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Wolf in sheep’s clothing, say unions of the employer’s lobby EK new policy concerning unemployment funds

The Confederation of Finnish Industries EK suddenly reversed its position on the issue of earnings-related unemployment benefits. Up until now it has supported the existing system whereby the benefits are paid through the unemployment funds. Since the year 1895, these funds have been mainly administered by the trade unions.

In July, the main lobby organisation of the Finnish business EK said it will support the proposals to establish a single state fund for unemployment benefits. This would make the existing 24 wage and salary earners unemployment funds redundant.

According to EK, this would extend the earnings-related benefits to everyone, as now these are paid only for those who are members of the unemployment funds. As things now stand those people who are not members of unemployment get lower benefits.

Everyone needs earnings-related unemployment security, according to the EK press release.

Sounds very reasonable and humane, but at the same time, the press release EK Director Ilkka Oksala, made it clear that when reforming the system, the proposals made by EK earlier should be taken into account.

In other words, this would mean considerable cuts to unemployment benefits. In October 2015, Oksala demanded a one billion euro cut in unemployment security costs. So no additional money for benefits. Quite the contrary.

In June 2019, EK Chief Policy Adviser Vesa Rantahalvari specified employer’s demands: limit the maximum time of benefits to 350 days or 250 days for those with less than three years working life experience.

Right now the general maximum time to receive earnings benefit is 400 days or 300 days for those with less than three years working life experience. The right-wing Government of PM Sipilä already cut the general maximum time of benefits from 500 days to 400 from the beginning of the year 2017.

Rantahalvari also wants the waiting period for allowance to be raised to seven days instead of the current five days and the longer unemployment period the smaller benefits (with a small rise in the beginning).

To be eligible for earnings-related benefits, one should have a working history of 12 months, Rantahalvari insists. Right now a member of the unemployment fund must have at least 26 weeks employment.

EK would thus double this, cutting dramatically the number of people now entitled to higher benefits.

Strange fairness

“This change of mind is a wolf in sheep’s clothing: it speaks of EK’s desire to erode the safety of the unemployed in general”, says Antti Palola, President of the Finnish Confederation of Professionals STTK.

In order to extend earnings related benefits to everyone would cost something in the region of 200 – 300 million euro. The question is would the politicians and employers who propose this scheme really be prepared to put in the extra money needed to realise it?

The spark for this discussion in the middle of the Finnish summer vacation season comes in July from the National Coalition Party MP Elina Lepomäki, known as a one of the most visible hardline neoliberal politicians in her party.

Back in 2015, she had proposed cutting the maximum length of unemployment benefit to 250 days, with the allowance being higher only for the first 100 days. Now, right wing politicians and even EK call this kind of radical cut in unemployment security fair, just and encouraging.

“It is repulsive to listen to the voices behind this initiative, who justify the extension of earnings-related benefits with ‘fairness’ and do not tell the real motives, the desire to undermine the livelihoods of the unemployed”, Antti Palola says in an STKK press release.

Jarkko Eloranta, President of the Central Organisation of Finnish Trade Unions SAK was also surprised by the EK’s new policy.

“In comparison with many other countries our system with temporary lay-offs and unemployment funds survived well under the pressures following the coronavirus crisis”, Eloranta says.

Now, it would be important to find out why so many people have not been securing earnings-related unemployment security for themselves, rather than weaken social security for all, he adds.

Sture Fjäder, President of Akava, the Confederation of Unions for Professional and Managerial Staff in Finland says in an interview for the newspaper Demokraatti that he also supports the existing system. “Of course, we must be effective and productive”, he adds.

Fjäder is surprised that EK is now advocating these kinds of fundamental changes. He asks whether they have really put much thought into how much they can jab at fundamentals without encountering problems on some other issues.

Heikki Jokinen

Read more:

Right-wing party wants to sideline Union unemployment funds (06.03.2018)

Enterprises Federation on a crusade against the union unemployment funds (22.05.2018)