Labour market organisations propose to provisionally make the temporarily lay-offs more flexible and unemployment security stronger

The process involving temporarily lay-offs should be provisionally conducted swiftly in private companies, the Finnish labour market organisations are proposing.
20.03.2020 11:08
Photo: Marjaana Malkamaki / SAK

The process involving temporarily lay-offs should be provisionally conducted swiftly in private companies, the Finnish labour market organisations are proposing.

The reason for this is clear: due to the coronavirus pandemic a big number of companies are in serious economic turmoil and might face bankruptcy if immediate steps are not taken to reduce their costs.

On 16 March, the Finnish Government declared a state of emergency restricting the movement of people. This and other measures against the spread of coronavirus have caused a sudden and serious liquidity problem in many companies, especially in services.

Published on 18 March, the proposal by the labour market organisations was unanimous. It has the full backing of all three trade union confederations Akava, SAK, STTK and both employers' associations EK and KT.

It includes in total 16 different proposals to help private sector companies and those facing unemployment at this time of crisis. All measures are provisional and intended to remain in place until the end of this year.

From 14 days to five days

The Act on Co-operation within Undertakings stipulates a negotiation process of at least 14 days or six weeks, depending on the number of temporary lay-offs. The proposal put forward is to provisionally cut this to five days in the private sector.

Temporary lay-offs would also extend to those in fixed term employment and be permitted during the trial period.

In the event that work is stopped due to a decision made by a public authority, the companies should not have an obligation to pay wages or salaries for that period of time. This will apply if the state is covering the loss of earnings for a maximum time of 14 days.

If an employee must take care of a child under 12 years of age due to a closed school or daycare, the organisations propose that the loss of earnings should then be paid by the state, too.

Cut in pension contributions

The organisations propose to cut the private sector employers' pension contribution provisionally by 2.6 percent point. This would benefit employers by 910 million euro if enacted from June. 

This money would come from the fund collected to help the pension system in exceptional situations. There is some seven billion euro available in this fund and it has been collected since 1997 before Finland joined the Economic and Monetary Union of the EU.

For the years 2022–2025, the employers' pension contribution would be raised accordingly to compensate for the cut this year and thus build up the fund once again.

The organisations also encourage insurance companies to postpone payment of private sector employers' pension contributions for three months.

Stronger unemployment security

Another main line in the proposal are the measures to strengthen unemployment security until the end of this year. For example, they wish to see the existing waiting period, in reality where unemployment benefit is unpaid for the first five days of unemployment, scrapped.

In order to receive unemployment benefit at the moment one must fulfil the employment condition. It means that one has been in paid employment for at least 26 calendar weeks during the 28 months immediately preceding unemployment. The organisations propose this be cut temporarily to 13 weeks for those employed this year.

The unemployment funds in Finland are probably facing a major influx of new claims. This means a lot of extra work and the organisations propose an extra 20 million euro support for the funds in order to guarantee service and quick payment in all situations.

Prime Minister of Finland, Ms. Sanna Marin said in an interview to the public broadcaster Yle that “it is really good that the labour market organisations have found each other”. The Government will soon decide on the necessary measures, she added.

Heikki Jokinen / Freelancer