of difficult decisions it has sought to avoid thus far.
“This is primarily a package of cuts,” he characterised.
The revamp of earnings-related unemployment allowance, for example, could have a negative impact particularly on temporary municipal workers who have worked in early-childhood education, education or sports in periods of two to three weeks. It could have a positive impact on people who are are paid for a one-off performance, such as artists and musicians.
Finland Chamber of Commerce estimated that the measures are insufficient.
“The newly decided measures are a drop in the ocean in comparison to the need for structural employment measures and the sustainability deficit in the public economy,” stated CEO Juho Romakkaniemi.
The National Union of University Students in Finland (SYL) welcomed the raise in the income limits of students, reminding that annually some 40,000 students are ordered to return financial aid for exceeding the limits.
“From an individual student’s viewpoint, the raise means there are more options to secure your livelihood, work and acquire experience,” said Konstantin Kouzmitchev, the chairperson at SYL.
Aleksi Teivainen – HT