It went to 2000 people already getting unemployment benefits.
> It was run by the Social Insurance Institution (Kela), a Finnish government agency, and involved 2,000 randomly-selected people on unemployment benefits.
So I'm curious what affect that had vs the general population's approach to finding employment. Particularly young people who may have never had a job before.
Finland is going to selecting 2,000 unemployed individuals, at random, and offering them cash without strings. Current unemployment schemes, they believe, hold back individuals from finding part time work / any work because the benefits outweigh the job opportunities. They hope that this new scheme promotes people to take work and have an adequate safety net to prevent homelessness and hunger.
"The Nordic social welfare champion spent the last two years handing out 560 euros ($635) per month to a randomly selected group of 2,000 jobless people aged between 25 and 58."
They were selected from a group of people who received a form of unemployment benefit called "työmarkkinatuki". Without going into too much details, it meant that almost all of them had been unemployed for at least two years. And that means that huge chunk of them (I would guess that overwhelming majority) are basically unemployable because they have some limitations (physical of mental) or they do not have any education.
On the other hand, there are about 213 000 officially unemployed and 140 000 "hidden unemployed" with an employed workforce of 2 413 000. Worse than that, the benefit dependency has now started to become intergenerational. About one fifth of Finnish young men (20-24) are "NEET" (Neither in employment nor in education or training). To exaggerate a bit, they don't mind living on benefits as they have enough for housing, food and computer games, or whatever they do.
The problem with welfare system's pockets of >100% marginal tax are not only related to money in the long term. It's also that the payment of benefits is interrupted very quickly upon the employment office learning of someone getting any job (even temporary and part time) and resuming payments is slow. So although the money is evened out in the longer run, people who take a job tend to have short-term cash flow problems. They really suffer for taking a job, and that is wrong.
BI would help in that, but as a long-term solution on population level the equation looks unsolvable.
I'll be interested to see how this plays out because it sounds like the current "welfare" in Finland is similar to that in the states, where getting a job equates to taking a paycut (because you no longer qualify) so why work (which is a constant argument).
I like the idea of a system that still has incentives for people to work but doesn't leave them hanging if they can't find a job.
The worst part of the unemployment benefit in Finland is not even the losing assistance if you take some job for a time. In the long run the payment will even out at least a little bit. It's the short run cash flow problem that really stops people from taking a job, as the jobseeker's allowance is cut immediately upon the employment office learning of someone having a job.
It's already a problem that the benefits are such that net income from an actual job may be negative. But even with that, people might take a temporary job to get the experience. But they cannot afford it, because getting a job cuts the benefit payment instantly, and they can't afford to wait the time that it takes the bureaucracy to resume payments.
That's actually a very weak part of the article. Finnish state unemployment benefits, even for the people refusing to seek employment, are bigger than students' grants. You are uneligible for unemployment benefits as long as you are eligible for students' grants. So while the grants may sound high to some, they are actually a scheme to discourage you from taking too much time studying.
TLDR: Two unemployed people are shown, each receiving 560€ a month with no strings attached. For comparison, median income in Finland is 2900€.
The woman doesn't seem to have learned any trade (at least it's not mentioned) and has only ever worked briefly at a factory. She took a job as a telemarketer that she liked. As the program ends, her financial situation will be unsustainable.
The man used to be a journalist and has been unemployed for five years. He's still unemployed after the program ends and will now have to "deal with bureaucracy again".
Unemployment benefits are more than $560 per month in Finland apparently, so this wouldn't be able to replace that (certainly not in a way which makes the administrative cost unnecessary).
>The unemployment benefit is 400+ euros per month. So tell me who in their right minds would go to work for 500 euros
Is there a limit to how long you can collect unemployment? In Finland if you still haven't found a job in about a year, you stop getting payments altogether. And while getting payments, you still have to prove that you're actually searching for a job and not just trying to scam taxpayers.
I'm not familiar with the Swedish system but in Finland the unemployment benefit depends on whether you paid an unemployment insurance fund a membership fee during your employment. It's something like an insurance except the fees don't cover most of the costs and the state covers them instead.
> How much do social welfare and unemployment programs pay out in Finland?
Minimum of 485,50€ and 705€ per month respectively. So 800€ isn't much more than any unemployed would get anyway. If you have any previous employment then your unemployment benefits will be (much) higher.
In Finland, it's a combination of two things. First, there's near-free education. Second, an under 25yo person is not eligible for unemployment benefit until they have completed a vocational/college/university degree or are participating in a training program.
Whether that actually works to useful effect, or just cleans up the NEET statistic, is up for debate.
I don't think the woman slacked, she did get a job, but she was living above her means when it was clear that the program would end at some point.
I also think that this is exactly what this kind of UBI will do: Subsidize low-paying jobs.
The man on the other hand seems to have this outlook that since he used to be a journalist, if he doesn't get another job as a journalist, he'll get to collect unemployment benefits indefinitely.
I wonder if that's him gaming the system or if that's really how the system in Finland works.
> because the state unemployment benefit offices are steeped in bureaucracy and aren’t processing these claims fast enough
When Norway went into lockdown, they predicted a similar problem. We have decent unemployment safety nets here, but the process takes a bit of time and the fear was that the bureaucrats would not be able to process the applications fast enough.
However they rose to the occasion and managed to come up with an online-based solution in 3 days. There's an interesting write-up here[1] (in Norwegian, but Google Translate should do a decent enough job).
A key point was that the legal department managed to find some wiggle room in the rules to allow them to pay out in advance of the application getting officially approved. However there was also some legacy systems to contend with, and of course the web site had to be secure since it had to process our equivalent of social security numbers etc.
The result was that in a few days they processed more applications than they typically do during a normal year, and people got their money.
The specific mechanism is 'basic social assistance / income support'. It is a minimum amount of money that everyone has the right to, and is tied to your actual living expenses. To receive it one has to apply for it, a number of months at a time (varies, 1-6 months usually), and provide your bank account statement indicating that you've received no money from anywhere else (other income is subtracted), and you must send your bills as they come to receive matching compensation.
What you need to understand is that the institution handing them out, Kela, naturally must appear scary and imposing, impenetrable bureaucracy. Because simply giving out money is faux pas. So they have to use language like "this is a last resort emergency support you must only seek when all other options are exhausted". In reality, you simply refuse service from the unemployment office and they'll gladly hand you your benefits without complaint.
If they decline or give you less than you're entitled to (very rare), you simply complain to the complaints processing department and they got you covered. Personally I've never had much trouble.
There is a heavy cultural sentiment for "mooching off the government" in this manner. But my back of the envelope calculation indicates that every bum in Finland receiveing these benefits costs the average taxpayer about $1/month. Some of these people literally do nothing but drink beer for the full amount. I'm working on turning my life-long passion hobby into a career.
The Finland trial replaced existing unemployment insurance with a no-conditions payment of about the same value. No extra expense, in fact it would have been cheaper to administer since there was no compliance paperwork to process and police.
There were many anecdotes from employers complaining about unemployment benefits, but the systematic data collection gave mixed evidence. I concluded the impact varied across industries.
The experimental outcome is actually indirect evidence against the view that traditional unemployment insurance makes people a lot less likely to get a job, at least in this specific experimental population. This is interesting news - it suggests that unemployment benefits works so well already that incentive effects just aren't hugely important, at least not to the extent that you'd find a statistically-detectable difference by giving UBI instead.
> It was run by the Social Insurance Institution (Kela), a Finnish government agency, and involved 2,000 randomly-selected people on unemployment benefits.
So I'm curious what affect that had vs the general population's approach to finding employment. Particularly young people who may have never had a job before.
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