Back to Work: Finland

Improving the Re-employment Prospects of Displaced Workers

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less  and have fewer benefits than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report is part of a series of nine reports looking at how this challenge is being tackled in a number of OECD countries. It shows that Finland has a higher rate of job displacement than most OECD countries but that most of these workers find a new job again relatively quickly. However, those who do not face a considerable risk of long-term unemployment; with older displaced workers and those with a low level of education facing the highest risk. While labour market institutions in Finland serve most displaced jobseekers well, there is room to improve policies for those at risk of long-term unemployment or inactivity who would benefit from earlier identification of their problems and early, effective and well-targeted counselling and intervention.



Executive summary

Workers who involuntarily lose their jobs as firms close or downsize in response to fluctuations in demand and production, face substantial economic and non-economic costs. Around 5.5% of Finnish workers with at least one year of tenure are displaced every year as a consequence of mass dismissal or firm closure, a share that crept up to more than 7% during the global financial crisis. Overall, Finnish displaced workers do relatively well in terms of labour market outcomes after displacement. In normal times, about five in six of them find a new job within one year but for those who do not find a job quickly, the impact of job displacement is very persistent and many of them never find a new job. Older displaced workers and those with limited education face the poorest post-displacement prospects.


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