About half a million people in Finland will begin receiving smaller subsidies from the Social Insurance Institution (Kela) next week. The changes may reduce an individual jobseeker’s social support by up to 390 euros a month.
The reductions in unemployment benefits and housing allowances are part of the austerity measures implemented by the right-wing government led by Prime Minister Petteri Orpo of the pro-business National Coalition Party (NCP).
As of Monday, 1 April, jobless benefit recipients will no longer receive extra benefits based on having children, and will now see a cut in unemployment payments corresponding to any paid work done while on the dole.
According to a Kela statement, “the child increases that Kela pays as a supplement to labour market subsidies, basic unemployment allowances and commuting and relocation allowances will be abolished” as will the 300-euro monthly “exempt amount” associated with unemployment benefits.
The latter refers to an exemption whereby an unemployment insurance recipient has been allowed to earn up to 300 euros per month without a loss of benefits. Earnings exceeding 300 euros have lowered unemployment insurance by 50 cents per euro.
From Monday, each earned euro will lower unemployment payments by 50 cents, up to a maximum reduction of 150 euros per month.
The cuts equally apply to earnings-related unemployment insurance as to labour market supports and basic daily allowances paid by Kela.
Until now, the unemployment insurance child benefit has been 130–240 euros per month, depending on the number of children. The child allowance will be removed completely.
About 100,000 people will be affected by the removal of child allowances. Meanwhile more than 74,000 people who received unemployment benefits also earned income from work last year. Some beneficiaries may be affected by both cuts.
Cuts particularly affect women
The cuts in the earnings-related allowance will hit women in particular, said Aki Villman, executive director of the Federation of Unemployment Funds in Finland (TYJ).
“The changes will have the greatest impact on parents who do part-time or gig work, who are most often women. Women receive child support more often than men, and are more likely to work part-time or intermittently than men,” he told Yle.
According to Signe Jauhiainen, a senior researcher at Kela, women who receive unemployment benefits are also more likely to earn some wages at the same than men.
Jauhiainen noted that the groups receiving earnings-related and labour market supports are different.
“There are three major groups of labour market support recipients: young people who don’t yet have a working career, people who have recently moved to Finland and those who have been unemployed for a long time. Doing part-time work is clearly less common among recipients of labour market support than among those receiving earnings-related support,” Jauhiainen explained.
Housing allowance will also be cut
Cuts in the general housing allowance will also take effect in April. In total, around half a million recipients of Kela housing and unemployment benefits will receive smaller payments than before.
About two-thirds of Kela's unemployment insurance recipients also receive housing allowances.
Jauhiainen said that income supports will partially compensate for the cuts in unemployment insurance and housing support.
“Around a third of Kela's unemployment insurance recipients already receive income support, so they will receive less unemployment insurance and housing benefit but more income support than before. As a result of the cuts, there may be new recipients of income support, in other words households that have previously managed without support,” Jauhiainen said.
Finland's main labour unions have cited cuts in social security among the reasons for their ongoing political strikes. They are aimed at pressuring the eight-month-old Orpo government into backtracking on its planned reforms in labour and social security policies. They argue that the reforms will broadly hurt women of working age.
Users with an Yle ID can leave comments on our news stories. You can create your Yle ID via this link. Our guidelines on commenting and moderation are explained here.
