Direct Request (CEACR) - adopted 1999, published 88th ILC session (2000)

Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168) - Finland (Ratification: 1990)

The Committee takes note of the information provided by the Government in its report and, in particular, that concerning the application of Articles 3, 10, paragraph 1, and 11, paragraphs 1 and 2, of the Convention, which were the subject of its previous comments. It also notes the comments, included in the report, made by the Central Organization of Finnish Trade Unions (SAK) and the Finnish Confederation of Salaried Employees (STTK).

Articles 7, 8 and 9 of the Convention (Promotion of employment). In its comments the SAK indicates that unemployment security has been reformed at the beginning of 1997, with a number of qualifying conditions for receiving unemployment benefit being tightened. As a result, the relative number of unemployed persons outside the actual unemployment security system has been on the rise and about half of all unemployed are already on labour market support. The impact of the reform should therefore be closely monitored so that it does not cause exclusion in any group. In this respect the SAK welcomes the fact that measures of assistance to long-term unemployed people on labour market support (for example, guidance into unpaid trainee work and employment using combination subsidy) have begun to be differentiated from the measures offered to other unemployed. However, it considers that particular attention should be paid to the situation of ageing long-term unemployed, who find it difficult to get work despite the increase in employment due to favourable economic trends.

The STTK concentrates its comments on the public labour market policy reform which took effect at the beginning of 1998, drawing attention to the fact that new employment opportunities should not be created at the expense of reducing expenditure on and the level of unemployment security. Undermining the livelihood of unemployed people has not been shown to create new jobs or to noticeably reduce the need for public income transfers. The STTK stresses that unemployed people who are in fact no longer available to the labour market should be provided with additional arrangements to meet their needs and emphasizes in this respect the importance of strengthening cooperation between the labour administration, the Ministry of Social Affairs and Health, local social services and health care services, and pension authorities.

The Government indicates in its report that the labour market policy reform of 1998 contains effective measures designed for people who have been unemployed for a particularly long time and have received their unemployment benefit for 500 days, and cites, in particular, the provision of "combination subsidy". Employment appropriations also focus on young people under 25 who are registered with an employment office, and the long-term unemployed who have been seeking work for more than 12 months, and cover such measures as subsidized employment, trainee work, adult labour market training, rehabilitation and training. As a new special group, the Government mentions ageing jobseekers whose employment on the open market has been promoted through, for instance, the National Programme on Ageing Workers and the National Workplace Development Programme.

The Committee notes this information as well as the statistics contained in the report on the number of employed, the number of recipients of unemployment benefits and the amount of expenditure on unemployment security for 1994-97. It notes, in particular, that while the number of employed people in all sectors has increased by 116,000, the number of recipients of unemployment benefits for the same period has decreased by 347,803. This substantial decrease has been accompanied by the 27 per cent reduction in expenditure on earnings-related unemployment benefit and by the over five times reduction in expenditure on basic benefit. At the same time the expenditure on labour market support has increased four times, proving that a number of people who had been previously receiving earnings-related or basic unemployment benefits have passed on to labour market support. According to the statistics, the total amount of labour market support in 1997 amounted to over 41 per cent of the combined expenses on earnings-related and basic unemployment benefits, while the SAK considers that about half of all unemployed are already on labour market support, partly because of long-term unemployment and partly because they are unable to fulfil more strict qualifying conditions for receiving the daily unemployment allowance. The Committee would like the Government to provide updated statistics in its next report, indicating in particular the total number of unemployed people receiving labour market support, as well as the number of those who have moved on to labour market support having used the full 500 days' duration of their daily unemployment benefits. It would further like the Government to detail, with appropriate statistics, the measures taken or contemplated with a view to preventing marginalization of unemployed and in favour of long-term and very long-term unemployed, including older jobseekers. In the light of the comments made in this connection by the trade union organizations, the Committee would like to stress that the use of social security, including its financial resources, as a means to promote employment, foreseen in Article 7 of the Convention, should be made in such a manner as to maintain in any circumstances the level of unemployment benefit at least at the minimum level prescribed in Article 15(1) of the Convention. Furthermore, the Committee would be glad if, as suggested by the STTK, the Government would consider in its next report the need to strengthen cooperation in providing additional assistance to the most disadvantaged categories of unemployed persons between the labour administration, the Ministry of Social Affairs and Health, local social services and health care services, and pension authorities. Finally, the Committee draws the Government's attention to its 1998 comments under the Employment Policy Convention, 1964 (No. 122).

Articles 15, paragraph 1(b), and 16. According to STTK, recent reforms have resulted in a situation where the standard of unemployment security, including earnings-related benefits, is already below the general income support for many unemployed people. In this respect, the Government indicates in its report that income support payable under the Act on Income Support No. 1412/97 is part of the social security system and is regarded as a last-resort type of financial support to be used purely to safeguard a person's livelihood in conditions of human dignity. The tax-free full basic amount of income support for a single person constituted FIM2,021 a month in the first category of municipalities and FIM1,934 a month in the second category of municipalities. At the same time, basic daily unemployment allowance amounted to FIM2,129 per month after tax and the minimum wage under the collective agreements currently in force attained FIM3,900-4,000 a month after tax at average rates. According to the Government, basic daily allowance can thus be considered to cover 50 per cent of the standard required under Article 15, paragraph 1(b), of the Convention. As regards the labour market support, its full amount is the same as the basic daily unemployment allowance. It is means-tested for unemployed persons who do not fulfil the previous employment requirement for the daily unemployment allowance, as well as for those who have received labour market support for 180 days after the maximum 500 days' period of receiving the daily allowance. As regards earnings-related daily unemployment allowance, it consists of the basic part equal to the full basic daily allowance plus an earnings-related part constituting 42 per cent of the difference between the daily wage and the basic part. In 1998, earnings-related daily allowance was about 58 per cent of the wage with average income levels.

The Committee notes this information and, in particular, the Government's statement that, in application of Article 15, paragraph 1(b), of the Convention, the level of the basic unemployment benefit covers 50 per cent of the statutory minimum wage. It recalls that this provision of the Convention links calculation of the level of unemployment benefit which is not based on contributions or previous earnings, also to the level attaining 50 per cent of the wage of an ordinary labourer, or to a level which provides the minimum essential for basic living expenses, whichever is the highest. The Committee notes in this respect that, according to the data provided by the Government, the amount of the basic daily unemployment allowance is only slightly higher than the amount of the income support which provides the minimum essential for basic living expenses. In order to be able to monitor the situation, the Committee asks the Government to continue to supply detailed updated statistical information on the amounts of the basic daily unemployment allowance, income support, minimum wage and the wage of an ordinary labourer, before and after tax.

Article 18, paragraph 1. The Government indicates that by virtue of the legislative amendments which came into force at the beginning of 1997, payment of daily unemployment allowance begin when a person has been an unemployed jobseeker registered with an employment office for seven working days during a maximum of eight consecutive weeks. This waiting period is counted once for the maximum payment period of 500 days. It further specifies that, for the purpose of the payment of the daily allowance, each calendar week may not comprise more than five payment days.

The SAK points out in this respect that, since daily unemployment allowance can be paid for a maximum of five days a week, this means that a person who becomes unemployed cannot, because of this waiting period, receive the allowance for the first nine to 11 calendar days he is unemployed. Moreover, the monitoring period during which the waiting days must be accumulated was not extended beyond eight calendar weeks. These changes cause losses, especially for people in part-time employment. However, the holiday remuneration at the end of an employment relationship was made payable in parts over the waiting period for the daily unemployment allowance.

The Committee notes this information. It would like the Government to provide a copy of the legislative amendments in question and to explain, in the light of the above comments made by the SAK, the practical consequences of the introduction of the new waiting period of seven working days for the unemployed, taking into account that, according to Article 18(1) of the Convention, any such period shall not exceed seven days.

Article 20(b). In reply to the Committee's previous comments, the Government indicates that in cases where employment has been refused or terminated without an acceptable reason, the opinion on whether the preconditions for receiving unemployment security are met, is given by a labour commission, which consists of representatives of employers and employees, with a representative of the employment office as chairperson. Each case of refusing or terminating employment is solved individually, in accordance with the principles set down in Act No. 602 of 1984, which respects the protection of the livelihood of unemployed persons. The Government further indicates that, as of the beginning of 1997, the duration of the suspension of the unemployment benefit in case of self-inflicted unemployment has been extended. Thus a person who has resigned from his job without justifiable reason or who has himself caused the employment relationship to terminate is not entitled to daily allowance for three months. If a person has, through his own conduct, caused an employment contract not to be made, he is not entitled to daily allowance for six weeks.

The SAK states that it does not accept the extension of the penalty periods of suspension of benefit, as these periods were already long enough before the extension, and points to many problems involved in fixing these periods in terms of the legal protection of the unemployed. It is very problematic, for instance, to investigate a job interview situation or to prove that an employee's own conduct was reprehensible.

The Committee notes this information, as well as the fact that because of the extension of the duration of the suspension of the unemployment benefit in cases of self-inflicted unemployment, the question of determining the employee's own responsibility has acquired importance. It further notes that, while the decisions in such cases are taken by the tripartite labour commission, this in itself does not exclude difficulties in assessing the degree of an employee's own fault and problems in ensuring his legal protection. The Committee recalls that the guiding principle for such situations established by this provision of the Convention consists in determination by the competent authority that the person concerned had deliberately contributed to his or her own dismissal. It would therefore ask the Government to indicate how this principle is being applied in the decisions of the labour commissions and the appeal bodies, and to provide examples of the relevant administrative or judicial decisions.

Article 25. With reference to its previous comments, the Committee recalls that this provision of the Convention calls for the adjustment of the statutory social security schemes, including unemployment security, to the occupational circumstances of part-time workers, unless their hours of work or earnings can be considered, under prescribed conditions, as negligible. As the legislation in Finland excludes from the entitlement to daily unemployment benefits part-time workers who work less than 18 hours per week, the Committee asked the Government to explain the criteria used in setting the said 18 hours/week threshold, below which the work done by part-time workers is apparently considered as negligible.

In reply, the Government indicates that unemployment security is an insurance-type benefit based on a previous employment requirement which calls for the amount of work considered to provide a person with an adequate income, i.e. 18 hours a week. At the beginning of 1997, the previous employment requirement was extended from 26 weeks to 43 weeks during the preceding 24 months in a job where the weekly working time was at least 18 hours. The Government recalls that before 1 January 1994 basic daily allowance was paid to people in need of financial support even if the previous employment requirement was not met. Afterwards, unemployed persons who do not fulfil this requirement can be granted labour market support subject to needs assessment without a set maximum period. The Social Insurance Institution is also in charge of paying labour market support.

In its comments, the SAK considers that the reform of unemployment security undertaken in 1997 has had a number of negative consequences particularly for people in part-time employment. Besides the extension of the previous employment requirement and of the waiting period, it finds that another feature introduced by the reform -- redefinition of the wages used as a basis for daily unemployment allowance after each new period of employment -- has caused problems specifically for people in part-time jobs and resulted in a downward spiral in the income of many of them.

The Committee notes from the Government's reply that the criteria used in setting the 18 hours/week threshold for coverage of part-time workers by unemployment security consisted in covering by social insurance only work which provided a person with an adequate income. It observes that, while in traditional spheres of employment gaining an adequate income would normally require working not less than 18 hours per week, in modern sectors of the economy with a high value-added potential it is now not rare to find part-time employment with less than 18 hours per week which would still permit to obtain an adequate living income. In Finland, however, under the present legislation such part-time employment would appear to be excluded from unemployment security. The Committee considers that the fact that the new forms of part-time employment which ensure an adequate income for work of less than 18 hours per week, do not carry with them the right to unemployment security is not in accordance with the priority objective of employment promotion and using social security as a means for achieving this objective, enunciated in Article 7 of the Convention. Such types of work gain a growing social importance and in no case could be considered as negligible in terms of Article 25(1) of the Convention. The Committee recalls however that, being particularly flexible, this Article permits to take into account for the determination of the non-negligible part-time work not only the hours of work, but also the earnings which are obtained from this work. It also recalls that the previous employment condition, under section 16 of Act No. 602 of 1984, which respects the protection of the livelihood of unemployed persons, also requires having a wage paid in accordance with the collective agreement or at the customary level, and that in branches of employment where the arrangements made for the hours of work depart from the normal, an exception to the requirement relating to the weekly hours of work may be made, subject to such conditions as may be prescribed by ordinance, if the person concerned can be regarded, on the basis of his earned income, as deriving his livelihood from such work. The Committee therefore asks the Government to indicate how these provisions are being applied in practice and whether any minimum amount of earned income from part-time employment has been established for the purpose of coverage by the unemployment security. If not, the Government might wish to consider the possibility of introducing an earnings criteria, on par with the 18 hours/week threshold, as an alternative means of satisfying the previous employment requirement for the entitlement to the daily unemployment benefit.

As to the actual situation of part-time workers, the Committee notes, from the Government's report and the comments made by the SAK, that modifications of unemployment security introduced in the reporting period with respect to the previous employment requirement have resulted in the exclusion of part-time workers working less than 18 hours per week, in addition to the earnings-related allowance, from the basic daily unemployment allowance as well, thus leaving labour market support the only kind of assistance on which they can still count in case of unemployment, subject to needs assessment. As regards the situation of part-time workers who, in principle, work more than 18 hours per week, it further notes that, according to the SAK, the extension of the previous employment requirement for the entitlement to daily unemployment benefit from 26 to 43 weeks has made it more difficult for them to get included in the unemployment security system and, to some extent, to renew their right to unemployment security. In this situation, the Committee asks the Government to provide in its next report detailed information on the conditions attached to granting labour market support in case of part-time workers who are not able to fulfil the previous employment requirement. Finally, taking into account that the application of Article 25 of the Convention requires governments to constantly keep in mind, particularly when reforming their social security schemes, the occupational circumstances of part-time workers, the Committee would like the Government to indicate in its next report the legislative and administrative measures taken or contemplated, including any statistical studies and reviews, to adjust the national unemployment security scheme to the specific needs of growing part-time employment.