After its first year of operation, the Employment Fund’s result showed a surplus. The Fund's net financial position amounted to EUR 1.67 billion at the end of 2019. The Employment Fund can balance the economy destabilised by the coronavirus, if necessary, with a business cycle buffer and loan financing. The Employment Fund has published its 2019 annual report, which is available online at talous.tyollisyysrahasto.fi/en.
Thanks to improved employment in previous years, the Employment Fund was able to reduce total unemployment insurance contributions for both employers and employees by an average of 0.49% for 2019. Last year, the Employment Fund collected a total of EUR 2,656 million in unemployment insurance contributions from employers and employees.
Improved employment also reduced the amounts paid to the earnings-related allowance for unemployment funds and to Kela’s basic daily allowance. The Employment Fund financed unemployment allowances for a total of EUR 1,160 million in 2019.
When times were good, the Employment Fund built up a business cycle buffer that could be used as necessary. On 31 December 2019, the Employment Fund’s business cycle buffer was close to the maximum amount prescribed in legislation. In autumn 2019, the fund paid the last instalment of the EUR 600 million loan it took out to cover increased unemployment benefit expenses in 2015.
Janne Metsämäki, the Employment Fund’s Managing Director, is satisfied with the first year of operation of the fund that was established in 2019: “We laid the foundation for our operations in the course of the year. We took on many development projects to provide better and more efficient service to our customers. We were among the first four organisations to begin using the national Incomes Register. Its introduction and preparations succeeded very well both in unemployment insurance contributions and in adult education benefits.”
A record year in the number of recipients of adult education allowance
Last year, 25,701 people received adult education allowance. This is 3.4% more than in 2018. A total of 26,187 scholarships were granted to qualified employees. In 2019, the fund paid a total of EUR 187 million in adult education allowance and scholarships for qualified employees.
The Employment Fund has used information held in the Incomes Register to pay unemployment insurance contributions since the beginning of 2019. Use of the Incomes Register was extended to processing of adult education allowance applications from employees in early 2020, which required the fund to perform major system development and learn new lessons in the course of last year.
In 2019, the fund worked with various ministries and central labour market organisations to draft a legislative reform that would change applications, amounts and study requirements for adult education allowance. The amendment is expected to enter into force on 1 August 2020.
The corona virus has an impact on the Employment Fund’s finances
The EmploymentFund estimates that the employment outlook will deteriorate markedly. The effects of the corona virus could not be taken into account during the preparation of the financial statements. The current view is that the Finnish economy will descend into recession and that the gross domestic product will shrink significantly.
“The economic situation in Finland remained relatively positive in 2019. We managed to increase the business cycle buffer close to its maximum amount. We invested assets with a moderate investment strategy and achieved a return of 0.8%. We are in a better position than in previous years to meet rising unemployment expenditure," sums up Tapio Oksanen, CFO of the Employment Fund.
The Employment Fund monitors the trend in unemployment expenditure and has appealed to the Finnish Government to ensure the fund’s solvency. The Employment Fund will submit a proposal for unemployment insurance contributions for 2021 in August, after which Parliament will confirm the contributions.
The Employment Fund’s entire annual report is available online at talous.tyollisyysrahasto.fi/en
Janne Metsämäki, the Employment Fund’s Managing Director, tel. +358 40 522 3614
Tapio Oksanen, Chief Financial Officer of the Employment Fund, tel. +358 40 539 4651
Bonds are EUR 600 million each.
The biggest changes relate to the application process, the amount of the allowance and study performance requirements. The Parliament of Finland passed the new law on 29 May 2020.