The Finnish system for temporary lay-offs turned out to be flexible in comparison to many other European systems during the coronavirus pandemic. But financially it is less generous than many others.
This is according to a comparative report on short-time (reduced hours) work schemes in six European countries, Austria, Denmark, Germany, the Netherlands, Spain and Sweden. The report is drafted by working life consultant Jyrki Raina, the former General Secretary of IndustriALL Global Union.
When the coronavirus crisis hit Finland, there was no need to establish a new scheme to facilitate short-time work. The existing scheme for temporary lay-offs is based on unemployment benefits from unemployment funds or from Kela, the Social Insurance Institution of Finland.
The temporary lay-off may be for a specific period of time or until further notice. Even a shortened working week is possible. However, some rules of temporary lay-offs were changed so as to be more flexible, as the crisis struck so suddenly and with full force.
In the six other European countries covered by Jyrki Raina’s report the situation was often different. New, usually fully state financed schemes were quickly established to support short-time work.
In Finland pay-related unemployment benefits are financed to a large degree by employers and the employees themselves. They pay unemployment insurance contributions on the basis of the actualised wage bill. From 2014 to 2019, this covered on average 56 per cent of expenses.
State paid 39 per cent of these expenses and six per cent was collected from the unemployment fund members as a fee.
Support for companies
Compensation for those laid off was lower in Finland than in the comparison countries, Jyrki Raina discovered. In the six other countries, the employee doing short-time work has received 60 – 100 per cent of his or her normal pay.
In Finland compensation was 56 per cent for those on a salary of 3 000 euro a month and a bit less than 50 per cent for those on a 4 000 euro salary.
Another difference between Finland and the other six countries is the strong role of trade unions or works councils. This is less so in Finland, as the scheme already exists and with national level rules.
In many other countries the schemes were often based on company or branch level agreements. Redundancy protection was often a part of these deals. This is not the case in Finland.
Some of the countries forbid dividends to being paid out or directors bonuses if companies receive aid. In Finland this is not possible as the support goes directly to those laid off. It should also be remembered that Finnish companies pay for part of the scheme.
Jyrki Raina also ponders what will happen in the future. As the existing schemes in many countries turned out to be too rigid in cases like the pandemic, some changes may lie ahead.
Also, the billions used for short-time work in the European schemes has in many cases meant more support for companies rather than adjusting the unemployment security system.
The report was commissioned by three Finnish trade unions: the Industrial Union, Trade Union Pro and the Paper Workers’ Union.