Social partners sign agreement on welfare and unemployment

Finland’s national social partner organisations have reached an agreement on welfare and unemployment issues. The agreement provides for an increase in the national pension contribution, which raised criticism among the employers. However, this measure is to be linked to an increase in contributions to regular pension plans, of which employers and employees will share the costs. Access to unemployment benefits is also to be increased, as is the minimum age for receipt of unemployment pensions.

An agreement has been reached between Finland’s national social partner organisations on major issues concerning the financing of social welfare and unemployment benefits. The agreement was reached between the trade union confederations – namely, the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) – along with employers affiliated to the Confederation of Finnish Industry (Elinkeinoelämän Keskusliitto, EK) and the public sector employer organisations, notably the Commission of Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) and the State Employer’s Office (Valtion Työmarkkinalaitos, VTML).

Pension contribution to be raised

Under the agreement, the national pension contribution will be raised. Employers have complained that they have had to finance basic security on behalf of the state. The employers’ national pension contribution has amounted to 0.8 % of income for employees in the private sector and 1.8 % for municipal employees. This increase in pension contributions represents a transfer of nearly €1 billion from private enterprises to the state.

The signatory organisations agreed that the lifting of the national pension contribution would be linked to an increase in contributions to regular pension plans. The pension contribution is to be raised by 0.4 percentage points annually from 2011 to 2014 − amounting to a total increase of 1.6%. The costs of the increase will be shared by employers and employees. The proposals are in line with a programme put forward by the Minister of Finance, Jyrki Katainen, in January 2009. The measures are expected to help stimulate the economy. It has been a long-held goal of the trade unions to link the lifting of employers’ national pension contributions to a long-term payment plan for the work pension system. Under the policy programme of the present government, the social partner organisations should agree on this matter.

Unemployment benefit measures

The social partner organisations sent a clear message to the SATA committee, which is preparing a comprehensive reform of the Finnish social welfare system. The government will decide in the spring of 2009 which of the committee’s proposals will be pushed forward as legislation. The SATA committee’s proposal would have allowed the duration of income-linked unemployment benefits to be cut in half. However, the social partner organisations agreed that the benefit period would remain at 500 days. Moreover, access to unemployment benefits is to be increased. Unemployed job seekers will be entitled to compensation if they have been employed for eight months – instead of the current 10 months – during the 28 months preceding unemployment. The trade unions and EK also agreed that basic unemployment benefits should not be increased without a rise in income-linked benefits as well. The aim is to also maintain the link between basic and income-linked benefits.

The trade unions agreed to the employers’ demand to lift the minimum age for receipt of the unemployment benefit. EK and the SATA committee do not want those under the age of 60 years to leave the workplace on the basis of unemployment. The two sides also reached agreement on the system under which someone who has been unemployed would be entitled to subsidies for temporarily taking the job of an employee who wants to take extensive leave. Under the agreement, the financing of the programme would remain unchanged. The state pays for about 45% of the cost, the employers contribute 38%, while the trade unions pay 17 % of the cost. EK has been critical of the system, but nevertheless agreed to its implementation.

Pertti Jokivuori, Statistics Finland

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