SAK seeks to modernise unemployment benefit and services for the jobless in Finland

The Central Organisation of Finnish Trade Unions (SAK) is seeking a comprehensive reform of unemployment benefit and services for the jobless in Finland, setting out its own motivating employment security alternative as the basis for this modernisation work in January 2019.
28.01.2019 09:03

The motivating employment security scheme ("kannustava työllistymisturva" in Finnish) is a straightforward and flexible form of income support for the jobless that can also serve as an income supplement for employees working on a casual basis.

The SAK approach eliminates the needless bureaucracy that complicates the present arrangements for the unemployed in Finland without recourse to a gratuitous security system resembling universal basic income.

Saana Siekkinen

SAK Work and Security Department Director Saana Siekkinen stresses the need for simplification: “So many changes have been made to the unemployment benefit system in recent years that only specialists in the field have been able to keep up. The reforms enacted by the next government will therefore need to be comprehensive, as there is no longer any sense in further tinkering around the edges."

The motivating employment security scheme proposed by SAK will provide two unemployment benefits: an earnings-related benefit proportional to earned income before falling out of work, and a basic benefit that is the same for everyone. The basic benefit will be payable to claimants who are not members of an unemployment fund, those who have earned too little as employees or in a self-employed capacity before becoming unemployed, or those whose unemployment has been prolonged.

There will be no waiting days before becoming eligible for benefit under the SAK scheme, so benefits will be payable from the very first day of unemployment.

The income of many workers in the gig economy relies on adjusted unemployment benefit that is currently paid on the basis of hours worked, even though there may be no way to monitor the working time of such workers. SAK is accordingly proposing an end to the practice of working time monitoring in unemployment security.

“Many casual workers have the experience of falling into a web of red tape where their income security relies on submitting endless reports to various parties. We envisage a system providing automatic access to the information that is essential for benefits from a register of income introduced in Finland at the start of the year," Saana Siekkinen explains.

Milder sanctions

SAK is also keen to mitigate the sanctions associated with unemployment benefit nowadays, which are often severe and convoluted.

“Unemployed claimants can currently lose their benefits entirely for as long as two months due to some unintentional default. SAK feels that a warning would suffice for the first such offence," Saana Siekkinen says.

The sanctions for subsequent defaults under the SAK approach would be clearly of shorter duration and would escalate only gradually. A jobseeker could avoid sanctions by rectifying the default or by finding work, engaging in self-employment, pursuing a course of training, or using some other employment-promoting service.

SAK is also seeking a clear increase in resourcing of services for the unemployed. The organisation insists that every jobseeker should have a personal meeting immediately when joblessness begins, with such meetings repeated at intervals not exceeding three months if unemployment continues. Between these meetings the jobseeker would follow an individually customised employment plan.

Background to the SAK scheme: a study of casual worker incomes

One reason for proposing the SAK motivating employment security scheme has been concern to ensure an adequate livelihood for workers in the gig economy. SAK accordingly commissioned a study on the problems of reconciling the income and social security of these workers.

The Little work, big bother ("Vajaalla työllä, valtavalla vaivalla" in Finnish) study conducted by employment researcher Mikko Kesä indicates that the working time of casual workers takes the form of an unstable triangle.

“Work in the gig economy is often scarce in terms of working time and earnings, with workers instead spending a great deal of time looking for work, harmonising unemployment benefits and solving various problems," Mikko Kesä explains in the report.

A case study on the incomes of workers in the gig economy took the form of personal qualitative theme interviews with eleven randomly selected workers.

The study by Mikko Kesä examined the broader situation of casual workers in Finland and other countries in autumn 2018 as part of the ongoing SAK Time of Opportunities project. Launched in 2017, this four-year SAK project has already focused on artificial intelligence, new adult education and the platform economy. The themes in 2019 will be immigration and climate policy.

The motivating employment security scheme (in Finnish)
The Little work, big bother study (in Finnish)