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Employment activation model increases disability pension applications

The new government has decided to scrap the controversial employment measure starting 1 January, 2020.

Mies TE-toimiston aulassa
More Finns applied for disability pensions due to the constraints of the much-reviled activation model. Image: Emilia Malin / Yle

The previous government's contentions plan to get unemployed jobseekers into work prompted a rise in disability pensions, according the Finnish Centre for Pensions (ETK).

In 2018, the Juha Sipilä-led administration introduced an employment-boosting measure known as the activation model. Under the scheme, jobseekers had to attend approved training courses or complete at least 18 hours of paid work over a three-month period, or face a 4.65-percent cut in their unemployment benefits.

The coalition government that followed under Prime Minister Antti Rinne decided to cancel the activation model as of 1 January, 2020 after it was found to have only a minimal or unclear net impact on employment.

According to the ETK, the contested model caused more than 1,600 unemployed people to apply for disability pensions in 2018. The total number of people who were granted the pension grew by 560 individuals.

Insurance firm Varma drew attention to the link between the activation model and an increase in disability pensions as early as April, 2018.

"The obligations in the activation model do not apply if a person has an unprocessed application for a disability pension," Varma chief physician Jukka Kivekäs said last year. "This is now one way to avoid them or to get extra time before [facing] a cut in benefits."

Meagre effects, psychological harm

The activation model did not increase the employment rate of those receiving labour market benefits, according to a team of researchers who presented their final report to Employment Minister Timo Harakka in early November.

"It is difficult to distinguish the employment effects of an active model from the effects of a good business cycle," the team stated.

Six thousand members of the trade union confederation SAK and its member organisation, the Industrial Union polled last year called the activation model "humiliating, embarrassing and stressful".

Fewer than one in three SAK members said that they had been able to meet the criteria for maintaining the benefits during the past year, while just one-fifth said they had been able to meet the conditions during at least one three-month review period. Moreover, more than one in four said they had never been able to avoid a benefits cut.

The Institute for Health and Welfare THL found in 2018 that the psychological stress of existing outside of the workforce is significantly more widespread than in the general population.

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