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This release is a summary of Employments Fund’s Half-Year Report January–June 2019. The Half-Year Report in its entirety is attached to this release and available at website https://economy.employmentfund.fi/.
• Total unemployment insurance contributions and other income: EUR 1,720 (1,916) million
• Total unemployment benefits and adult education allowances paid and administrative expenses incurred: EUR 1,356 (1,611) million
• Change in net position (half-year): EUR 371 (303) million
• Net position: EUR 1,345 (31 Dec 2018: 969) million
• Total investments and assets: EUR 2,103 million (31 Dec 2018: 1,687) million
• Total raised debt and other liabilities: EUR 758 million (31 Dec 2018: 718) million
• Unemployment rate: 6.2% in June 2019 (June 2018: 6.7%)
• Return on investments: 0.7% (0.1%)
On 1 January 2019, the Unemployment Insurance Fund and the Education Fund were merged to form the Employment Fund. The new Fund was tasked with handling the statutory duties of both of the previous funds: collecting unemployment insurance contributions, financing earnings-related unemployment security, and granting and paying adult education allowances.
The merger was executed as planned. A lot of work has been done to ramp up the new Fund. In the first half of the year, this has included building a new organisation for the Fund and taking measures to implement the Employment Fund’s strategy.
Since the beginning of 2019, the Employment Fund has made use of data from the Incomes Register when it levies and collects unemployment insurance contributions. The transition to the Incomes Register was successful. Preparations are now being made for the introduction of the Incomes Register for adult education allowances. The Fund is also involved in preparing the adult education allowance reform, which will take effect in 2020.
Finland’s economic growth has slowed since the start of 2019. At the same time, the outlook for the future has become less certain and more difficult to forecast. Despite the deteriorating economic climate, employment has increased, and unemployment continued to decline throughout the first half of the year. However, the slowdown in economic growth may be reflected in employment trends later on this year or next year.
The labour market organisations made a submission to the Ministry of Social Affairs and Health in June proposing that the maximum amount of the business cycle buffer be set at six per cent of the expenses incurred by the Fund as a result of the unemployment rate – amounting to approximately EUR 1.75 billion – as of the beginning of 2020.
The growth of the Finnish economy began to stall in the first half of 2019. Employment has continued to improve, and the number of unemployed jobseekers has been on the decline. Payroll growth has been good, and the amounts of earnings-related unemployment benefits and daily allowances have reduced significantly. This trend is expected to level off in the second half of the year. Recently, signs have emerged to indicate that the risk factors and challenges associated with international trade have led to a weakened outlook for exports, and the trend in overall production has shown signs of deceleration. Traditionally, cyclical economic fluctuations have been reflected in the Employment Fund’s operations with a delay of about six months.
In 2019, the total amount of unemployment insurance contributions is 3.0 per cent of pay, while the corresponding amount in 2018 was 3.8 per cent. During the period under review, the amount of collected contributions decreased by 10 per cent year-on-year. Meanwhile, unemployment benefit payments fell by 16 per cent. The result at the end of the review period was a surplus of EUR 371 million, which represents an improvement of EUR 68 million year-on-year.
Adult education allowances have grown in popularity since the corresponding period last year, while the number of applications for scholarships for qualified employees has declined. In the period from January to June, the Employment Fund received 16,718 (15,372) applications for adult education allowances and 18,591 (21,251) applications for scholarships for qualified employees.
Based on the information published by Statistics Finland, the unemployment rate in June 2019 was 6.2 per cent, which is 0.5 percentage points lower than a year earlier. According to information published by the Ministry of Economic Affairs and Employment, there were 19,000 fewer unemployed jobseekers at this time than in the preceding year. In August 2019, the Employment Fund estimates that the number of unemployed jobseekers will stop decreasing in the second half of 2019. Furthermore, the Fund estimates that its result for the financial year 2019 will show a surplus of roughly EUR 500 million and that its net position on 31 December 2019 will be approximately EUR 1,500 million.
Helsinki, 27 August 2019
Board of Directors
Janne Metsämäki, Managing Director, tel. +358 (0)40 522 3614
Tapio Oksanen, Chief Financial Officer, tel. +358 (0)40 539 4651
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The Employment Fund proposes that the total contribution be reduced by 0.49 percentage points.
The new year got off to a strong start for the Employment Fund. The result at the end of the review period was a surplus of EUR 371 million.