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Finland could do more to help vulnerable laid-off workers

 

24/11/2016 - Access to more intensive employment services before and after dismissal could help disadvantaged laid-off workers get back into employment, according to a new OECD report.  

 

Back to Work: Finland says that 5.4% of Finnish workers with at least one year of tenure are laid off as firms close or downsize in response to fluctuations in demand and production, one of the highest rates in the OECD. The share of workers who find a new job within one year after displacement is also among the highest among OECD countries, standing at 87%.

 

The good average re-employment outcomes rely mostly on the flexible Finnish labour market that allows fast labour reallocation. But older and low-educated workers have more difficulty getting a new job. Since the global financial crisis, blue-collar workers are also less likely to transition to new employment. Regions are also affected differently and internal migration plays a very limited role in reducing these regional disparities.

 

The Finnish unemployment benefit system protects displaced workers effectively, but there is a need to re-balance labour market spending towards more active programmes to help the most disadvantaged workers transition to a new job:

 

  • Wide use of the temporary layoff scheme helps prevent unnecessary layoffs. But the lack of direct cost for employers also probably postpones dismissals and thus job search, hence further weakening the ability of the most disadvantaged workers to find a new job.

 

  • Early response measures before dismissals through the Change security process consist mainly of providing information to dismissed workers. Publicly-provided re-employment support before dismissal is very scarce, and shrinking resources of employment offices mean there is almost no individual and face-to-face assistance once registered as a jobseeker.

 

  • Extended unemployment benefits for older workers contribute to lowering re-employment rates for this group. At the same time, unemployed older workers participate relatively less in training programmes.

 

To help address these challenges, the OECD recommends that Finland:

 

  • Make employers bear more of the costs of the temporary layoff scheme to avoid possible overuse and the resulting delays in job transitions.

 

  • Ensure that more people are reached by Change security including workers in smaller businesses.

 

  • Strengthen the activation regime by promoting early registration of displaced workers with employment services.

 

  • Shift labour market spending towards more individual re-employment support both before dismissal and once registered as a jobseeker.

 

  • Involve the social partners more in the process of job-to-job transitions before dismissal.

 

  • Raise the effectiveness of training including through outcome-based funding of services and recognition of prior on-the-job skills.

 

For further information or comments, journalists should contact Ann Vourc’h, economist at the OECD Employment Policy Division and author of the report (tel. +33 1 45 24 17 27) or Christopher Prinz, manager of the OECD Back-to-Work project (tel. +33 1 45 24 94 83).

 

For a copy of the report, please contact OECD’s Media Division (+33 1 45 24 97 00).

 

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.

 

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