Finnish policy on reconciling work and family life should strengthen

‌

In many respects Finland does well in reconciling work and family life. The female employment rate in Finland, at 66%, is well above the OECD average of 55%, and more than 9 out of 10 Finnish woman and mothers who have jobs in employment work full-time.

Behind these figures, there are causes for concern though. Only half of the mothers with very young children are employed (about 20 percentage points lower than in Sweden), and 44% of female employees in their twenties have a temporary employment contract, leading to job insecurity. Many Finnish women find it difficult to combine a career with motherhood: 27% of women in their early 40s who have completed the second stage of tertiary education are childless, compared with only 15% of 40-year old Swedish women.

The Finnish model of work and family reconciliation stands out in international comparison because of the manner in which it provides choice to parents with young children. Finnish policy reduces barriers to employment by providing all families with young children with guaranteed access to a subsidised childcare place. Home Care payments provide financial support to those who do not make use of the childcare offer. Because childcare is relatively expensive, most of the larger municipalities make additional Home Care payments to discourage use of local government childcare facilities. As a result, the financial incentives in the current system tilt the balance of work and care options towards mothers choosing to stay at home: only 44% of 2- year olds are in formal childcare (compared to 85% in Sweden).

If mothers spend too long without being employed, their career prospects are permanently damaged. There are proportionally fewer women in management positions in Finland than in Canada, for example.

Demographic trends point to an urgent need to increase female labour supply in the near future. The government’s own policy objective is to raise the female employment rate to 70% by 2010. To do this it should reform the Home Care Allowance. Out-of-school-hours care facilities for 9 and 10 year olds should be expanded, and financial incentives to work part-time for parents with young children should be strengthened.

Based on its review, the OECD’s Babies and Bosses report suggests the following policy recommendations to improve the balance of work and family life in Finland:

The simultaneous provision of a childcare guarantee and Home Care Allowance payments to parents who do not use municipal childcare support, increases choice to parents with children under 3 years old. However, given the level (some municipalities provide additional payments) and duration of payments, it is no surprise that many parents of very young children, usually mothers, are not in paid work. This reduces future career prospects and hampers the pursuit of gender equity objectives. Moreover, the system of Home Care Allowances holds back labour supply growth, while projections point to emerging labour supply concerns. For these reasons, policy should consider reform options limiting benefit payments and/or duration.
To contribute to the long-term financial viability of the childcare system, maintain where possible, the role of family day-care services as such services are less costly than centre-based care services.
Explore opportunities to extend out-of-school-hours care entitlements to children aged 9-10.
To encourage part-time work, reform the current partial care payments for parents with children up to school age into a part-time work entitlement of two years, and use current funding to finance benefit payments during this period.