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Minister of Employment Tuula Haatainen: Flexibility and security to labour market from Government’s actions

Ministry of Economic Affairs and Employment
Publication date 20.3.2020 13.16 | Published in English on 23.3.2020 at 13.43
Press release
Työministeri Tuula Haatainen

The Government has decided on first-hand measures to be taken to secure people’s livelihoods and liquidity of companies in the difficult situation caused by the coronavirus. The Government will implement most of the measures proposed by the labour market organisations, on request of Minister of Employment Tuula Haatainen. The livelihoods of entrepreneurs and freelancers will also be secured, regardless of the type of company.

“The Government asked the labour market organisations to give their proposals within a week, and they completed the task in two days. Now it is up to the Government and legislators to act swiftly. I am confident that Parliament will also support these measures,” Minister Haatainen says.

The measures are temporary and, according to the decisions that have now been made, they will remain in force for three months. The amendments to the employment legislation concern all businesses and organisations.

“We must do all we can to secure the functioning of the labour market, avoid bankruptcies of viable companies, and ease the position of wage-earners in this difficult situation. What companies now need is flexibility, while wage-earners need security,” Minister Haatainen says.

“When we heard about the situation of sole entrepreneurs at the Ministry of Economic Affairs and Employment, we immediately started to prepare measures to assists them in coping with their daily lives. As part of this package, full-time entrepreneurs will also be eligible for unemployment benefits. The system is very flexible, all that is need is a notification by the entrepreneur. This is no time for red tape, but decisions must be made fast. People’s anxiety is very real,” Minister Haatainen says.

Easing the companies’ payment burden: EMU buffer and extending the deadlines for payment

The Government will implement a temporary reduction in the employers’ pension insurance contribution, as proposed by the labour market organisations. The temporary reduction is 2.6 percentage points. This will be implemented as quickly as possible, but no later than 1 June 2020, and it will remain in force until 31 December 2020. The reduction will reduce the burden of private sector employers by EUR 910 million, if it enters into force on 1 June 2020.

The reduction will be implemented using the EMU buffer included in the earnings-related pension system, which is now about EUR 7 billion. The buffer will be rebuilt by raising the employers’ contributions payable in 2022-2025 so that the impact of the reduction will be fully compensated for.

In addition, the payment of employment pension contributions will be postponed by three months, as proposed by the labour market organisations. The same changes also apply to the contributions under the pension schemes for self-employed persons, farmers and seamen.

Flexibility to companies regarding lay-offs and cooperation procedures

The Government has decided on measures that allow more flexibility for companies to lay off their employees at the lowest possible cost in the highly exceptional situation caused by the coronavirus. In case of lay-offs, the minimum negotiation periods under the Act on Cooperation within Undertakings are shortened from the present 14 days and six weeks to five days. The right to lay off employees is extended to apply not only to indefinite-term employment contracts but also to fixed-term contracts. In case of lay-offs, the employee is entitled to unemployment security and has the right to terminate the employment contract, including a fixed-term one. The notification period concerning lay-offs will be shortened to five days from the present 14 days.

The measures to increase flexibility in employment legislation will be prepared by the Ministry of Economic Affairs and Employment.

Improvements to wage-earners unemployment security

To compensate for the flexibility allowed for companies, the Government also decided on certain improvements to wage-earners’ unemployment security. The personal liability period in unemployment security will be abolished. The duration of lay-offs will not be included in the maximum unemployment security period. Unemployment security legislation will be amended by a provision that the employee is entitled to unemployment allowance even when the lay-off is based on an agreement.

The condition concerning the period of employment will be changed: if the condition would otherwise not be fulfilled, the required period of employment is 13 weeks in employment relations that started on 1 January 2020 or after that. The payment of unemployment benefits will also be facilitated. The State is prepared to subsidise the functioning of unemployment funds by EUR 20 million in 2020, following principles to be decided separately.

The measures will be prepared by the Ministry of Social Affairs and Health. The Ministry of Economic Affairs and Employment will act swiftly and participate in the preparation of amendments that will facilitate the payment of the benefits.

Securing the livelihoods of entrepreneurs and freelancers

The Government decided to improve the access to unemployment security for sole entrepreneurs and freelancers, regardless of the type of company. The temporary weakening of the conditions for entrepreneurial activity due to the coronavirus provides sufficient grounds for deeming the entrepreneurial activity as a secondary activity. Persons engaged in a secondary business activity are entitled to unemployment benefits. Entrepreneurs with full-time employment are not required to wind down their business activities in order to be eligible for unemployment benefits.

The type of entrepreneurial activity is irrelevant, which guarantees equal treatment of entrepreneurs in this emergency situation. Only the entrepreneur’s notification is required, which reduces the need for processing and decision-making based on discretion in the Employment and Economic Development Offices.

The amendment to the Unemployment Security Act is temporary. It will be prepared by the Ministry of Economic Affairs and Employment.

Timo Nevaranta, Special Adviser to the Minister of Employment, tel. +358 50 574 1430

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