The unemployed are in for a rocky ride

There will be all sorts of cuts to unemployment security, if the provisions of the new government programme go ahead. The cuts will hit low wage-earners in atypical employment relationships hardest, says Antti Veirto, Research Director at Service Union United PAM.

With these cuts the government is looking for employment gains and savings in benefits spending. Veirto points out that there is not enough research data on how various changes in  unemployment security impact employment.

Earnings-related unemployment security to decrease in stages

Possibly there has been most talk around the staggering of earnings-related unemployment security. The government plans that after eight weeks of unemployment, allowances would drop to 80 per cent of the original amount and after 34 weeks to 75 per cent.

According to Veirto, for many low income-earners this staggering means a reduced duration of earnings-related security as their unemployment benefits could drop to the level of basic unemployment allowance already after eight weeks of unemployment.

Basic unemployment allowance is currently 37.21 euros a day.

Work requirement for earnings-related unemployment security tightened

Currently unemployed persons are entitled to earnings-related unemployment benefits if they have been in work in the previous six months. The government wants to extend the requirement to one year. In future wage-subsidised employment would not accrue the work requirement.

The government also plans to put a monetary value on the work requirement. This means that getting earnings-related allowances would be tied to the wages earned and not the number of working hours.

– These tighter requirements mean that some people who have been in atypical employment  would become dependent on labour market subsidy alone, Veirto explains.

Protected amount of unemployment security to be removed

Currently an unemployed person can earn 300 euros a month without it affecting their unemployment security. The plan is to remove this protected amount. In this way the government aims to move people from part-time to full-time working.

– This seems a strange objective, since according to Statistics Finland there are over 100,000 part-time workers in Finland who indeed would like to get full-time work. So there simply isn’t full-time work available for all those who want it, Veirto wonders.

PAM has previously proposed an amendment to the Employment Contracts Act whereby part-time working would always have to be justified. This would encourage employers to offer full-time employment.

Removal of child increases will hit low-wage families most

The government plans to encourage people into working by removing the child increases to unemployment security. Currently the increase is 7.01 euros a day for one child, for two children it is 10.29 euros a day and for three or more children 13.26 euros a day.

– If you think of a part-timer on adjusted allowances who is a single parent facing high costs in Helsinki, this cut will be terrible, Veirto says.

Index increases to social benefits to be  frozen

The annexes to the government programme reveal that there are cuts ahead to many other social benefits. Among other things, index increases to social assistance, housing allowance and unemployment security expenditure are to be frozen.

– This will also reduce the incomes of people on benefits, especially if inflation is high, Veirto sighs.

Text: Anu Vallinkoski