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Gov’t plan to kickstart unemployed begins in 2017

The centre-right government wants to improve Finland’s dismal unemployment numbers, and has chosen to use more of a stick than a carrot to incentivize the jobless. New legislation cutting the size and duration of the unemployment benefit and imposing harsher penalties for not taking jobs on offer, among other things, will come into effect at the turn of the year.

TE-toimisto Joensuussa.
Unemployed people will be required to sit for an interview about their job search every 3 months if they want to keep their benefits. Image: Ismo Pekkarinen / AOP

The everyday life of Finland’s approximately 400,000 unemployed will change significantly in 2017, after changes in the legislation determining unemployment policy take effect. Overall, things will become more difficult for the jobless, especially if they are unable to find work.

The labour market subsidy and the basic unemployment benefit paid by the state will drop about 6 euros to 697 euros per month. Child increases to the benefit will fall by the same percentage. Earning-related unemployment allowances will likewise fall by 4-10 euros per month, and allowances with increases tacked on will decrease in general by 40 to 100 euros monthly. Taxation on the state benefits will remain the same.

At the same time, the basic allowance granted by the state for people down on their luck will increase by a few euros to around 488 euros per month.

Over-60s from unemployment to early pension

Thanks to the so-called Lex Lindström change to legislation, people over 60 who have been unemployed for five years or more will transfer from the unemployment scheme to early retirement and begin collecting a pension. Beginning next summer, the early pension will be 760 euros a month, 6 euros lower than at present. This early pension support will continue until the recipient transfers to an old-age pension or turns 65.

100 days less compensation

The maximum duration of the earnings-related unemployment allowance - the fixed-term compensation that is tied to a jobless person’s former income level - will fall from 500 to 400 days in 2017. For those with only a three-year work history in their former position, the compensation period will fall to 300 days. For people over 58, however, the current 500-day limit will still remain valid.

Penalties for failure to apply for recommended vacancies

Starting in 2017, after a three-month grace period in which a jobseekers can hold out for work that matches their education and experience, they will not be able to refuse to apply for jobs from vacancy listings recommended by employment offices. If they do not comply and apply for listed jobs, they risk losing 90 days of benefit payments, up from the current penalty of 60 days.

Similar penalties will be imposed for people who have left or refused a job because it was located more than 80 kilometres away. As a small carrot, a 700-euro monthly supplement will be given to people for two months if they accept work that requires long commutes.

Other changes

State-awarded assistance to people starting a new company will also be cut in 2017 from 18 months in duration to 12, although the approximately 700-euro monthly amount will remain the same.

The employment or TE offices in Finland will also start calling in customers once every three months for an interview starting next year. The interview will assess the jobseeker’s efforts and plans, and make adjustments if necessary.

One-month recruitment trials will also be added to the TE office arsenal, where jobseekers will be asked to try out a potential job for a month to see if they are a suitable candidate. During the trial, people taking part will still be eligible to receive their unemployment benefits.

And potentially more in store

In addition to these reforms, the government has other changes to its unemployment policy in the pipeline.

For example, a new plan for unemployment benefit distribution that they call an ‘active model’ is scheduled for 2018, and a ‘participatory social services’ scheme is slated for later in 2018, if the parliament agrees to execute them.

Edit 28.12.2016 at 10.48 am: Updated to specify that sanctions will be increased for failure to apply for job vacancies from listings provided by local employment offices.

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