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Expanding earnings-based jobless benefit will cost, say labour market groups

Labour market representatives agree that the current one-size-fits-all system may not work for everyone.

Providing unemployment fund coverage for people who move from employee to self-employed to entrepreneur is difficult, one union spokesperson says. Image: Jyrki Lyytikkä / Yle

Representatives of two union confederations and a private sector business lobby say they are open to looking at ways to improve the current system of earnings-based unemployment benefits. But they warn that attempts to broaden coverage to non-unionised workers will come at a cost.

Vesa Rantahalvari, lead specialist with the Confederation of Finnish Industries (EK), said that broadening coverage of the earnings-based unemployment benefits system would lead to a considerable increase in costs as well as poorer employment.

Speaking on Yle’s weekday breakfast television programme, Yle aamu, he said however that criticism levelled at the system is justified. He said that if the mechanism were to be created today, it would not resemble the current one.

Rantahalvari said that if efforts are made to reform the system, attention should also be paid to revising key elements such as conditions for employment, maximum duration of employment and employment level. "We should make sure to improve employment [levels] and ensure that costs remain under control," he added.

Minister calls for reform

Speaking at a press conference last week, Centre Party chair Katri Kulmuni called for changes to the current system after revealing that 30,000 furloughed workers were not eligible for earnings-based unemployment benefits because they did not belong to unemployment funds managed by labour unions. Instead, this large group only had access to the basic unemployment benefit.

In addition, political leaders speaking at an annual summer debate session on Wednesday (held online this year) called for the system to be expanded to cover all workers, including non-unionised employees.

Kulmuni had pointed out during her press conference that even if they had joined a union, many of the stranded 30,000 workers would not necessarily have been eligible for the earnings-based benefit, for example if they had not been employed long enough.

Everyone can join

Akava, the Union Confederation for Professional and Managerial Staff, said it has not adopted a formal position on the issue. The confederation’s head of labour affairs Lotta Savinko said that the current system is functional. She said she wanted to dispel the notion that it props up the trade union movement.

"Everyone has the option to join an unemployment fund. A rational person who checks around online very quickly realises that it is possible to join a fund without being tied to it," she noted, adding that there is room for improvement and that reforms will come at a cost.

"You also have to consider that there is a large group of people who move from employee to self-employed, to entrepreneur and from their perspective, providing unemployment coverage is very difficult," she noted.

Room for improvement

STTK, the Confederation of Finnish Professionals, agreed with Akava that the current system works, although there is room for improvement.

"We must remember that everyone has the opportunity to join an unemployment fund if they want to and to have this so-called additional security," advocacy director Katarina Murto said.

She called for an investigation into the option of broadening coverage of the earnings-based unemployment benefit.

"We think that we should first examine the funding alternatives: how would we finance [it] and what would it mean from the perspective of benefits and costs. Then we would have more information and can draw conclusions based on facts," she said.

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