Upcoming legislative changes

A number of legislative reforms are under way regarding the Finnish unemployment security system. The most notable changes are summarised below. A comparison table showing the current situation versus the upcoming changes is included at the bottom of the page.

According to the latest information, the amendments will enter into force in stages during 2024. Some of the changes will take effect at the start of the year and some later. The exact schedule and the details will become clearer as the legislative process progresses.

Please note that the information on this page is provisional and subject to change. The latest developments can also be found on the website of the Federation of Unemployment Funds in Finland (TYJ).

Changes that are currently expected to take effect on 1 January 2024:

Waiting period will be extended to 7 days

The Government Programme agreed to extend the waiting period for unemployment benefits by 2 days. The waiting period refers to a period set at the beginning of unemployment or lay-off during which earnings-related unemployment allowance is not paid. Currently, the waiting period is 5 days, which equates to 1 week for a completely unemployed person. After the legislative amendment, the waiting period would be 7 days, which corresponds to approximately one and a half weeks. The extension of the waiting period will affect nearly all recipients of earnings-related allowance. At the average earnings-related unemployment allowance level, the impact of the cut would be approximately EUR 150 per person.

The phasing of holiday compensation will be restored

The Government Programme has resolved that the phasing of holiday compensation will be restored. This means that, if a person has time off that has not been taken at the end of the employment relationship, the compensation paid for this will postpone the start of eligibility for earnings-related unemployment allowance. Holiday compensation equal to 1 month’s pay postpones the start of entitlement to earnings-related unemployment allowance by approximately 1 month. Currently, holiday compensation does not affect the commencement of entitlement to earnings-related unemployment allowance. However, the provision was included in the Unemployment Security Act until 2012.

The phasing of holiday compensation and the waiting period do not elapse at the same time. The waiting period begins after the phasing of any holiday compensation.

The effect of restoring the phasing of holiday compensation depends on how much untaken leave a person has. One month of untaken leave would reduce gross income at the average earnings-related unemployment allowance level by approximately EUR 1,600.

National pension index will be frozen

The Government Programme has agreed to freeze the national pension index. This means that benefits will no longer increase along with rising consumer prices. The magnitude of the cuts will depend on how much prices will rise. In 2022, the national pension index rose by a total of 8% due to the increase in consumer prices. Regarding earnings-related daily allowance, the impact of the index freeze also partly depends on earnings, as the index adjustment affects the formula for calculating the daily allowance in various ways. Freezing the national pension index will affect the level of earnings-related unemployment allowance for all recipients.

Changes that are currently expected to take effect on 1 April 2024:

Child increases will be abolished

The Government Programme has agreed on the abolition of child increases supplementing unemployment security. Currently, child increases range from EUR 150 to EUR 285 per month. Last year, around one third of recipients of earnings-related unemployment allowance received a child increase.

The EUR 300 exempt amount of earned income will be withdrawn

The Government Programme has agreed on the withdrawal of the exempt amount of earned income. Currently, recipients of unemployment benefits can earn EUR 300 without their wages or business income affecting their daily allowance. Last year, 39% of recipients of earnings-related unemployment allowance received daily allowance while they were partially employed. Each euro of earned income above the EUR 300 exempt amount reduces the unemployment benefit by 50 cents. In other words, the amendment will cut the benefit for those receiving earned income by a maximum of EUR 150 per month.

Changes that are currently expected to take effect on 1 August 2024:

Job alternation leave system will be abolished

The Government Programme has agreed to abolish the job alternation leave system. Job alternation leave means that a person takes leave from work for a maximum of 6 months and the employer hires an unemployed person for the same period. During job alternation leave, job alternation compensation is paid instead of wages.

Last year, 5,300 persons took job alternation leave. A corresponding number of unemployed persons found employment through the job alternation leave system. The job alternation leave system was significantly tightened in 2014 and 2016. These tightening measures reduced the use of job alternation leave by 75%.

Changes that are currently expected to take effect in September 2024:

Level of unemployment security will decrease after 2 months

It has been agreed in the Government Programme that unemployment benefits will decrease

to 80% of the original level after eight weeks of unemployment (approximately 2 months), and
to 75% of the original level after 34 weeks of unemployment (approximately 8 months).

Currently, unemployment security is not staggered and the level remains unchanged throughout the maximum duration of the earnings-related unemployment allowance.

Subsidised work does not accrue the right to an earnings-related unemployment allowance

The plan is to stop subsidised work from counting towards the employment condition that must be satisfied to qualify for an earnings-related unemployment allowance. Under the current system, subsidised work counts towards satisfying the employment condition at a rate of 75%.

The change regarding subsidised work is especially significant from the perspective of the long-term unemployed.

Age-related exceptions will be abolished

It has also been agreed in the Government Programme that age-related exceptions will be abolished. Age affects many aspects of unemployment security:

In certain situations, persons aged 55 or over can gain access to education and financial compensation, for example. This an example of the transition security model that was created during the last government as a replacement for the additional allowance days, i.e. the unemployment path to retirement.
People aged 57 or over may be covered by an obligation to employ that guarantees them a job.
In certain situations, persons aged 58 or over may receive earnings-related benefits for 500 days instead of 400 days.
The level of daily allowance for persons aged 58 or over is protected. The protection is relevant when a person is in a low-paid job and becomes unemployed again, with the level of daily unemployment allowance being recalculated.
Persons aged 60 or over can meet the prior work requirement for earnings-related unemployment allowance in an employment promoting service.

Please note: The Government has not provided further details on whether the entry applies to all age-related exceptions.

To qualify for earnings-related employment, you must work for 1 year

The Government Programme stipulates that the length of the prior work requirement for earnings-related unemployment security will be doubled. Currently, earnings-related unemployment allowance can be obtained after 6 months of work. In the future, a year’s work would be required.

The change will affect people at the beginning of their careers and those whose careers are intermittent and for whom it is difficult to find permanent employment. The prior work requirement has previously been shortened from 10 to 8 months and later to 6 months.

In addition, the Government Programme stipulates that subsidised work will not count towards the prior work requirement. Currently, subsidised work accrues the prior work requirement at a rate of 75%. The change regarding subsidised work will particularly affect the long-term unemployed.

The grounds for determining earnings-related unemployment allowance will change for partially employed people

The Government Programme has agreed to make the amount of earnings-related unemployment allowance dependent on the amount of earnings from prior work. This means that entitlement to daily allowance would not depend on the number of hours worked before unemployment. The amount of work carried out before unemployment would be assessed solely on the basis of wages.

Currently, in order to receive earnings-related unemployment allowance, a person must have worked 18 hours a week for about 6 months. According to the amendment, the weekly hourly limit would be abolished. Instead, the person would be required to have earned a certain minimum amount per month. In the model for the amendment prepared during the last government, the minimum wage was set at around EUR 860.

Although the model applies to all recipients of earnings-related unemployment allowance, in practice the change mainly affects those whose working hours and pay remain close to the minimum limits defined by law. During the earlier preparations, it was estimated that the change could facilitate access to earnings-related unemployment allowance. However, the amount of earnings-related unemployment allowance could decrease for these persons. If the regular working hours exceed 18 hours per week, the amendment does not affect the amount of daily allowance.

See table: Impact of upcoming legislative changes compared to the present situation

Present	After the change
At the beginning of unemployment, there is a 5-day waiting period during which no unemployment benefit is paid.	At the beginning of unemployment, there is a 7-day waiting period during which no unemployment benefit is paid.
Holiday compensation for untaken holidays does not affect unemployment security.	Holiday compensation for untaken holidays postpones the start of entitlement to earnings-related unemployment allowance.
The unemployment security rises at the turn of the year as a result of the national pension index, which is tied to consumer prices.	The amount of unemployment security will not change even if prices rise.
For children under the age of 18, a child supplement of €150–€285 per month is paid.	No child supplements are paid.
If you are unemployed, you can earn €300 without changing the amount of unemployment benefit. Each euro of earned income exceeding €300 reduces the unemployment benefit by 50 cents.	Each euro of earned income reduces the unemployment benefit by 50 cents.
You can take a 6-month job alternation leave from work.	The job alternation leave system will be abolished.
The amount of unemployment security is the same throughout the maximum duration.	Unemployment security will decrease to 80% of the original level after eight weeks of unemployment (approximately 2 months), and to 75% of the original level after 34 weeks of unemployment (approximately 8 months).
Subsidised work accrues the right to earnings-related unemployment allowance at a rate of 75%. (Every fourth working week is ignored.)	Subsidised work does not accrue the right to an earnings-related unemployment allowance.
There are various exceptions based on age which affect the duration and amount of daily allowance.	Age-related exceptions will be abolished. (Note: details of the changes will be available later.)
Earnings-related benefits can be obtained after working while being a member of the fund for 6 months.	Earnings-related benefits can be obtained after working while being a member of the fund for 1 year.
You can receive earnings-related unemployment allowance if you have worked 18 hours a week (for 6 months).	Earnings-related unemployment allowance can be obtained when you have earned a minimum amount of euros per month (for 1 year).

Other changes

Unemployment funds to assist in finding employment

It has been agreed in the Government Programme that unemployment funds can provide employment services to their customers. At present, the funds cannot do anything to promote or support employment.

Combined unemployment insurance and universal earnings-related security will be investigated

It has been agreed in the Government Programme that, by the mid-term policy review, the Government will prepare a model for combined unemployment insurance in order to improve the social security of persons who simultaneously work as entrepreneurs and employees. In addition, it examines the universal earnings-related model and the linear model of unemployment security duration in relation to the prior work requirement.

The article was originally published on KOKO’s website on 21 June 2023 and most recently updated on 1 December 2023.