Pay subsidy is granted for employing unemployed persons

Pay subsidy is a discretionary subsidy aimed at promoting the employment of unemployed jobseekers. An employer hiring an unemployed jobseeker may receive financial assistance in the form of pay subsidy that covers 30, 40 or 50% of the payroll costs.

The aim is to promote employment on the open labour market for unemployed jobseekers who have gaps in their professional skills or an injury or illness that affects their abilities to perform their work duties. Although the pay subsidy is granted and paid to the employer, it is always dependent on the service needs of the unemployed jobseeker. The purpose of the subsidy is to compensate for the employee’s lower productivity. The pay subsidy is also a compensation for the fact that the employer uses more time for guiding the employee.

Which employers are eligible for pay subsidy?

All employers, except for central government agencies, are eligible for pay subsidy. The employment relationship may only start after the decision on granting the subsidy has been made. The requirements are that

  • the pay subsidy does not distort competition;
  • the employer is committed to paying a wage laid down in collective agreements, 
  • the employer has performed its statutory obligations.

How can an employer apply for pay subsidy?

The employer must apply for the pay subsidy before the employment relationship starts. The application can be submitted via the Employment and Economic Development Office’s electronic service for employers or by using a form available online for printing. Submitting the application online speeds up the application process. 

Inquiries: Kirsi Hyttinen, kirsi.hyttinen(at)tem.fi      

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