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PM pledges end to Finland’s contentious activation model early in 2020

PM Antti Rinne also floated the idea of a wage subsidy "Tinder" service to match employers with jobseekers.

Antti Rinne
Prime Minister Antti Rinne at his official Kesäranta residence. Image: Antti Haanpää / Yle

Prime Minister Antti Rinne has signalled that from 1 January next year he will follow up on a pre-election pledge to roll back a deeply unpopular "activation" scheme that essentially penalises unemployed jobseekers who are unable to find work.

In an Yle interview, Rinne said that his administration would at least eliminate the element of the so-called activation model that cut jobseekers’ unemployment benefits by 4.65 percent if they were unable to find work, earn money as entrepreneurs or provide proof of training during a three-month evaluation period. He added that there is also a possibility that the entire system would be axed.

"I don’t believe that it has produced a single new job. It has been a benefits cut that has increasingly pushed people toward [reliance on] income support. This will be addressed," Rinne declared.

Rinne told Yle that aspects of the programme that have had a positive impact on employment could be preserved. He pointed to the system of regular interviews of unemployed persons as one example of a useful addition. He said that government working groups are currently trying to determine the employment impact of the activation system.

The PM explained that legal issues have slowed down dismantling of the model. He added that it would not be enough to tackle the benefit-cutting aspect of the system and said that the administration preferred to deal with all possible reforms with a single legislative proposal.

"It could be that in the final analysis we would water down [jobseekers’] obligations in some way. That would allow us to get rid of the benefits cut," he noted.

Tinder setup for wage subsidies

The government is expected to bring new, fast-acting employment-boosting measures to budget talks due to begin in the autumn. It has also asked labour market organisations to submit proposals that would help it meet job creation and employment targets, but Rinne stressed that it has not imposed any empirical targets for them.

Rinne said that one idea that the new administration is mulling is a proposal that would make it easier for individuals to apply for wage subsidies.

The system would involve rolling out an online service in which unemployed jobseekers could apply for a wage subsidy that is equivalent to the labour market subsidy. At the same time, employers would be told whether or not they are able to hire an employee using the wage subsidy. The result would be a kind of wage subsidy Tinder service.

"Bringing these people together would simplify the process and could create tens of thousands of new jobs," Rinne speculated.

The government’s goal is to get at least 60,000 people into jobs and to raise the employment rate to 75 percent during its four-year term. The entire government programme is largely predicated on improving the current employment rate of around 72 percent. However economists have expressed caution over slowing economic growth and bearish employment prospects.

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