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30,000 furloughed workers miss out on unemployment fund benefits

Centre Party chair Katri Kulmuni is calling for changes to Finland's income-linked unemployment benefits system.

Katri Kulmuni, Helsinki, 10.07.2020
Centre Party chair Katri Kulmuni speaking at the press conference on Friday afternoon. Image: Antti Haanpää / Yle

Nearly 30,000 workers who were temporarily laid off, or furloughed, from full-time employment in Finland during the month of May were unable to claim earnings-related unemployment benefits.

They were excluded from claiming the benefit because they had not joined an unemployment fund, even though they would have met the necessary requirements needed to claim, such as the number of months in full-time employment.

A total of almost 120,000 people were furloughed in Finland during the month of May due to the economic impact of the coronavirus pandemic, but the vast majority were members of an unemployment fund and were therefore able to claim hundreds of euros more in benefits than a furloughed worker relying solely on the basic unemployment benefit.

The figures were revealed by Centre Party chair Katri Kulmuni at a press conference on Friday afternoon, and were based on a report by the Parliamentary Information Service.

Kulmuni said the economic impact of the coronavirus pandemic has revealed vulnerabilities within Finnish society, and called for earnings-related unemployment benefits to be made available to all workers, once the necessary conditions are met, when Finland’s social security system is reformed.

"In May, almost 30,000 people who would have been entitled to earnings-related unemployment benefits have not received it because they did not realise that they needed to apply for membership of a fund," Kulmuni told Yle. "This is a pretty big question of justice."

Mostly young and part-time workers not fund members

An estimated 15 percent of workers in Finland have, for one reason or another, opted out of joining an unemployment fund, with younger and part-time workers especially unlikely to be members.

Professor Petri Böckerman of Jyväskylä University told Yle News in May that this may be because many people are not sure how the system works.

"You pay nearly all of the costs, but you don't receive the income-linked benefits because you did not join an unemployment fund," Böckerman said at the time, referring to the fact that the largest part of the cost of income-linked unemployment benefits (56 percent) is paid by every employee and employer in Finland -- regardless of employment fund membership.

Most of the rest of the cost (39 percent) is paid through tax revenue, while only a small percentage (six percent) comes from membership fees paid by unemployment fund members.

"It is unfair that people who work just as much do not necessarily receive earnings-related unemployment protection. This question of fairness should be be remedied over time," Kulmuni said at Friday’s press conference, but added that it was likely to fall to the next government to make the changes.

Story continues after graphic.

Income-linked unemployment benefit
Image: Samuli Huttunen / Yle
The percentage of furloughed workers without access to unemployment benefits during the past spring was much higher than in previous years, at between 25 and 30 percent. Previously, only about 10 percent of furloughed workers were excluded from earnings-related unemployment benefits at any one time.

The figures collected by the Parliamentary Information Service are based on data from the Financial Supervisory Authority and Finland’s benefits agency Kela.

Opposition party joins calls for reform

The discussion on extending earnings-related unemployment benefits to all employees was re-ignited by an interview (in Finnish) with National Coalition Party MP Elina Lepomäki in Helsingin Sanomat on Friday morning.

According to Lepomäki, the opposition NCP has now has reversed its position on the issue and is demanding reform of the system, which would cost the state an estimated 250 million euros a year.

Prime Minister Sanna Marin's Social Democratic Party has previously ruled out extending the unemployment coverage to all workers.

In an interview with the online publication Verkkouutiset 18 months, party chair and former PM Antti Rinne said such a move would be a way to erode the trade union movement.

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