''The Government's employment rate target requires an increase in the labour market participation"

3.5 Finland built on trust and labour market equality

Current situation

The employment rate has grown in recent years, with unemployment falling in all groups. However, comparing the situation across all Nordic countries, Finland has the lowest employment rate. Increasing Finland’s employment rate to 75 per cent will be difficult, despite the improvement in employment. At the same time, difficulties in labour availability and recruitment have nevertheless become an increasingly serious problem in various parts of Finland.

The employment rate is currently 72.4 per cent. Labour productivity has also begun to increase. The principal factors improving productivity in economies like Finland are skills and technological progress. Climate change has an impact on the world of work and occupational structures. Improving competitiveness is essential for Finnish enterprises and their employees, so attention is paid to employee education and skills, product R&D and investment, and services that seek to boost employment and incentives for entrepreneurship and self-employment.

Economic development is expected to deteriorate. Ageing of the working-age population and a lower birth rate pose challenges for the Finnish labour market. Skills have declined, and a significant population segment even has deficiencies in basic skills. The changing character of work is also bringing new kinds of issues that present legislation does not yet recognise. There is still much to be done to improve the quality of the world of work and equality. A woman’s euro is still 84 cents. Women do more part-time work, and they also work more often in low-income sectors.

Increasing the employment rate will be difficult. It is essential to increase the labour market participation of people with partial work capacity, of those with poor employment prospects, and of immigrants. Effective measures are needed to promote the employment of these people. Thus equipped, it is possible to strive for good growth in view of the sustainable economy, the environment and social justice and attain an employment rate of 75 per cent. Realisation of these three dimensions must be ensured in all policy measures.

Objective 1

Seeking high employment through active measures

The Government's employment rate target requires an increase in the labour market participation of people with partial work capacity, those with poor employment prospects, the young and older people and those with an immigrant background. Effective measures are needed to promote the employment of these people.

Working careers will be prolonged at the beginning, middle and end.

The aim is to change the course of labour market policy from passive to active, as in other Nordic countries, and to target services more efficiently than at present.


Development of the employment services administration

National steering of employment services and cooperation across administrative sectors will be improved.

The role of municipalities as organisers of employment services will be strengthened. The organisation and implementation of employment services may be assigned by agreement to one or more municipalities based on agreements made with the municipalities. Provisions to support implementation will be laid down in separate legislation as required.

The public sector is the organiser of employment services, and may produce these services in partnership with the private and third sectors and with organisations.

Development of employment services

Employment services will be renewed to support rapid re-employment. Services particularly at the start of unemployment will be made more efficient and thus varying individual needs of unemployed persons can be considered better than before.

Routine operations will be replaced with a system providing better availability, quality, effectiveness and diversity of services.

The necessary staffing resources will be set aside to guarantee a personal service and service package for unemployed people.

The prospects for introducing personal budgeting in employment services will be investigated.

Career and guidance services will be improved not only for unemployed persons, but also particularly for those returning from extended family leave and for older employees. Working career guidance will also be increased for employees, entrepreneurs and the self-employed.

Reform of unemployment benefit and services for the unemployed

A reform of the unemployment benefit system and services for the unemployed will be prepared with a view to shortening periods of unemployment, making short-term employment more attractive, encouraging job seeking, and adjusting unemployment benefit sanctions (qualifying periods) to establish a more reasonable balance of rights and duties. The cuttings and obligations of the activation model will be dismantled, when measures with corresponding employment impacts have been decided.

An alternative scheme will be prepared in which the personal employment plan of the unemployed person will include a personal job search obligation and services such as training and rehabilitation. Resources will be ensured for personal service at Employment and Economic Development Offices. 

The criteria governing sickness allowance, rehabilitation allowance and unemployment benefit will also be reviewed to ensure that people receive appropriate benefits. Measures will be taken to further develop the adjusted unemployment allowance. This will focus on making it easier to participate in work and will take into account changes in working life. The notion of combined unemployment insurance will guide the insuring of self-employed and wage income and the determination of per diem allowances in these circumstances.

Increase in the private sector pay subsidy

The Government aims to increase the use of the pay subsidy substantially in enterprises. The current pay subsidy will be reformed and simplified, reducing employer bureaucracy by giving the employer a binding pay subsidy decision in advance. An employment voucher will be introduced.

The pay subsidy scheme will be improved and its use will be expanded in partnership with labour market organisations to avoid jeopardising work done under collective agreements or distorting competition.

Pay subsidy financing will continue under the unemployment benefit budget item of the Ministry of Social Affairs and Health after 2020.

The prospects for introducing subjective pay subsidies for ageing or long-term unemployed people will be investigated.

Reform of the third sector pay subsidy

The third sector’s pay subsidy will be reformed. The aim is that strong individual support, review of work capacity and other services are linked to the third sector’s present pay subsidy so that the model will become new support for moving to the open labour market. The Government aims to increase the maximum pay subsidy for people with partial work capacity, the disabled, the long-term unemployed and immigrants who are difficult to employ. The 4,000 person-year limit preventing employment will be abolished in the third sector pay subsidy.

Recruitment subsidy trial for SMEs and lowering of the sole trader employment threshold

Growth of small and medium-sized enterprises will be supported by a recruitment subsidy trial to promote the matching of labour supply and demand and lower the threshold for SMEs to recruit unemployed people.

The risk of sole traders in hiring the first employee will be reduced by introducing a subsidy for such hiring with minimal administration.

Supporting employment of young people

All young people aged under 25 years of age and all graduates under 30 years of age will be guaranteed a job or work trial, traineeship, workshop, apprenticeship or rehabilitation placement no later than three months into the period of unemployment. The Government will promote the Youth Guarantee based on expert work.

Ohjaamo services and youth workshop activities will be consolidated.

People with partial work capacity and those in need of special support

A working capacity programme for people with partial work capacity will be implemented to ease access to employment. Pilot projects for the deployment of effective services and schemes will be launched as part of this programme. The rehabilitation system will be redesigned based on the proposals of the rehabilitation committee.

The intermediate labour market will be developed. Access to employment-promoting and individual services will be enhanced for those in need of special support (including people with partial work capacity, immigrants, people with disabilities, young people and older members of the workforce). The availability of work coaches in employment and social services will be improved. The availability of mental health services will be ensured.

The operating conditions of social enterprises will be improved by revising their funding and providing support to strengthen business expertise.

The Government’s aim is that a condition is set for social employment in public procurement.

The system of rehabilitative work will be remodelled to incorporate social rehabilitation, allowing for the individual rehabilitation needs of people who are long-term unemployed or disadvantaged in the labour market with a view to strengthening their working life skills and ensuring their social participation.

Linear model for partial disability pension

The incentive traps that prevent people on disability pension from working will be abolished by introducing a linear model for partial disability pension.

Objective 2

Making Finland a global leader in gender equality

The Government’s goal is to raise Finland into a leading country in gender equality. The Government aims to improve equality ambitiously in different sectors of society. Special attention will be given to enhancing gender equality in the world of work and in families.


Action Plan for Gender Equality

A broadly based Action Plan for Gender Equality will be drawn up to coordinate measures for achieving a gender equal society in various sectors.

A monitoring system covering all state administrative sectors will be created for monitoring equality. A gender impact assessment will be a compulsory part of public administrative functions in all government departments.

Pay transparency

The elimination of unjustified pay disparities and pay discrimination will be promoted through statutory measures to improve pay transparency. Unjustified disparities in pay between women and men will be addressed more rigorously than at present. 

The Act on Equality between Women and Men will be amended to incorporate rights and meaningful opportunities for staff, staff representatives and individual employees to access pay information and address pay discrimination more effectively.

Equal Pay Programme

Pay equality will be promoted by continuing the Equal Pay Programme, which must be more ambitious and effective than before. The key aim of the programme is the commitment of the Government, employers and organisations representing employees to take measures to assess job requirements, to promote equal pay and pay transparency, and to abolish segregation in the world of work. The gender impacts of collective agreements will be assessed as part of the programme.

Preventing discrimination

Discrimination on the grounds of pregnancy will be prevented. Legislation will be clarified to ensure that pregnancy and use of family leave may not affect the continuation of temporary employment. The prospects for improving the job security of employees returning from family leave will be studied, with the findings applied in necessary legislative and other measures.

Discrimination will be prevented in recruitment. An investigation of the feasibility of anonymous job applications will be done.

Family leaves

An ambitious family leave reform supporting the wellbeing of families will be implemented together with the social partners. The aim is an equal division of family leaves and care responsibilities between both parents in families, stronger non-discrimination and equality in the world of work, and reduced pay disparities between the sexes. Families will have more opportunities for choice and flexibility in taking family leave. The reform will be implemented in a way that treats everybody equally, including diverse families, and allows for various forms of self-employment.

The reform should be implemented in a way that gives mothers and fathers an equal quota of months. Earnings-related leaves allocated to fathers will be prolonged without reducing the share currently available to mothers. Family leave must also include a freely chosen period of parental leave. An increased earnings-related component corresponding to the present share for mothers will be paid to both parents.

The reform must satisfy the requirements of the directive on the safety of pregnant workers and the directive on work-life balance.

Child home care allowance will continue in its present form. The prospects for paying the benefit directly to a grandparent caring for the child will be studied.

Objective 3

Stability and trust in the labour market through collective bargaining

The Government supports the Finnish contract society and strengthens the atmosphere of trust on the labour market. The policy of the Government is to prepare reforms in the working life on the tripartite principle and thus seek to develop the working life equally and to reform it effectively. The Government takes steps to protect the weaker parties in the labour market, in other words employees, paying attention to the competitiveness of the country and enterprises and thus securing the requirements for employment. This will enable stability and predictability in the labour market and minimise disruptions, which are key requirements for a stable business environment and new investment.

The Government promotes wellbeing in the working life, ensures equality, increases employees’ participation opportunities, promotes company-level agreement and improves the position of the weaker parties in the labour market. The Government supports the generally binding collective agreement system.


Reform of the Act on Cooperation within Undertakings

The structure and content of legislation on industrial cooperation will be reformed to improve trust between the employer and staff.

An amendment of the Act on Cooperation within Undertakings will support better cooperation at workplaces and ensure meaningful, safe and productive working life. The reform will seek to give employees adequate rights to receive information and influence their work, to increase continuous dialogue, to promote wellbeing at work, and to improve skills.

To boost trust at work and cooperation at workplaces, the participation and status of employees will be improved both in cooperation procedures and in other aspects of enterprise policymaking. The provisions of the Act on Personnel Representation in the Administration of Undertakings governing staff representation will be transferred to the Act on Cooperation within Undertakings. The threshold governing the scope of the present Act on Personnel Representation in the Administration of Undertakings will be reconsidered to allow for the special characteristics of SME operations.

Local collective bargaining

The Government will seek to increase local collective bargaining based on mutual trust between the parties. Bargaining at enterprise level will be enhanced by ensuring that staff are adequately informed and have opportunities to influence their work, which is a key element in creating the atmosphere of trust required for bargaining.

Local collective bargaining will be promoted through the system of collective agreements with a view to achieving a balanced combination of flexibility and security, and improving employment and competitiveness.

Guidance and support for small enterprises

More guidance and support will be provided to small enterprises and their employees in issues associated with regulation in the world of work. 

The necessary measures will be clarified and implemented to enable swifter settlement of employment-related disputes, for example by promoting workplace mediation.

Working time flexibility

The prospects for increasing the flexibility of working time will be examined with a view to balancing the harmonisation of work and family and prolonging working careers. The aim in particular is to improve part-time working opportunities for parents of small children and for those who are caring for elderly relatives.

Restraint of trade agreements

The use of restraint of trade agreements and the prohibition of competing activities will be restricted by clarifying the legislation and enacting balanced provisions on sanctions for the use of prohibited terms and conditions.

Labour protection

Labour protection supervision resources will increase to improve the effectiveness of supervision related to occupational safety, combating the grey economy, monitoring the terms and conditions of service relationships and supervising the use of foreign labour. The flow of information between public authorities will be improved. 

Annual holidays

The Annual Holidays Act will be amended. The prospects for greater flexibility in taking holidays and transferring them when changing jobs (for example, through annual leave day banking) will be studied to improve the equality of workers in short-term employment.

Zero-hours contracts

The status of individuals working in irregular casual employment and on zero-hours contracts will be improved. A study will focus on the working time agreed in employment contracts. Stabilisation of working time for persons with variable working hours will be confirmed in legislation. 

Work-based immigration and foreign specialists

Finland needs active work-based immigration. The Government aims to increase work-based immigration of experts. The assigned priorities of work-based immigration concern sectors suffering from labour shortages, and the specialists, students and researchers who are essential for leading and growing fields of research, development and innovation. A wide-ranging action programme will be compiled to attain this target.

The administration of work-based immigration is transferred to the Ministry of Economic Affairs and Employment to improve the efficiency of handling.

The Talent operations of Business Finland will be continued and reinforced to support the placement of international talent in Finland and the use of expertise in enterprise growth, globalisation and renewal, and growth of investment.

An action plan will be compiled to improve the employment of international degree students. An investigation will be made on financial support modes to compensate for the tuition fees of non-EU/EEA students studying in Finland if they stay on to work in Finland after graduation. The post-graduation residence permit will be prolonged to two years and will allow the permit holder to take short-term work.

Processing times for work-based residence permits will be shortened by reinforcing the network of foreign missions and applying the recommendations of reports on eliminating processing bottlenecks. Swift and smooth processing of work-based residence permits will be ensured, with a view to achieving an average processing time of one month. Sufficiently rapid processing of work-based residence permits for seasonal workers will be confirmed to ensure that enterprises can satisfy their need for labour. Seasonal workers will have better opportunities to change employer.

Measures will be taken to ensure that people coming to work in Finland arrive with a permit that is intended for working (by such means as eliminating the use of tourist visas). The status of foreign seasonal workers working independently (e.g. berry pickers) will be protected by legislation.

A working life programme will be created to improve the recruitment and diversity skills of employers, and to recognise the skills of immigrants and their development at workplaces.  

Reforms will give consideration to preventing the abuse of foreign labour. In accordance with the European mainstream, work-based immigration will comply with the requirement to determine home market labour availability applicable to labour from outside the EU and EEA. 

The need for combining regional work permit policy procedures into a larger entity will be assessed with a view to ensuring labour mobility and matching of supply and demand in the labour market, and to greater flexibility in determining home market labour availability.

Immigrant integration

Active integration of immigrants into Finnish society will be reinforced, enhanced and accelerated. The Government will prepare a comprehensive action plan on the need to reform integration measures based on the report of the Audit Committee approved by Parliament.

The quality, binding character and effectiveness of integration services will be improved in both national languages. A format for integration work will be introduced to support the employment of immigrants and their integration into Finnish society. The role of municipalities and the third sector will be strengthened. Work must be accompanied by language instruction, and by vocational training for example.

Positive and active integration will be promoted by strengthening the language and vocational skills of immigrants, accelerating placement in employment, and fostering knowledge of society and social participation. Access to language instruction should be available within three months of receiving a favourable residence permit decision.

Integration of asylum seekers must commence at an earlier stage, even at reception centres. The access of immigrant women to integration and language instruction will be ensured. Multidisciplinary Centres of Expertise in Immigrant Integration will be established and the national dissemination of best practices will be promoted. Recognition of immigrant skills, guidance and the operations of centres of expertise will be strengthened.

Objective 4

Skills provide protection in the transformation of work

Digitalisation and the transformation of work will cause the disappearance of certain jobs but will also mean the creation of new, more productive industries, businesses and jobs. These new opportunities must be supported in all ways by promoting skills, reforms, deployment of new technologies and the dissemination of new ideas. A higher level of skills and competence will be required in most occupations. A new kind of joint effort for training and continuous learning will be needed in the world of work.

The downside of the transformation of work is increasing uncertainty in working life. There are shortcomings particularly in meeting the minimum terms of employment for employees in a weaker position.


New forms of working

The need for changes in legislation will be studied from the perspective of the transformation of work (entrepreneurs and self-employed persons, the sharing and platform economy, new forms of commissioning work and cooperatives). To reduce the uncertainty of working life, the concept of an employment contract in the Employment Contracts Act will be clarified to prevent employment from arising under the guise of other contractual relationships.

Anticipation and restructuring protection

Anticipation for structural change will be elaborated. Special attention is paid to fields that have pressures for change due to technological advances and climate change.

Restructuring protection will be developed to improve the skills and employment of workers.

Development programme for work and wellbeing at work

To support workplaces, a multiannual national development programme for work and wellbeing at work will be launched to accelerate the renewal of modes of operation and the use of new technology. The aim of the programme is to strengthen the work culture based on cooperation and trust as a competitive strength of Finland, to make Finland the leading developer of working life innovations in the digital era, and to make Finland the world leader in wellbeing at work by 2030.

The target group of the programme includes employees, employers, working communities and their networks. The programme will be prepared and implemented on a tripartite basis, using the experiences of previous working life development programmes.

A research and development programme for work, health and work capacity will be carried out as part of the programme. The programme safeguards the research related to the work and functional capacity of people of working age essential for developing our service systems.

Skills development at work, and apprenticeships

Conversion, supplementary and further education will increase in working life. The aim is to promote continuous learning, improve employees’ employment protection, strengthen adults’ missing basic skills and respond to the labour need of different areas and sectors.

New cost-effective service forms will be developed based on the various needs of individuals. Individual training programmes, for example at upper secondary and liberal adult education educational institutions, will be provided by also enabling vocational competence-based qualifications. Special priority will be given to people with low skills, retrained unemployed persons, and those who are at risk of unemployment. Labour market training arranged as joint purchases with enterprises will also increase.

The use of apprenticeship training will grow with a view to securing the first job, and as a channel for retraining and adult education. The allowances paid for the apprenticeship training period will be revised and simplified to ease the administrative burden on employers.

On-the-job learning and the role of workplace counsellors will be strengthened.

The study leave system will be improved and a reform of the adult education allowance will enable its wider use. This reform will support harmonisation of work and studying.

Unemployed persons will have more opportunities to study part-time while looking for work. 

The prospects for expanding the functions of the Employment Fund to provide broader support for skills development and maintenance of working capacity among adults will be studied.