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Reduction proposed in unemployment insurance contributions
Unemployment Insurance Fund Stock Exchange Release 29 August 2017 at 10.20 a.m
This release is a summary of Unemployment Insurance Fund's (TVR) Interim Report January - June 2018. The Interim Report in its entirety is attached to this release and available on the Unemployment Insurance Fund's website at https://tvr.fi/en/investors/financial-facts/interim-reports/
Managing Director Janne Metsämäki:
The Finnish economy continued on a strong growth path during the first half of 2018. Positive economic growth is expected to continue in 2019, but at a lower rate than in 2018. Improved employment and the decreased unemployment rate are signs of this economic upturn. The number of unemployed jobseekers continued to decrease during the first half of 2018, but at a lower rate than in 2017. Without a downturn, the number of unemployed jobseekers is expected to continue decreasing until at least 2020.
The Unemployment Insurance Fund has continued with its preparations for the launch of the new Incomes Register at the beginning of 2019. A new operating model and unemployment insurance contribution system will be introduced in order to improve the Fund's customer service and operational efficiency.
At the beginning of 2019, the Unemployment Insurance Fund and the Education Fund will be merged to form a new fund, the Employment Fund. The legislative amendment concerning the merger was ratified in June 2018. Different working groups and subprojects have been preparing the merger under the project to establish the new fund all through the first half of 2018. The personnel 20of both funds have also been actively involved in the preparations.
Janne Metsämäki, who is currently managing director of both the Unemployment Insurance Fund and the Education Fund, has been appointed as the Managing Director of the Employment Fund from 1 January 2019.
Operational environment of the Unemployment Insurance Fund
On 21 March 2018, TVR issued a stock exchange release on improved outlooks. It forecast that the full-year result for 2018 would be plus EUR 550 million, while the budget approved on 30 August 2017 predicted a full-year result of EUR 409 million.
In 2018, the unemployment insurance contribution totals 3.8 per cent of pay, while the corresponding amount in 2017 was 4.0 per cent. During the period under review, the amount of collected contributions decreased by four per cent from a year earlier. Meanwhile, unemployment benefit payments fell by twelve per cent. The result at the end of the review period was EUR 294 million, which represents an improvement of EUR 61 million from a year earlier.
Events after the review period and outlook for the second half of 2018
Based on the information published by Statistics Finland, the unemployment rate in July 2018 was 6.5%, which is 1.0 percentage points lower than a year earlier. According to information published by the Ministry of Employment and the Economy, the number of unemployed persons in June 2018 was 47,000 lower than a year earlier. When preparing its budget for 2018 in August 2017, TVR estimated its result for 2018 to be EUR 409 million in surplus. In August 2018, TVR estimates that the number of unemployed jobseekers will continue to decrease during the second half of 2018. Furthermore, TVR estimates that its result for the financial year 2018 will show a surplus of roughly EUR 700 - 800 million and that its net position on 31 December 2018 will be approximately EUR 800 - 900 million.
The Board of TVR proposes lowering unemployment insurance contributions
Today, the TVR's Board of Directors decided on its proposal to the Supervisory Board concerning unemployment insurance contributions for 2019. It is proposed that the total contribution be reduced by 0.8 percentage points.
It is proposed that the unemployment insurance contribution of employees be set at 1.5 percent and an average of 1.5 percent for employers of wages. The lower employer contribution is 0.50 percent and the higher contribution 2.05 percent of wages.
At its meeting to be held on Thursday 30 August, the Supervisory Board of the TVR will discuss and decide on the proposal to be presented to the Ministry of Social Affairs and Health. The final contributions will be decided by Parliament later in the autumn.
Helsinki, 28 August 2018
Unemployment Insurance Fund
Board of Directors
Janne Metsämäki, Managing Director. tel. +358 40 522 3614
Tapio Oksanen, Deputy Managing Director, CFO tel. +358 40 539 4651
NASDAQ OMX Helsinki
The total contributions would therefore amount to between 2.4% and 3.0% of workers’ wages.
Report consists Annual Review, Financial Statements, Corporate Governance Statement and Remuneration Report.