Questions and answers on Työkanava Ltd

The Government wishes to promote the employment of the most disadvantaged jobseekers with partial work ability by setting up a state-owned special assignment company to implement such employment measures in practice. 

The Government aims to reach an employment rate of 75% by the mid-2020s. This will require increased employment also among people with partial work ability. In the interests of achieving its aim, the Government has initiated a work ability programme, in which Työkanava Ltd is one component.

The establishment of Työkanava Ltd is also underpinned by binding international obligations. The company will promote the opportunities of persons with disabilities and with partial work ability to find employment in the open labour market in keeping with the UN Convention on the Rights of Persons with Disabilities. 

The Government aims for the company to launch operations in 2022. The government proposal for an Act on a limited liability company by the name of Työkanava Ltd was submitted to Parliament in October. 

The proposal is linked to the Budget proposal for 2022 and both proposals are to be considered jointly. Parliament will address the legislative proposal on its own schedule, however. 

The specifics and detailed timetables for the operations of Työkanava cannot be determined yet, as preparation is ongoing. More information will be forthcoming once plans for the company’s operations progress and consideration of the matter in Parliament moves forward.

Työkanava Ltd will be able to employ the most disadvantaged people with partial work ability whose employment prospects cannot be markedly enhanced by measures and services to promote employment.

Much action over multiple government terms has been taken to place people with partial work ability in employment. Over the years, several pilots have been put into place and people with partial work ability have been provided with a range of labour administration services. The tools employed, such as pay-subsidised employment, have not delivered the desired outcome to a sufficient extent, i.e. people with partial work ability finding jobs in the open labour market or landing permanent employment. 

The Government of Prime Minister Marin aims to promote the employment of people with partial work ability and develop the intermediate job market in a new way. The Finnish approach has been modelled, where applicable, on the Swedish company Samhall. 

Työkanava Ltd would be financed with an initial capital of EUR 20 million allocated to it in the Budget from the Sustainable Growth Programme for Finland (EU Recovery and Resilience Facility RRF). In addition, the company would be provided with an annual appropriation of EUR 10 million, with the aim of employing 1,000 persons.

The company would also generate income from selling its services. Sales are estimated to account for no more than 20% of total turnover in 2022. Going forward, sales could make a larger contribution to the company’s finances.

While Työkanava Oy Ltd would not seek to generate profit or pay dividends to its shareholders, in other respects it must strive for profitable operations. The performance of public service obligations would be taken into account in setting performance targets for Työkanava.

Työkanava Oy will be a new special assignment company wholly owned by the state. It will provide employment for those people with partial work ability who wish to work despite being among the most disadvantaged in the labour market. The goal of the company is to boost their competences and labour market skills so that after their period of employment with the company, as many as possible could transition to employment in the open labour market. 

The company would have no public administration functions and it would not exercise public authority. Instead, the Employment and Economic Development Office (TE Office) would direct people with partial work ability to employment with Työkanava Ltd in a centralised manner. Employment with Työkanava Ltd would be the option of last resort when all other opportunities for finding employment have been exhausted.

Työkanava could make use of existing services and work together with other intermediate labour market operators such as organisations and foundations.

Työkanava will be an employer that may engage in the sales of services or provide staffing to customer enterprises. The goal of the company will be to support the skills and abilities of the people it employs to enable them to find a job in the open labour market.

As a state-owned special assignment company, Työkanava will be very similar to any ordinary limited liability company, the operations of which are regulated by legislation. It will also carry the same risks as any other limited liability company. The one exceptional feature is that the company will be subject to state ownership steering, for which the Ministry of Economic Affairs and Employment is responsible. The company will not exercise public power and is therefore not a public authority. Consequently, the TE Office will designate suitable candidates for employment by the company. The jobs available at the company for people with partial work ability will therefore not be publicly advertised.

The customer base of the company could consist of companies and other private entities, public agencies and unincorporated state enterprises, state-owned companies as well as private consumers. To begin with, Työkanava Ltd would focus on a few selected sectors. These sectors are yet to be determined.

The sectors are yet to be chosen. The aim is to launch a pilot to test a few designated sectors in various parts of Finland. Operations are to be expanded once experiences have been accumulated. 

Työkanava Ltd would operate across Finland by leveraging a multilocational approach and remote work opportunities. For the most part, the people employed would work on the premises of customer companies alongside other employees.

The company will also have its own physical location and going forward, it may expand to multiple locations. No specifics on this are yet available. 

The decisions guiding the operations of the company will be taken by its management, board of directors and the Ministry of Economic Affairs and Employment, which is responsible for ownership steering.

The economic activities of Työkanava Ltd, like those of any publicly-owned enterprise, are subject to the Competition Act, which lays down provisions on safeguarding equal operating conditions, i.e. ensuring competitive neutrality between public and private sector business activities. 

Työkanava must operate in such a way that it does not distort competition relative to the service offering of entities active in the open market, such as companies and organisations. State funding cannot be used to give the company a competitive position that would allow it to, for example, underprice its services and thereby gain an artificially strong position in the market. In practice, this means that the services provided by the company must be priced at arm’s length. Any rise in the company’s market share could also be curbed where necessary. 

In the interests of preventing any competition distortion, Työkanava Ltd would have an advisory board to monitor pricing and the company’s market share. In addition to the oversight of the Finnish Competition and Consumer Authority, the Ministry of Economic Affairs and Employment would monitor and address any competitive disadvantages as part of its ownership steering. 

Työkanava Ltd would operate across Finland by leveraging a multilocational approach and remote work opportunities. Operations will be launched gradually in the various regions depending on how quickly the company will be able to source a sufficient number of employment opportunities for people with partial work ability and the staff to coordinate the work.

Operations will be launched in the form of pilots implemented in a few regions with different characteristics. This will best provide insights into the viability and scalability of the business model. The pilot areas are yet to be selected.

The number of people with partial work ability who want to and are able to work is estimated at around 50,000–60,000. At present, the TE Offices have registered 34,500 unemployed jobseekers who have been diagnosed as having reduced capacity to work. Some of them can quickly find their way into employment. In addition, there are a number of people who lack the diagnosis, and those who are not registered with the TE services as jobseekers, for example, people on disability pension or in community employment. 

A precise figure is not available, but the number of most disadvantaged jobseekers is estimated at around 30,000.

Just like any other company, Työkanava will recruit staff when it needs workers. In that case, the employer and business services of the TE Office will locate potential employees who meet the competence requirements of the available job. What makes the approach special is that the TE Office will only offer for employment the most disadvantaged jobseekers with partial work ability. 

The TE Office would record in the employment plan of a person with partial work ability their willingness to find employment with Työkanava. The plan would also state that the person meets the criteria for submission to Työkanava as a potential employee. From the pool of potential employees thus created, one authorised TE Office would then direct jobseekers with partial work ability to Työkanava for recruitment. Työkanava would be responsible for the external sales of the job performance of people with partial work ability to customers in need of such job performance.

Employees would be hired directly by Työkanava under an employment contract. Their remuneration and other terms of employment would be determined under employment legislation and the applicable collective agreement.

As a highly heterogeneous group, people with partial work ability differ from each other not only based on individual characteristics but also the type of disability, for example. People undergoing mental health rehabilitation and people with developmental disabilities in particular find the job market more difficult than people with other types of illness or disability. Their health issues give rise to restrictions of work ability that make it more difficult to find employment than on average. 

Among jobseekers registered with TE Offices, the most disadvantaged people with partial work ability include people who have an illness or disability and who are also aged over 55 and have a low level of education.

Työkanava Ltd will be an enterprise and it will not, and cannot, exercise public authority. The only avenue available to Työkanava in choosing employees would be the TE Office, which will offer Työkanava suitable employees based on its needs. The system is designed to ensure that the selection of jobseekers with partial work ability takes place on the basis of chosen objectives and not primarily in order to achieve the business aims of the company.

The draft government proposal envisions that each year, 1,000 of the most disadvantaged jobseekers with partial work ability would find employment with Työkanava. The aim is for Työkanava to have a workforce of 1,000 at all times. Whenever a person finds employment in the open labour market and leaves Työkanava, a new person will be recruited to replace them.

This is the goal set by the Government in its mid-term policy review in spring 2021 and the annual appropriation to the company has been allocated accordingly. However, in its first years of operation the company will only seek to employ a few hundred people and will then gradually expand. 

In practice, they could do any work. People with partial work ability have a wide range of skills and their educational background is broad and diverse.

The company will also support its employees by providing additional training and support for the employees’ work ability.

Under law, Työkanava would be tasked with providing employment to the most disadvantaged people with partial work ability. The company could employ unemployed jobseekers directed to it by the TE Office who wish to work but who are unlikely to find suitable employment because of their illness or disability. The persons concerned would also have to be willing to accept work and have a history of unsuccessful job search despite employment promoting services.

The operations of the company are being planned alongside the legislation concerning the company and its establishment. The resourcing and competence needs of the company at the initial stages of operations will also be assessed in these preparations. People with strong business and management expertise will be recruited for the company’s key positions.

In addition to the people with partial work ability, the company will only have a few employees at the initial stages. Special attention will be paid to business expertise in their recruitment. 

Besides the people with partial work ability whom it employs, the company would have administrative staff (management, marketing, communications and HR) and staff responsible for employment. The staff positions could be advertised openly but they could also be filled by persons with partial work capacity. When necessary, Työkanava Ltd could also outsource some of its administrative services.

• The company’s employment target and the financing for the company have been determined based on the best information available at the time of preparation. More detailed information will become available as progress is made on planning the company’s operations.
• Both sound planning and business management will be required to achieve the aims set for the company. 
• In the initial stages of the company’s operations, the employment target is lower, a few hundred people. Operations will expand gradually as the company builds on its experiences.
• When deciding on the appropriation in the Budget, Parliament may set targets relating to the number of people with partial work ability to be employed by the company and to the allocation of financing.

The company’s performance would be evaluated from three perspectives: the number of people with partial work ability employed by the company, the number of people with partial work ability who have found employment in the open labour market, and the contribution of service sales to total turnover. 

The three indicators used to evaluate performance would also provide information on the quality of services provided to people with partial work ability. High-quality services that boost work ability and conditions for employment are integrally linked to how well the company succeeds in its sales and how seamlessly people with partial work ability manage to transition into employment in the open labour market.

The company would have a board of directors whose duties are laid down in the Limited Liability Companies Act and in the company’s Articles of Association. The planned number of board members is consistent with that of any other limited liability company, around 6–8 members. The board members must possess a wide range of expertise in order for the company to engage in successful business.

Ownership steering for Työkanava Ltd will be the responsibility of the Ministry of Economic Affairs and Employment.

A risk management plan will be prepared for Työkanava and it will be regularly updated.

• Above all, the company will provide people with partial work ability and the people most disadvantaged in the job market with fresh experience in work and working life, and thereby enhance their labour market skills. Without the opportunities afforded by the company, these people have only little opportunity of finding employment in the open labour market.
• The company will help enterprises outsource labour-intensive tasks. 
• The contribution of people with partial work ability and people who are disadvantaged in the job market is needed to boost the overall employment rate. The Government has set its employment rate target at 75% by the mid-2020s.

The chosen approach of a state-owned special assignment company is based on the proposal of rapporteur Hannu Mäkinen. He rejected an approach based on the job bank experiment because it delivered only modest results in terms of placing people with partial work ability in employment. The job bank approach also failed to address the challenges associated with the employment of the most disadvantaged people with partial work ability. 

However, the job bank experiment did prove that employers were in need of an easy, low-risk way of utilising the labour of people with partial work ability. It also showed the importance of identifying and recognising competence, support for work ability and the significance of coordinating services for private customers and employers. These aspects have been taken into account in Työkanava.

No subsidiaries will be set up for the company in the context of its establishment. Subsidiaries are not ruled out going forward.

The transfer of public employment services to the municipalities in 2024 will cause many changes in the structure and content of service provision. The organisation of services to employers and businesses will also be reconsidered as part of these changes, similarly to the services of the state-owned special assignment company.

Measures under the Government’s work ability programme as well as various projects and pilots are underway in the administrative branches of both the Ministry of Economic Affairs and Employment and the Ministry of Social Affairs and Health. In the former, the measures focus on tackling the obstacles to the employment of people with partial work ability, stepping up the rate at which they find employment, and preventing long-term unemployment. In the latter, the focus is on measures to enhance the services in support of the work ability of people with partial work ability.

Besides the work ability programme, there are several major reforms underway to help unemployed people who are disadvantaged in the job market. Such reforms include the TE services reform where the responsibility for organising TE services will be transferred to municipalities in 2024, the introduction of the Nordic labour market service model, and the reform of the pay subsidy scheme. Työkanava Ltd is given the special assignment of providing employment for those people with partial work ability who cannot find employment despite services or for whom it is otherwise unlikely. 

The effects of the local government pilot on employment have been considered in the operations of Työkanava by giving a single TE Office the responsibility for selecting jobseekers for the company. This will ensure that the most disadvantaged jobseekers with partial work ability can find employment via Työkanava regardless of whether they are covered by the local government pilot or not.