Senior government advisors: Flexicurity could over time boost employment
A new report assesses the components of the flexicurity model and its suitability for Finland. The model brings together flexible employment protection legislation, strong unemployment security and a broad, active labour market policy.
The flexicurity model has three components:
- Flexible employment protection legislation makes hiring and firing easier, helping the labour market run more smoothly.
- Strong unemployment security ensures income for jobseekers while requiring them to stay active during what are generally short spells out of work.
- An active and broad labour market policy provides support for re-employment and keeps up the pressure to find new jobs.
Both employers and employees stand to gain. Businesses would benefit from a reliable supply of labour, while those who lose their jobs face shorter periods of unemployment, backed by comprehensive employment services and a reasonable level of unemployment security.
The findings show that this model could over time boost employment and reduce unemployment, bringing benefits to the economy.
Report sets out proposals for moving towards flexicurity
In February 2025, the Ministry of Employment and the Economy appointed Research Director Heikki Räisänen and Ministerial Adviser Johanna Alatalo as rapporteurs to examine the feasibility of applying the flexicurity approach to the Finnish labour market.
Their report draws on research literature and analysis of economic and labour market indicators, as well as the components of flexicurity. It also compares Finnish practices with those found elsewhere, especially in Denmark, the Netherlands and Sweden.
“Should Finland choose to adopt a comprehensive flexicurity model, our key findings are clear. Once the current reforms are complete, Finland will meet the basic level of flexicurity in employment protection. Unemployment security offers good coverage, but benefit levels need to rise. Where Finland lags most is in active labour market policy, which should be stepped up significantly,” say the rapporteurs, Heikki Räisänen and Johanna Alatalo.
The study also models policy scenarios and weighs their impact on jobs and the national economy. Based on this, the rapporteurs outline example proposals for a phased transition between 2028 and 2040. These would expand and modernise the active labour market policy, improve earnings-related unemployment security and build on the employment protection reforms already under way.
“Although the costs of implementing these proposals would be substantial in the long term, we expect the gains in employment and the wider economy to outweigh the costs,” Räisänen and Alatalo note.
Inquiries:
Heikki Räisänen, Research Director, Ministry of Economic Affairs and Employment, tel. +358 295 047 118
Johanna Alatalo, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 048 084