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Earnings-related unemployment allowances hit 20-year high

Jobless funds paid out nearly three billion euros in allowances in 2020, while demand for income support rose slightly.

Hotellin asiakas puhuu vastaanottovirkailija kanssa.
The hotel sector is among those hardest-hit by the pandemic (file photo). Image: Henrietta Hassinen / Yle

The number of people receiving earnings-related unemployment allowances rose by 86 percent last year compared to the year before, reaching its highest level in 20 years, the Federation of Unemployment Funds in Finland (TYJ) said on Wednesday.

Unemployment funds paid out the allowance to 456,000 unemployed or furloughed workers, representing about eight percent of the population.

The monthly number of applications rose as much as eight-fold compared to previous years.

"Last spring's spike was unprecedented," TYJ Director Aki Villman said in a statement on Wednesday.

Despite the rapid surge, applications were processed within two weeks on average, the TYJ said. According to Villman, funds hired more staff and boosted automation to cope with the sudden rise in demand.

Funds shelled out 2.7 billion euros in earnings-related per diems to jobless and temporarily laid-off people, about a billion euros more than in 2019.

Only those who have joined unemployment funds – typically through trade unions – are eligible for earnings-related unemployment allowances.

Slight rise in income support recipients, especially among young women

Meanwhile the number of people receiving income support rose only slightly from 2019 to 2020, according to a joint study by the National Institute for Health and Welfare (THL) and the Social Insurance Institution (Kela).

"The number of people getting basic income support rose by five percent, which was less than we expected," said Kela researcher Tuija Korpela said.

According to Korpela, one reason for this is that entrepreneurs were for the first time given the right to apply for unemployment benefits due to the Covid-19 crisis.

The biggest increase in those receiving basic income support last year was among women aged 18-24, with an increase of 10 percent compared to 2019. The need for basic income support rose the most in Uusimaa, which includes the Helsinki region, and Southwest Finland, which includes the city of Turku.

Last spring the need for support granted by social workers rose, particularly in many small towns, as the opening hours of Kela offices were cut back. Those who needed in-person help in filling out applications had to seek assistance from social workers.

"For various reasons, not all social work clients know how to use smart devices or have access to them. For them, it is difficult to replace face-to-face assistance with remote services," noted THL senior researcher Merita Jokela.

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