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A consistently high need for unemployment benefits
Unemployed persons are in Finland eligible for financial assistance in the form of unemployment benefits. Unemployment funds pay out earnings-related benefits to fund members, while Kela provides basic unemployment allowances and labour market subsidies to other unemployed persons. Unemployment benefits also include a commuting and relocation allowance and a job alternation compensation.
The number of unemployed persons and the benefit expenditure have stabilised at a high level compared to that seen prior to the economic depression of the early 1990s. After 2000, the rate of unemployment has varied between 5 and 12 percent.
In 2017, the expenditure on unemployment benefits decreased by 10 percent. The unemployment funds and Kela paid a total of EUR 4.5 billion in unemployment benefits in 2017, which was nearly EUR 500 million less than in 2016. The largest decrease was seen in earnings-related unemployment benefits.
The decline is explained by the rise in the rate of employment seen during 2017.
Still, Kela’s unemployment benefit expenditure in 2017 was nearly twice that before the recession beginning in 2008 and more than nine times that seen before 1990.
A total 299,900 persons were paid earnings-related unemployment allowance in 2017. Basic unemployment allowance was paid by Kela to a total 72,700 persons and labour market subsidy to 86,000 persons. The number of recipients of earnings-related and basic unemployment allowances decreased 11% from the previous year, while the number of recipients of labour market subsidies increased by one percent.
The average rate of earnings-related unemployment allowance in 2017 was EUR 63.77 per day (EUR 1,371 per month). The average rates of the basic unemployment allowance and labour market subsidy were EUR 32.01 per day (EUR 688 per month) and EUR 35.35 per day (EUR 760 per month) respectively.
The activity requirement reduced unemployment benefits for one half of all unemployed persons
The adoption of the activity requirement at the beginning of 2018 results in smaller unemployment benefits for those unemployed persons who do not meet the requirement.
Among recipients of Kela unemployment benefits whose activity status was checked by Kela, 52% met the activity requirement between 1 January and 1 April 2018. The activity requirement reduced the unemployment benefit for about one half of all recipients of a Kela unemployment benefit who come within the scope of the requirement.
Men and older unemployed persons were most likely to see a decreased benefit.
Finns have an expected cumulative lifetime unemployment of five years
Finns’ total work life expectancy declined significantly during the economic depression of the 1990s, dropping from 32 years to 26 years. Finns born in 2016 can expect to spend 31 years of their lives working and 4.9 years unemployed.
The calculations suggest that women born in the 2010s will have careers that are nearly two years longer than those of men.
Building in greater incentives into the system?
The Finnish system of unemployment protection is based on the two assumptions that the rate of employment is high and periods of unemployment short. However, in many cases this no longer matches reality. The unemployment protection system also does not always offer financial incentives to seek gainful employment: unemployed persons may not necessarily see an increase in income even if they find work, because their benefits may be cut.
Therefore, there have been calls to reform the system by building in greater incentives. Along with the introduction of the activity requirement in 2018, a basic income experiment is underway which will produce information to guide the reform. Analysis of the effects of the experiment on employment will begin after the experiment concludes at the end of 2018.
Press releases
- 31 vuotta töissä, 5 työttömänä, 21 eläkkeellä – tutkija laski odotteen suomalaisten elinajan jakautumisesta (31 years in employment, 5 years unemployed, 21 years in retirement – A researcher’s projection of how Finns’ life expectancy is distributed)
- Aktiivimalli vähentää etuutta useimmin miehillä ja iäkkäillä työttömillä (Men and older unemployed persons most likely to see reduced benefits as a result of the activity requirement)
- Kelan työttömyysetuutta leikattiin 80 000 henkilöltä huhtikuussa (Kela-provided unemployment benefits were cut for 80,000 persons in April)
- Hylkäävää työkyvyttömyyseläkepäätöstä seuraa todennäköisimmin työttömyys (A denied application for disability pension is most likely followed by unemployment)
- Nyt yli puolet Kelan työttömyysturva-asiakkaista täyttää aktiivisuusehdon (More than a half of Kela’s unemployment security clients now meet the activity requirement)
- Puolet Kelan työttömyysturva-asiakkaista täytti aktiivisuusehdon (One half of Kela’s unemployment security clients meet the activity requirement)
- Työttömyysturvan etuusmenot pienenivät 10 % vuonna 2017 (Unemployment benefit expenditures down 10% from 2017)
- Monialainen yhteistyö tukee heikossa työmarkkina-asemassa olevia (Multiprofessional cooperation supports those with a precarious labour market status)
Statistics
Research
- Odotelaskelmat työllisyyden, työttömyyden ja eläkeajan arvioinnissa (Projections as a tool of estimating employment and unemployment rates and retirement life expectancies)
- Työkyvyn hallinta, seuranta ja varhainen tuki. Tutkimus sairausvakuutuslain vuoden 2011 muutoksen vaikutuksista työpaikkojen toimintaan (Management and follow-up of work capacity and the provision of early support. A study of the impact of changes enacted in 2011 in the Health Insurance Act on workplace activities)
- Monialainen yhteistyö paikallisessa työllisyyden hallinnassa. Integroiva kirjallisuuskatsaus (Multiprofessional cooperation in the local management of employment. An integrating literature survey)
- Esimerkki- ja simulointilaskelmia sosiaaliturvan muutoksista 2012–2019 (Some sample calculations and simulations of changes in social protection, 2012–2019)
- Kannustinloukku – työmarkkinoiden todellinen vai kuviteltu ongelma? (Welfare trap – A real or imagined problem in the labour market?) In: Työllisyyskysymys. (The question of employment)
- Putoaville ratkaisu. Työhönvalmennusta ja päihdekuntoutusta nuorille (A solution for those falling between the cracks. Work coaching and intoxicant rehabilitation for young persons)
- Kelan ja Ohjaamoiden yhteistyö. Selvitys Kelan roolista nuorten matalan kynnyksen palveluissa (Cooperation between Kela and the Ohjaamo Youth Guidance Services. An investigation into Kela’s role in low-barrier services for young persons)
- Onko osa nuorista vaarassa syrjäytyä pysyvästi? Nuorten syrjäytymisriskit ja aikuisuuteen siirtymistä tukeva palvelujärjestelmä (Are some young people at risk of permanent social exclusion? Risks of social exclusion and services supporting transition to adulthood in Finland. )
- Nuorten osallisuuden edistäminen. Selvitysmiehen raportti (Promoting youth inclusion. Rapporteur’s report)
- Perustulon työllisyysvaikutukset. Asiantuntijahaastatteluihin ja verrannollisiin esimerkkeihin perustuva arvio (The effects of the basic income on employment. An evaluation based on expert interviews and illustrative examples)
- Muuttuva Salo. Kyselytutkimus äkillisen rakennemuutoksen alueen asukkaiden hyvinvoinnista (The city of Salo in transition. A questionnaire survey on wellbeing among residents of a region undergoing rapid structural change)
- Työttömien maahanmuuttajien asiointi sosiaaliviranomaisten kanssa (Unemployed immigrants and their interactions with social welfare authorities)
- Perustulo ja kannustavuus (The basic income and work incentives)
- ESPN thematic report on access to social protection of people working as self-employed or on non-standard contracts
- Työttömyys, työttömyysturva ja tuloköyhyysriski Euroopassa. (Unemployment, unemployment protection and the risk of working poverty in Europe) In: Eurooppalaiset elinolot (Living conditions in Europe)
- Harkittua? Avauksia sosiaaliturvan harkintavallan tutkimukseen (Well-considered or not? Some ideas for research on discretionary powers in social protection)
- Työmarkkinatuen saajien koettu terveys ja toimeentulo. (Subjective health and economic security of labour market subsidy recipients)In: Huono-osaisten hyvinvointi Suomessa. (The well-being of socio-economically disadvantaged population groups in Finland)
- Takaisin perusteisiin. Perusturvan riittävyys kulutuksen näkökulmasta. (Back to basics. The adequacy of basic social benefits from a consumption perspective)
Blog posts
- Hylkäävää työkyvyttömyyseläkepäätöstä seuraa usein työttömyys ja vakiintumaton toimeentulo (Denial of application for disability pension is often followed by unemployment and irregular income)
- Aktiivimalli: hyvät ja huonot uutiset (The activity requirement: The good news and the bad news)
- Sosiaaliturvan uudistamisen vaihtoehtoja – arvio OECD:n ehdotuksista (Alternatives for a social security reform – An evaluation of proposals put forth by the OECD)
- Aktiivimalli ja keikkatyöt – työtuloja enemmän naisilla ja nuorilla (The activity requirement and incidental work – Women and young persons have more earned income)
- Aktiivimallin karikoita (Pitfalls of the activity requirement)
- Työllistymisen tueksi tarvitaan yhteen sovitettuja palveluja – entä yhden luukun palvelua? (Coordinated services are needed to support employment – What about single-window services?)
- Kun työttömyys vähenee, sairauspoissaolot yleistyvät (As unemployment declines, sickness absences increase)
- Yksinkertaisempi ja kannustavampi sosiaaliturva? (A simpler social security system that incorporates stronger incentives?)
- Osallistumistulo voisi ehkäistä nuorten syrjäytymistä (A participatory income could forestall social exclusion among young persons)
- Nuoret Kelan asiakkaat: Mitä Kelan etuuksia nuoret käyttävät eri ikävaiheissa? (Kela’s young clients: What Kela benefits do young persons receive at different stages of life?)
- Alle puolet perusturvan varassa elävistä työttömistä uskoo uuden työn löytymiseen (Less than a half of those subsisting on basic social benefits are confident that they will find a new job)
- Perustulosta ratkaisu osatyökykyisille ja vajaakuntoisille? (The basic income: A solution for those who are partially fit for work or have functional impairments?)
- Uusi arviointityökalu työttömyyspäivärahan enimmäiskeston uudistuksiin (A new tool for evaluating adjustments of the maximum eligibility period for the unemployment allowance)
- Työttömyys haukkaa ison pätkän työurista (Periods of unemployment account for a large portion of working careers)
Current research
- Kelan työttömyysturvaetuuksien saajien hyvinvointi Suomessa 2017 -puhelinhaastattelututkimus (Well-being of Kela unemployment benefit recipients in Finland 2017: A phone survey)
- Työmarkkinat, sosiaaliturva ja tulonjako (Labour markets, social security and income distribution)
Contact information
- Viveka Tschamurov, Researcher, tel. +358 20 634 1905
- Sami Tuori, Statistics Coordinator, tel. +358 20 634 1887
- Heidi Kemppinen, Lead Coordinator, tel. +358 20 634 1307
email: firstname.lastname@kela.fi