Social partners unveil joint employment plan

The Finnish government is concerned about the high unemployment rate that is being recorded, despite the fact that numerous job vacancies exist. Presenting the government’s new plan to offer relocation allowances to those who move to take up a job, the Minister of Finance also called on the social partners to deliver a proposal for new employment measures by mid August 2006. On 17 August, labour market groups unveiled a joint wide-ranging package aimed at boosting employment and labour mobility.

Government plan

The Minister of Labour, Tarja Filatov, recently called for new measures to boost employment and to solve the problem of a relatively high rate of unemployment despite labour shortages (FI0605029I). At the end of July 2006, the Minister of Finance, Eero Heinäluoma, presented the government’s new plan to offer relocation allowances to those who agreed to relocate for a job. The measures for increasing labour mobility can be divided into four key elements:

1. A travel allowance of €23.50 per working day may be paid to recipients of a labour market subsidy who accept full-time work lasting at least two months outside their own commuting area. Payment is conditional upon the employment office giving a favourable decision about the travel allowance. This payment would in effect extend the current allowance, which can be paid for a maximum of two months only.

2. The compensation level of the mobility allowance will be raised from the current rate of €0.15 per kilometre to €0.21 per kilometre. The mobility allowance is paid to unemployed persons or jobseekers threatened with unemployment who travel to a job interview or to negotiate an employment contract, or who travel to a new job outside their commuting area.

3. An employment office can give relocation support up to a maximum of €500 in connection with redundancy protection.

4. The maximum amount of the tax deduction for commuting expenses will be raised from €4,700 to €7,000. Travel expenses between home and work are to be deducted according to the cheapest means of transport available; the deduction is to be taken from earned income.

At the beginning of August, Minister Heinäluoma called on the leaders of social partner organisations to deliver a proposal for new employment measures by 15 August 2006. Minister Heinäluoma expressed his hope that measures would be proposed to address the problem of high unemployment despite the tens of thousands of vacant jobs that exist in the country. ‘If a joint position from the labour market organisations can be presented that clearly carries weight, I have pledged that the government will take their opinion seriously,’ the minister stated.

Joint list of job creation proposals

In all, five leaders of the main social partner organisations released their joint motion on 17 August 2006, representing: the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK); the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK); the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA); the Commission for Local Authority Employers (Kunnallinen työmarkkinalaitos, KT); and the Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK).

The social partners put forward a wide-ranging package (in Finnish, 25Kb PDF) to boost employment and labour mobility. The proposed plan emphasises that labour mobility cannot be considered in isolation, and that vocational apprenticeships should be increased and continuing education intensified.

In addition, the proposed relocation support of €500 should be raised to €700. The social partner groups underline that the current housing situation is a key factor in weakening labour mobility and economic growth. The central aim of the housing policy should be to increase the number of affordable apartments for rent in areas showing economic growth. The labour market leaders also proposed an increase in the supply of apartments for rent, and that the cost of state-subsidised rented accommodation should be reduced for those who relocate to take up a new job.

Minister Heinäluoma was satisfied with the cooperation between the social partners before the government’s budget proceedings. Seppo Riski, Director of industrial relations in the Confederation of Finnish Industries, highlighted that the consideration of measures to increase employment must be carried over into the next government’s policy platform.

Commentary

A jointly drafted list of job creation proposals by the social partners before the budget proceedings is a new development. The current government has often emphasised the importance of a tripartite system, and that it maintains good relations with the social partner organisations. However, the forthcoming budget will be the last one of the current government as the next parliamentary election will take place in March 2007.

Pertti Jokivuori, Statistics Finland