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.



Prevention of job displacement in Finland and early interventions to promote job-to-job transitions

This chapter analyses the most important policy measures in Finland that take effect prior to workers being dismissed. Measures to prevent excessive layoffs are discussed first, including anticipation of employment and skill needs, the rules governing hiring and firing of workers, and the use of the temporary layoff scheme. The chapter then discusses public intervention aimed at providing support to workers dismissed notably through Change security and the Abrupt Structural Change programme. Overall, the policy set-up allows relatively high labour reallocation while preventing excessive layoffs. The absence of cost for employers may even cause excessive use of the temporary layoff scheme. Information on income and employment support after dismissal is efficiently provided to workers collectively dismissed in large and medium enterprises, but with the increasingly limited means of public employment offices, public early support to dismissed workers does not go much further. This is likely to affect the re-employment prospects of the more disadvantaged groups, in particular the older and low-educated workers.




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