Unemployment Insurance

Finland Table of Contents

The Unemployment Security Act of 1984 reformed the unemployment assistance system that had been gradually worked out to deal with the persistent problem of unemployment in Finland. The act arranged for coverage of all unemployed between the ages of seventeen and sixty-four, resident in Finland, whose income came from wages earned doing work for another person or legal entity. A person had to be in need to receive payments under the terms of the act and could be disqualified because of a spouse's earnings. The self-employed, full-time students, and people receiving pensions or maternity allowances were not eligible, nor were those who were unemployed because of illness, injury, or handicap, or who had quit work voluntarily, who had lost work because of labor disputes, or who had refused to accept employment.

In the mid-1980s, those eligible for unemployment benefits received them in two ways. A basic daily allowance of Fmk70 went to any person looking for employment. This allowance was meanstested , and the income of a spouse could disqualify a potential beneficiary. The allowance lasted as long as the recipient was unemployed. Those unemployed who were members of an unemployment fund (80 percent of Finns were) and who had worked for at least 26 weeks in the preceding 2 years were eligible for more substantial benefits amounting to the daily basic allowance plus 45 percent of the difference between their daily wage and the basic allowance. After 100 days the payment was reduced by 20 percent. Beneficiaries of the income-related allowance could receive it for 500 days in a 4-year period. Workers in their late fifties and older who had been unable to find work could be granted an unemployment pension equal to a disability pension until they reached the age when they would be eligible for an old-age pension. Unemployment benefits were administered by the Social Security Institute. The basic allowance was completely financed by the state. Employers and the state funded equal shares of 95 percent of the income-related payments and the beneficiary was responsible for the remaining 5 percent.

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Source: U.S. Library of Congress