Government to reform social protection and unemployment security

The Government aims to achieve a marked increase in the employment rate. As outlined in the Government Programme, the Government will reform social protection and unemployment security in such a way that it will encourage people to accept job offers swiftly, shorten unemployment periods, reduce structural unemployment and save public resources. In line with Annex 6 of the Government Programme, the aim is to save EUR 200 million on earnings-related unemployment security.

An informal working group headed by Esko Salo has drafted the reform. There were representatives of the labour market parties in the working group. The proposal is to shorten the period of eligibility for earnings-related unemployment benefits from 500 days to 400 days; for those with a work history that is shorter than three years the period would be brought down from 400 days to 300 days and for those aged over 58 the duration would remain at 500 days.

Moreover, the waiting period would be increased from five to seven days. The increased earnings-related component that is paid for services that promote job creation would be reduced. The new percentages would be 55 and 25. The increased component paid following a long work history would be abolished. The net effect of these measures on public expenditure is estimated at EUR 135 million at the spending level for 2019. Dynamic effects were not taken into account in the estimate.   

The Government will assess the overall effect of all measures for improving employment and competitiveness and the implementation of the plans outlined in the Government Programme in connection with the spring 2017 spending limits negotiations. Where necessary, the Government will then take further action to reach the impact objectives originally set.

The working group’s proposal serves as a basis for the Government’s detailed law drafting. A government proposal on the matter will be completed in spring 2016. The amendments will enter into force at the beginning of 2017. The Ministry of Finance estimates that the employment effect would be in the range of 10,000 person years.

Inquiries: Markus Lahtinen, Special Adviser (Economic Affairs), Prime Minister’s Office, tel. +358 295 160 404, Hannu Mäkinen, Director General, (Budget), Ministry of Finance, tel. +358 295 530 330, and Esko Salo, Ministerial Counsellor for Legal Affairs, Ministry of Social Affairs and Health, tel. +358 295 163 422