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On 29 August 2019, the Supervisory Board of the Employment Fund has approved the Fund's budget for 2020 and decided to propose changes in unemployment insurance contributions to the Ministry of Social Affairs and Health as follows:
The Employment Fund proposes that the total contribution be reduced by 0.49 percentage points. The average contribution for employers would be reduced by 0.24 percentage points and the employee contribution by 0.25 percentage points. This would take the average unemployment insurance contribution for employers to 1.26 per cent and the employee contribution to 1.25 per cent of payroll in 2020.
According to the proposal, the lower contribution would be 0.45 per cent of payroll (employer’s total payroll a maximum of EUR 2.1 million per annum) and the higher contribution would be 1.70 per cent (for the total payroll exceeding EUR 2.1 million).
The Fund’s net financial position (business cycle buffer) is estimated at nearly EUR 1.5 billion at the end of 2019. The maximum amount of the buffer would, according to a legislative amendment proposed by labour market organisations, be approximately EUR 1.75 billion from the beginning of next year. The expenses and benefits financed by the Fund in 2020 will be slightly higher than in 2019. The annual result of the Employment Fund is expected to be positive in 2020.
The slowdown of Finnish economic growth may indicate a slight increase in unemployment. According to the Employment Fund’s budget, the unemployment rate will be approximately 6.7 per cent in 2019 and 6.9 per cent in 2020. The Fund estimates that the significant decline in unemployment between 2017 and 2019, as well as the accumulation of the Fund's net financial position and good annual results, will make it possible to reduce unemployment insurance contributions.
Parliament legislates on unemployment insurance contributions annually.
|Employment Fund’s budget for 2020|
|Amounts, %||2018||2019e||Budget 2020|
|Unemployment rate, %||7.4||6.7||6.9|
|Change in total payroll amount, %||4.7||4.0||3.2|
|Unemployment insurance contribution, %, employers, average||1.91||1.50||1.26|
|Unemployment insurance contribution, %, employees||1.90||1.50||1.25|
|Key financial figures, EUR million *|
|Unemployment insurance contributions||3,020||2,481||2,122|
|Other income **||774||717||746|
|Financed expenses and benefits||-2,922||-2,719||-2,761|
|Change in net position||872||480||107|
|Maximum amount of buffer||2,032||2,091||1,757|
* 2019 figures are unaudited
** Contributions from the Ministry of Social Affairs and Health
Source: Employment Fund, Statistics Finland
Helsinki, 29 August 2019
Chief Financial Officer
Markku Jalonen, Chairman of the Employment Fund’s Board of Directors, tel: +358 40 547 7710 (amount of payments)
Janne Metsämäki, Managing Director, tel. +358 40 522 3614
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The Employment Fund proposes that the total contribution be reduced by 0.49 percentage points.