OECD: On average, displaced workers in Finland are re-employed quickly

Ministry of Economic Affairs and Employment 24.11.2016 11.46
Press release

The Finnish labour market model has proven to be fairly flexible in recent years assesses the OECD. Dismissals are common in Finland by international standards, but a majority of displaced workers gain re-employment quickly. However, special attention should be given to people over the age of 55, who are dismissed, and the long-term unemployed.

On 24 November 2016, the OECD published a country report, which analyses the functioning of Finland's labour market from the perspective of dismissal and re-employment and examines policy measures that support employment.

In Finland, 5.5 per cent of Finnish workers with at least one year of tenure become displaced each year due to dismissals, mass dismissals or as a result of firms closing down. According to a survey, nearly five out of 6 dismissed workers gains new employment within a year. Of the OECD countries that can be compared to Finland, only Sweden has as high a re-employment rate.

As in other OECD countries, re-employment in Finland is less common for people over the age of 55 and under the age of 25. People, who have been dismissed and have a low level of education or work in industry, are less likely to gain re-employment.

Active labour force policies recommended

The OECD estimates that the Finnish labour market is effective from the perspective of the majority of its labour force. Especially in the case of older displaced workers and the long-term unemployed the model could be further developed.

The report finds that funding of public employment services is lower in Finland than in many other OECD member countries. For this reason, the OECD is recommending that Finland increase the resources allocated to public employment services and focus them more on identifying the potentially long-term unemployed earlier than previously. Additionally, the OECD recommends that dismissed workers are provided more intensive employment services by funding the services in a performance-based manner.

The OECD feels that Finland's unemployment benefit system is comprehensive and fairly effective. According to the OECD, it is not possible to lower benefits in Finland a great deal from their present level, so benefit recipients should be encouraged to seek employment by e.g. implementing stricter obligations for job searches.

- It is beneficial to gain up-to-date research data on how Finland's labour market places in international comparisons. Reforms to the Government's unemployment security and employment services will make accepting employment more appealing and will better support the unemployed in job search, Minister of Justice and Employment Jari Lindström says.

On 24 November 2016, the OECD published its Back to Work country report on Finland as part of a comparative study covering nine countries. In addition to the OECD, the Labour Institute for Economic Research participated in the preparation of the report.

OECD report: Back to Work: Finland – Improving the Re-employment Prospects of Displaced Workers

Further Information:

Labour Market Counsellor Kimmo Ruth, tel. +358 29 50 48073
Research Director Heikki Räsänen, tel. +358 29 50 47118

Lisätiedot:
Työmarkkinaneuvos Kimmo Ruth, TEM, puh. 029 50 48073
Tutkimusjohtaja Heikki Räsänen, TEM, puh. 029 50 47118