Friday 10.07.2020

Kela to remove in January the penalty for the unemployed for not finding work

Thousands of unemployed people affected by the so-called 'activation model' will see their unemployment benefits increase by 4.65% next year.

Kela to remove in January the penalty for the unemployed for not finding work

The so-called 'activation model', introduced in 2018 by the Government of former Prime Minister Juha Sipilä and which has so far been used to justify cuts in unemployment benefits for thousands of job seekers, will be abandoned in early 2020.

According to the Finnish Social Security Institution (Kela) as of 1 January 2020 unemployment activity "will not be monitored" and the allowance received by the unemployed job seekers will no longer be reduced according to the terms of the 'activation model'.

Since 2018, any unemployed job seeker lost 4.65% of their benefit if they were considered less active in their job search. 

To avoid this cut, the job seeker had to either find employment for 18 hours in a three month period, receive entrepreneurial income of at least 241 euro or participate in a five day training course or be available for other services offered by the employment offices.

These requirements became in practice impossible to meet for the majority of the unemployed, so the Finnish unions denounced the 'activation model' as a simple penalty for the unemployed.

The Central Organization of Finnish Unions (SAK) conducted a survey among 6,000 members of unemployment funds and concluded that only 30% of the unemployed were able to meet the criteria of this mechanism. "It simply cuts unemployment benefits," remarked SAK.

The current Prime Minister, Antti Rinne, also expressed doubts about the effectiveness of the system and committed himself in his government program to eliminate it. "I do not believe it has produced a single new job," he said in a interview last summer.

Benefits accrued in 2019 and paid in 2020

When the change comes into effect, Kela and the different unemployment funds will no longer monitor the activity of the benefit recipients neither reduce the amount of their allowances. However, Kela warned that the terms of the 'activation model' will still affect those unemployment benefits accrued in 2019, even if paid in 2020.

The Social Security Institution explained that unemployment benefits which have been reduced because of the 'activation model' will automatically revert to the normal level. Kela's customers can check the amount of their benefits and the date of payment at the online services.