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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.

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Foreword

OECD labour markets are dynamic. Each year, around 20% of jobs in a typical OECD country are created or destroyed, and around one third of all workers are hired or separate from their employer. These large job and worker flows are driven by a continuous process of labour reallocation, both across industries and between declining and growing firms within the same industry. This process is an important source of productivity gains, since more productive firms expand at the expense of less productive firms and earnings rise on average for workers changing jobs, particularly workers who voluntarily quit one job in order to move to another. However, high job turnover is also a source of insecurity for workers, especially those who are displaced from their jobs because their employer downsizes its workforce or goes out of business altogether. A common challenge facing OECD governments is thus to nurture labour market dynamism while keeping the adjustment costs that are borne by displaced workers as low as possible.

English

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