Proposed rehabilitative employment scheme causes controversy

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In February 2000, the Finnish Ministry of Social Affairs and Health published a proposal for new measures to improve the position of long-term unemployed people who have difficulties in finding work, including a compulsory "rehabilitative employment" scheme, under threat of benefit cuts. Employers have reacted positively to the proposal, while trade unions characterise the idea as forced labour.

The severe depression of the early 1990s brought high levels of unemployment to Finland. Since then, numerous measures have been implemented - stemming both from national and EU level - in order to reduce unemployment. However, despite strong economic growth, there remains a group of unemployed people who face difficulties in finding work. According to Statistics Finland, in January 2000, out of a total labour force of 2,504,000 people, there were 358,000 unemployed, of whom 93,600 had been unemployed for over one year. In February 2000, a Ministry of Social Affairs and Health working group on "activation" proposed measures aimed at tackling this hard core of unemployment.

Working group proposals

The working group proposes "rehabilitative employment" for long-term unemployed persons in the form of new measures that would help provide skills for working life and enable the people concerned to take increased control over their own lives. Rehabilitative employment would be targeted at those people who find it difficult to get work or to participate in existing schemes intended to help people find work, run by the employment administration. In other words, it would be aimed at long-term unemployed persons who would be unlikely to find work through the present measures.

Under the proposals, rehabilitative work would be offered by local municipalities, after the unemployed person concerned had been given an activation plan prepared together with officials. The employment would last for two months as a rule, on one to five days a week. The results of the activity would be checked regularly and it would be assessed whether the person could move into training or into other employment policy measures. In addition to their normal unemployment or social security benefits, the participants would receive subsistence costs and a small economic incentive. Unjustified refusal of rehabilitative employment would lead to cuts in benefits. People employed under the scheme should not be used to replace work that is normally done under an employment relationship.

The goal of the proposed activation scheme is to improve services for those unemployed people who are at risk of marginalisation. The working group believes that improvements in labour market dynamics would prevent such exclusion from the labour market. The aim, as mentioned in the current government's programme, is to target resources so as best to support the demand for jobs among those most difficult to employ and, on the other hand, so as to increase the incentives to offer work. According to the working group, this requires continued economic growth, moderate incomes policy agreements and development of the tax structure. The unemployment benefit system should be developed through tripartite means, with an emphasis on the principle of insurance. In addition, preventive activities to maintain the ability to work, and other activities that reduce early exit from work, should be developed at workplaces.

Social partners divided

The working group proposal has aroused a heated debate on the treatment of unemployed people, and has divided the social partners.

The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) thinks that the proposals promote the aims of a motivational and "remunerative" social security system, and constitute a good step towards preventing marginalisation. According to TT, both public and private sectors should adopt the practice that an employment subsidy should be remunerative for its user. "As a condition for the subsidy, the employer should commit itself to offering measures for unemployed people, like training and rehabilitation, so that the support period would help improve the likelihood of finding work in the open labour market, "states TT.

The Employers' Confederation of Service Industries (Palvelutyönantajat, PT) supports the proposal, but affirms that work done in the open labour market is the best form of social security. In PT's view, the employment of long-term unemployed persons would be best promoted by decreasing indirect labour costs and changing the VAT system so as to favour labour-intensive sectors. PT is concerned about the results of the unemployment system and requires that the additional resources invested in it should produce the desired outcome.

According to the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the working group has sought to achieve a good and very necessary result, in which long-term unemployed people under threat of marginalisation are offered help to find a path back to work. However, SAK considers that the proposal is still too flawed and cannot be implemented in practice. SAK finds the delineation of the target group for this scheme to be too mechanistic, including a large group of those unemployed people whose only problem is the absence of suitable work. According to SAK, a meaningful and demanding activity for unemployed people would be paid work done in an employment relationship. "The working group's model could easily mean replacement of public and third sector workers with those in the rehabilitative employment scheme. So there would be parallel labour markets, based on unpaid work," declares SAK, giving a "thumbs down" to the proposal.

The Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestöi, AKAVA) believes that rehabilitation into employment has to be desired in order to be successful - that motivation for it cannot be produced by force. The proposed measures can be considered as forced rehabilitation, which has never been attempted before. "If the proposed scheme for unemployed people involves work, it should be carried out within an employment relationship or as a public post, and social security rights should accumulate from it." AKAVA believes that an extension of such a scheme would lead the municipal labour market into crisis by tying up resources and turning less demanding work usually done by the normal workforce into rehabilitative working activity.

The Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) does not accept the proposal, stating that long-term unemployment would not be reduced by forcing capable and willing people into unpaid work. "Successful rehabilitation cannot be based on force, but on the individual's own willingness and motivation. The officials must take into account a person's own baselines and respect the self-determination and human dignity of each one in all circumstances," states STTK.

Commentary

In order to steer Finnish unemployed people back into working life, officials have now started to consider radical measures. This has certainly been influenced by outside pressures to decrease Finland's structural unemployment levels. It should be remembered, however, that the aftermath of the 1990s depression still affects many unemployed people severely. Major structural change has led to social marginalisation for many. Fast turnover and rapid outdating of occupations has, for many people, also meant a prolongation of unemployment. The idea of employment for all is seen as justified by all the social partners– it is just a question of the practical procedures for its implementation. The income and living standards of those now unemployed has already fallen greatly from what they were before they lost their jobs. Therefore, a reduction of benefits or a threat of losing them may be questionable. It should be considered very carefully whom the rehabilitative employment scheme would really help. On the other hand, such activation may be a new opportunity for some to get to grips with life, so the proposal should not be rejected completely, either. The proposal in its present form has caused a very sharp divide between the employer and trade union camps, which means that the continuing work of the working group will not be trouble-free. There seems to be disagreement even between the ministries involved in the reform, since the new minister of labour, Tarja Filatov, has stated that the reform should be carried out on the basis of voluntary participation by the unemployed persons concerned. (Juha Hietanen, Ministry of Labour)

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