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Economists uneasy as Finland's employment rate lags behind other Nordics

An economist says a labour ministry report shows that the country's employment centre system is slow and makes jobseekers passive.

Nuori selailee kännykkää, silhuetti.
Fewer people in their early 30s are earning university degrees (file photo). Image: Henrietta Hassinen / Yle

Finland's outgoing government reached its employment goal of 72 percent late last year, and the figure has risen slightly since, but the country lags far behind Iceland, where 83 percent of working-age people have jobs. That is according to a new report on Finland's unemployment situation.

The report, entitled "Employment rate disparities across the Nordic countries and some determinants for them," was published by Finland's Ministry of Economic Affairs and Employment last week.

The report said Sweden had the second-highest employment rate (77.5 percent), while Denmark and Norway are at the level Finnish leaders have said the country should reach (around 75 percent) during the incoming government's term.

Doing so would require Finland to take the problem of joblessness more seriously, according to Tapio Bergholm, a history docent from the University of Eastern Finland.

He said other Nordic countries seem to deal with unemployment more urgently, but noted that consequences for uncooperative jobseekers there can also be more severe than in Finland.

Activation model

A more stringent approach to getting people to work was taken up in Finland, though.

Last year the centre-right administration of prime minister Juha Sipilä implemented its so-called "activation model,"
which is said to mimic the Danish unemployment insurance system. Under the new programme jobseekers are penalised with slight cuts to unemployment benefits unless they take part in compulsory job training and other fulfilments.

Story continues after photo.

Mies te-toimistossa.
File photo of jobseeker at an employment centre office in Joensuu. Image: Ismo Pekkarinen / AOP

It remains to be seen whether the new model has helped the situation. On Wednesday, results of a survey of experts and supervisors who work for the country's TE employment offices found that 62 percent of respondents said they supported ditching the active model. Just 10 percent of respondents said the model helped people find jobs.

However some economists have called for even more drastic measures to address unemployment.

Employment office "slow"

The head economist at the Central Organisation of Finnish Trade Unions (SAK), Ilkka Kaukoranta, called for changes in the employment office system.

Pointing to data in the ministry report, he said the process of seeking work through the employment office is slow and makes jobseekers passive.

"We need to invest in personal support and eye-to-eye meetings between employment office staff and jobseekers," Kaukoranta said.

The report was compiled and written by researchers Johanna Alatalo, Liisa Larja and Heikki Räisänen, and notes that Finland's economic growth has also been lower than in the other Nordic countries during the years between the financial crisis of 2008 through 2016.

Finland's "unwilling" part-time workers

"In the last few years the economic development has reached good Nordic levels in Finland. In the short-term comparison, Finland has done well both in terms of productivity and labour input increase," the report's abstract states.

The report said the country is not at the very bottom among the Nordics in terms of full-time employment however, saying that it's doing better than Denmark, and among women, Norway.

Finnish residents also appear to be taking on part-time work more than their Nordic counterparts- even unwillingly, according to research director Räisänen.

"Although part-time work is not [very] common here, a larger share of part-time workers does their work unwillingly,” he said in a ministry press release.

Story continues after photo.

Nainen kurkistaa alas jossa konttorityöntekijöitä
An open-plan office at a UPM forest company facility (file photo). Image: Elisa Kinnunen / Yle

Education "eroding"

The Finnish researchers also noted a decline in tertiary degrees among residents in their early 30s.

"Before the financial crisis [of 2008], Finland was at the top among Nordics in tertiary educational attainment among the 30-34-year-old-population, while this is now the contrary: Finland is the last one [among Nordic countries]. Educational attainment is facing an erosion," an English abstract of the report stated.

Bergholm pointed out that the outgoing government had carried out education budget cuts, which resulted in a decline in the quality and availability of tertiary and vocational school offerings.

"If one wants to raise employment, one also has to invest in a skilled workforce," Bergholm said.

SAK's Kaukoranta said he is concerned that the country's education levels are sinking and suggested raising the age of mandatory schooling to 18. Currently education is compulsory until age 16.

"It's hard to land a job if you haven't matriculated. Extending mandatory education would be an investment that would improve employment rates," Kaukoranta predicted.

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