Activation model for unemployment security

The activation model for unemployment security incorporates measures to encourage people to actively seek work and use employment services at all stages of their unemployment. These activation measures have been in effect since 1 January 2018. Under the changes introduced with these measures, the length of the waiting period before qualifying for unemployment benefit has been reduced from seven to five days. However, jobseekers failing to meet the activation requirements during unemployment lasting more than 65 benefit payment days will receive a reduced unemployment benefit, the reduction being equivalent to additional waiting period days.

Under the activation model, from 1 January 2018 the extent to which an unemployed person has been active is reviewed each time 65 benefit payment days have elapsed. This is equivalent to approximately three months of continuous unemployment. With the first such review period starting on 1 January 2018, the earliest that the activation measures can affect the amount of unemployment benefit is 2 April 2018. The amount of unemployment benefit will not be reduced if, during the period of 65 benefit payment days, the jobseeker:

1) works for a total number of hours that is at least equivalent to the calendar-week work requirement for an employee to be entitled to basic unemployment allowance, i.e. 18 hours of paid work, where the pay is in accordance with the applicable collective agreement. Under the activation model, it is sufficient that these 18 hours are accumulated over the entire period of 65 benefit payment days. In some sectors, a smaller number of hours is sufficient (e.g. teaching in educational establishments) or the work requirement is accumulated on the basis of earned income (e.g. employment in artistic and creative fields).

In the activation model, the 18-hour minimum requirement regarding paid work can be accumulated in any number of ways, for example by working six hours for three consecutive days, nine hours on each of two consecutive days,or just a short time on many different days over the period. The hours may be worked for the same employer or for two or more different employers. The work performed can be on weekdays or at weekends; or

2) earns in self-employment a total of at least 23 per cent of the monthly earnings requirement for a self-employed person to be entitled to basic unemployment allowance. Within the activation model this means that in 2018 the activation requirement is met if the jobseeker earns at least EUR 241.04 in self-employment over the period of 65 benefit payment days; or

3) participates in five days of employment-promoting services agreed with the Employment and Economic Development Office (TE Office). These employment-promoting services include labour market training, self-motivated study and work trials. More information about employment-promoting services and how to apply for them can be obtained from any TE Office. Information is also available via the following link;

4) participates in five days of other services or activities organised by the employment authorities aimed at improving jobseeker employment prospects. Such services or activities must be comparable to the employment-promoting services described in point 3 above. They may be, for example, training in vocational and career choice options or practical work training; or

5) participates in five days of other recruitment-supporting activity in the workplace or connected with employment promotion, during which time he or she is paid unemployment benefit. More detailed provisions on these measures are given in the Government Decree on the Implementation of the Unemployment Security Act. The measures concern recruitment trials or recruitment training during which the jobseeker has the right to unemployment benefit.

If the jobseeker satisfies the activation requirements, the payment of unemployment benefit will continue unchanged. If the activation requirements have not been satisfied, the unemployment benefit will be reduced by 4.65 per cent for the duration of the next period of 65 benefit payment days, following which it will return to normal if the jobseeker has been sufficiently active. The financial impact of the 4.65 per cent reduction is equivalent to having a waiting period of one day per month. The deduction is made from the jobseeker's unemployment benefit, whether this is earnings-related unemployment allowance, labour market support or basic unemployment allowance.

The amount of unemployment benefit will also return to its normal level in cases where the benefit recipient has started to receive the reduced amount of benefit but then:

1) becomes employed full time in paid work for an interrupted period of more than two weeks, before returning to be a benefit recipient again; or 

2) becomes self-employed on a full-time basis for an interrupted period of more than two weeks, before returning to be a benefit recipient again; or

3) becomes partially employed and no adjusted unemployment benefit is payable for the application period on account of income from employment or the time employed, after which he or she returns to being a benefit recipient again; or

4) becomes an unemployment benefit recipient again after the TE Office, in a written statement, has imposed a period without benefit, or after the end of a duty-to-work period. This avoids the possibility of two sanctions being applicable at the same time.

The amount of unemployment benefit will also return to normal if it was being paid in reduced form and the benefit recipient meets the work requirement again. At the same time, the maximum period of payment that applies to the daily unemployment allowance will be restarted from the beginning.

The reduction in unemployment benefit is always 4.65 per cent, even if the person repeatedly fails to meet the activation requirement. The reduction is not cumulative.

The aim of the activation model is to encourage jobseekers to take even short temporary jobs or fixed-term work, and therefore prevent long-term unemployment and raise the employment rate.

ACTIVELY INFLUENCING THE AMOUNT OF UNEMPLOYMENT BENEFIT

 

Adjusted unemployment benefit supports those who find work

When jobseekers find work and are active, they can receive an adjusted amount of unemployment benefit from their unemployment fund or from Kela. The level of adjusted unemployment benefit is not affected by the first EUR 300 earned per month, as this is exempted. The adjusted unemployment benefit is determined by deducting from the normal benefit an amount equal to fifty per cent of the person’s earnings that are in excess of the exempted EUR 300.

The calculator for this can be found on the Kela website and, in the case of earnings-related unemployment allowance, the website of the Federation of Unemployment Funds in Finland (TYJ). With these calculators you can see how earnings affect the unemployment benefit.

Background

The activation model for unemployment security is part of the Government's key project on employment and competitiveness. It is based on the model prepared by a working group led by Permanent Secretary Martti Hetemäki of the Ministry of Finance, which met in autumn 2016.

 

In brief

Activation model and waiting periods, effective 1 January 2018

  • What?

To avoid any reduction in the level of unemployment benefit, the jobseeker is required to perform paid work, obtain income from self-employment or take part in employment-promoting services. Anyone who remains fully unemployed and does not take part in any employment-promoting services either will in future receive unemployment benefit that is reduced by 4.65 per cent.

  • Why?

The aim of the changes is to increase employment and encourage unemployment benefit recipients to be active and to take the initiative in jobseeking throughout their period of unemployment.

  • When?

When there is a risk that the period of unemployment will be prolonged. The normal amount of benefit will be paid for the first 65 benefit payment days. During this period the extent to which the jobseeker is active will be monitored for the first time. If the jobseeker has met the requirements, for example by performing a sufficient amount of paid work, the normal amount of benefit will continue to be paid during the next period of 65 benefit payment days. If the jobseeker is not sufficiently active, the benefit will be reduced by 4.65 per cent for the next 65 benefit payment days. The first period during which the activeness of the jobseeker is examined is 1 January – 31 March 2018.

  • Other points

The activation model does not apply to unemployment benefit recipients who, alongside their unemployment benefit, also receive benefits due to incapacity for work or a disability. These benefits include partial disability pension, partial rehabilitation allowance, workers’ compensation pension and disability pension that is not granted on the basis of full invalidity, and disability allowance. Neither does the activation model affect informal caregivers or family carers, or unemployment benefit recipients with an application for disability pension pending at a pension company or institution.

 

 

 

 

 

 

Further information

Marjaana Maisonlahti, neuvotteleva virkamies 
STM, Sosiaaliturva- ja vakuutusosasto / SVO, Etuusyksikkö / ETU 0295163288   forename.surname@stm.fi


Liisa Siika-aho, johtaja 
STM, Sosiaaliturva- ja vakuutusosasto / SVO, Etuusyksikkö / ETU 0295163085   forename.surname@stm.fi