The Active Employment Model Cuts Unemployment Benefits By 80 Million Euros This Year – This is Why the Model is So Controversial
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“Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” The famous lines by Mr Micawber, from Charles Dickens’ book David Copperfield and happiness is what the current Finnish government is hoping to achieve by balancing the country’s accounts and trying to satisfy the various party’s self-interests. It’s proving a very difficult task with different proposals satisfying one party but not the others in the coalition.
Some changes to the social benefits system have already taken place, the active employment model was started at the beginning of the year for those people taking unemployment benefit. It has proved highly controversial because of the very specific requirements for avoiding financial penalty. Over the first three months of the year, the unemployed person had to show that they were actively looking for work by applying for a minimum number of jobs per week. On top of this, they either had to complete five days training provided by the employment office, or 18 hours of paid part-time or earn at least 241.04 euros for entrepreneurial work.
According to the Central Organisation of Finnish Trade Unions SAK, the active employment model could cut the unemployment benefits by about 80 million euros this year. The labor union estimates that less than half (47 percent) of its members who receive earnings-related unemployment allowance have met the activity requirement during the first three months.
Apparently, about half of the folks have had their money reduced from 37.63 euros per working day to 35.88 euros. Monthly figures reduced from 752.60 to 717.60 euros before tax, which is a significant difference for those with little or no savings. The following three months will be paid at the reduced rate until the criteria is met.
The controversial point of this system is that it penalizes those who are actively looking for work but unsuccessful, and with the government offering a very limited range of approved training courses, it has discouraged many people.
[alert type=white ]The controversial point of this system is that it penalizes those who are actively looking for work but unsuccessful, and with the government offering a very limited range of approved training courses, it has discouraged many people.[/alert]
Then there is the double whammy of inflation eating into the benefit amounts which have not been increased for several years. Hence the lengthening queues at the food banks around the city.
Last week the Parliamentary Remuneration Committee approved a 3.2 percent increase in MP’s pay, with 1.6 percent awarded from the May 1st and the remaining to come January 1st, 2019. Apparently, the decision followed trends on salary increases agreed in general labor market negotiations this spring. The committee aspired to ensure that MP’s salaries and pay growth would remain in balance with nationwide salary increases, but it won’t go down too well with unemployed citizens and those facing financial hardship.
The Centre Party, in theory, had been advocating a basic income model, but once in power, pushed through the above activation model and now they will not be funding the researchers to further expand the ongoing basic income trial.
The Social Democratic Party and National Coalition, want to require recipients to work or study to be eligible for benefits, while the Greens prefer a basic income model.
Members of the government are actively pushing their own proposals and to complicate matters some are jumping ship.
The National Coalition MP, Harry Harkimo defected from the party this week and will sit as an independent MP, backed by the Internet-based movement called “Liike Nyt” (Move Now). Although it remains to be seen if there is room for another party in Finnish politics.
In the spring, various unions also negotiate for better pay and conditions, an annual event which usually reaches a compromise.
However, these are troubled times for the government and hopefully, by the time everyone feels they have had their say through the democratic process, Finland will remain one of the happiest countries in the world and also have balanced income and expenditure.