Ministry of Social Affairs and Health requests comments on amendments to Unemployment Security Act
The Ministry of Social Affairs and Health requests comments on a draft bill that aims to simplify the unemployment security system and increase employment. The proposed amendments would concern the prior work requirement for employees to be entitled to unemployment benefits, the adjusted unemployment benefit, the starting date of the right to receive unemployment benefits, and the child increments to unemployment benefits.
Employees may be entitled to unemployment allowance if they meet the prior work requirement. Currently, the fulfilment of the prior work requirement is determined based on calendar weeks. The draft bill proposes that, in future, the prior work requirement be determined on the basis of income from paid work. As a result of this change, only the income earned during a calendar month would count towards the fulfilment of the prior work requirement. The prior work requirement would be extended. This would mean that, in future, employees would be required to have worked for 12 months in order to meet the prior work requirement. A work requirement month would mean a calendar month during which the earned income before withholding tax would be at least EUR 930 per month. Periods of 0.5 months would also count towards the prior work requirement.
The provisions on earnings-related unemployment allowance would be amended as necessary due to the changes in the prior work requirement. Because of the changes, earnings-related unemployment allowance would in future correspond better to a person’s income level at the start of their unemployment.
Changes in the exempt amount of unemployment benefit, the waiting period and the increments based on the number of children
The draft bill proposes that the exempt amount of the adjusted unemployment benefit be abolished. The exempt amount means the portion of income that is not taken into account when calculating the amount of adjusted unemployment benefit. Currently, the exempt amount is EUR 300 for a one-month period of adjusted unemployment benefit and EUR 279 for a period of adjusted unemployment benefit consisting of four consecutive calendar weeks.
In future, the waiting period before unemployed persons become eligible for unemployment benefits would be seven days. Also, if the employee was paid holiday compensation at the end of a full-time employment relationship that lasted for over two weeks, no unemployment benefit would be paid for the period over which the holiday compensation is phased. The phasing of holiday compensation means that the holiday compensation received from paid work is divided by the average daily pay from work.
The draft bill proposes that the child increments to unemployment benefit be abolished. The abolition of these increments would cause changes to the amount of commuting and relocation allowance and to certain provisions on the funding of unemployment benefits. It would also affect child maintenance allowance and the funding of this allowance, because the child increments to unemployment security have been used to pay child maintenance in situations where a parent liable for maintenance has insufficient means to provide an adequate level of child support.
The changes concerning the abolition of the exempt amount of the adjusted unemployment benefit and the abolition of the child increments to this benefit would increase the similarity of unemployment security between the unemployment benefit and other benefits aimed to guarantee income security, because benefits paid under the Health Insurance Act, for example, do not include child increments or the above-mentioned exempt amounts.
Changes aim to simplify unemployment security system
In line with the policies outlined in the Government Programme, the purpose of the proposed measures is to simplify and clarify the unemployment security system, to increase employment by improving incentives for employment and to strengthen general government finances.
The proposed measures aim to realise an expenditure adjustment of around EUR 250 million and an employment growth of about 20,000 people. The growth in employment generated by the changes is expected to strengthen general government finances by around EUR 550 million.
The proposal is included in the 2024 budget proposal and will be discussed in that context.
The bill is scheduled to enter into force on 1 January 2024. The amendments would be applied gradually. The amendments concerning the extension of the waiting period and the effect of holiday compensation would be applied when the bill enters into force. The amendments concerning the abolition of the child increments and the abolition of the exempt amount of the adjusted unemployment benefit would be applied from the beginning of April. The amendments regarding the prior work requirement would be applied from 2 September 2024.
Comments on the draft bill should be submitted by 15 September 2023 at 16.15.
Liisa Siika-aho, Director General, Ministry of Social Affairs and Health, tel. +358 295 163 085, [email protected]
Marjaana Maisonlahti, Senior Ministerial Adviser, Ministry of Social Affairs and Health, tel. +358 295 163 288, [email protected]
Veera Svahn, Special Adviser to the Minister of Employment, Ministry of Economic Affairs and Employment, tel. +358 295 047 321, [email protected]