Boosting employment in Finland
In the context of the COVID-19 pandemic and resulting economic contraction and government
debt build-up, the government is formulating reforms to raise employment by 80 thousand
workers by 2029. Finland’s employment rate has been lagging behind the Scandinavian
Nordics, with most of the gap attributable to older workers, who have more favourable
access to early retirement schemes than their Scandinavian counterparts. To restrict
their use, extended unemployment benefit, which is paid to unemployed persons aged
61 or more after normal unemployment benefit expires until they retire or reach 65,
should be phased out and non-medical conditions should no longer be taken into account
for disability benefit applications of persons aged 60 or more. Activity rates for
mothers of young children are also lower in Finland than in the Scandinavian Nordics
mainly owing to Finland’s generous homecare allowance. It should be reduced and access
to convenient early childhood education and care services expanded to improve mothers’
work incentives. By increasing mothers’ work experience at critical points in their
careers, such a reform would also help to narrow Finland’s large gender wage gap.
As part of its 2021 budget, the government is setting out labour market reforms to
increase employment by 31 to 36 thousand workers. Such reforms should focus on promoting
employment of older workers.
Published on June 04, 2021
In series:OECD Economics Department Working Papersview more titles