1. Policy, economic and institutional/legal context in Finland

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1 Assisting the Disadvantaged Groups Statements and Comments Vappu Karjalainen STAKES, National Research and Development Centre for Welfare and Health 1. Policy, economic and institutional/legal context in Finland 1.1 Labour market context Finland is still recovering from the 1990ies depression which was the worst since the second world-war. Although promising recovery has taken place with record growth rates (over EU average) unemployment rate is still high (7.6 %). There is a tough structural unemployment component in Finland. The proportion of long-term unemployed is approx. 25 % (59 000) 1 of all the jobless people. The long-term unemployment has stayed high but the prospect will be declining in the next few years. Due to demographics Finland is entering a period of a generation change of the labour force. The change will be complex with a higher dependency rate and probable shortage of workforce in the long run. For the moment the improved demand and the growth of jobs start to have an effect and unemployment figures in all age cohorts (especially in the older 55+) have started to drop. The prospect is that unemployment will be under 5%. Employment rate is 67.1 and the target for that is over 70 % in the next few years. The employment policy in Finland develops in close connection with social policy and economics. The Nordic welfare state model has given a solid ground for a combination of competitive industry, large responsibility of the public sector, gender equality, general social security, good education, high research & development investment and consistency of politics. Economical growth in 2006 reached approx. 5.5 %. Social security expenditure has increased moderately and is of an average level for the EU. According to a comprehensive study 2 on the wellbeing of Finns the labour market position is the main factor explaining other components of welfare and it maintains the distinctions within the population. The disadvantaged groups on labour markets are the long-term unemployed, the disabled (on pension benefit or registered as unemployed jobseekers), the young people with difficulties to fix in education or work and the immigrants (refugees included). Compared to Malta the groups are mostly the same. Generally the biggest difference between the countries concerns the participation of women to the labour market. The employment rate of women in Malta is 33.7 % while the respective rate in Finland is 66% 3. 1 Statistics Ministry of Labour 2 Kautto, Mikko (ed.) (2006) Suomalaisten hyvinvointi Stakes. Helsinki. 3 Eurostat May 2007 Peer Review Assisting the Disadvantaged Groups 1

2 Because of the generation change and the prospect of shortage of labour force the issue of a workforce enlargement has emerged in Finland. The enlargement will involve e.g a challenge to recruit more of the disabled persons and the long-term unemployed to labour market. The same trend seems to be visible in Malta. 1.2 Relevant policy development The framework for Finnish labour market development has been Government Policy Programmes - Employment ( ). The Employment Policy Programme has provided a strategic and cross administration (Ministry of Labour, Ministry of Social Affairs and Health, Ministry of Education and Ministry of Trade and Industry) approach to labour market issues. The strategic objective of the Programme has been to reinforce the Government s political steering in matters concerning labour force development in the country. Lowering structural unemployment and ensuring the availability of skilled labour force are the shared objectives that have been pursued by coordinating the different resources and administrations. The Employment Policy Programme has been implemented by four subprojects: (1) Reforming the public employment service. Employment Offices service model has been developed by putting emphasis on self-services and services to employers in order to enhance brokerage between demand and supply. Early intervention and a kind of strong start to job-seekers have lead to setting up special job-seeking centres in employment offices. Joint services for the longterm unemployed have been set up on the other end of the service chain. 39 Labour force service centres (LAFOS) are established on local level with multiprofessional personnel delivering employment, social, health and activation services under the same roof (one-stop shops). Public employment service (PES) and municipalities are responsible for allocating resources (50-50) to LAFOS. LAFOS services are individually tailor-made for those long-term unemployed who are multi-agency clients and whose situation cannot be adequately supported by employment services alone. LAFOS has similarity to the Supported Employment Section in Malta. (2) Activation of labour market support is addressed to the long-term unemployed (who have received support for 500 days) in order to improve their activation. A refusal results in the withdrawal of support and a reduction of social assistance. So the definition of the rights and obligations of the unemployed job-seekers have been made clearer. (3) Developing adult education and training by directing resources at working life oriented training, education and guidance. Especially groups such as those with a low standard of basic education and ageing workers have been prioritized. (4) Extending careers of the aged by developing the quality of working life and make it possible for young people to start their careers earlier. From the point of the disadvantaged groups the policy development has been quite favourable. Especially the long-term unemployed have greeted the individually integrated services in LAFOS with satisfaction. On the other hand the evaluation of Government Employment Programme is in progress and the final results are not yet on tap. Preliminary analysis suggests higher activation rate and a light increase in employment rate of the long-term unemployed. Anyway, the Programme has had impacts on the welfare of the long-term unemployed. They get more often May 2007 Peer Review Assisting the Disadvantaged Groups 2

3 involved in health and rehabilitation services and the uninterrupted social support contributes to the stabilisation of life situation. The results 4 so far have opened up discussion on the relationship between employment policy and social policy. Are the targets of social policy congruent with those of employment policy? Could increased well-being of the client - without getting to job - be an approved outcome of the activation process as well? There are many similarities concerning the contents and the objectives of the recent policy between Malta and Finland. The Malta policy appears to place great emphasis upon education and gender equality of all the disadvantaged groups. The scale in organizing and delivering services is, of course, different between Malta and Finland. Because of long distances and scattered resources the Finnish model stands for networking and client-centred coordination of activities. 1.3 Institutional background Due to the size difference between the countries there are significant differences also between Maltese and Finnish institutional structures for dealing with employment and activation of the disadvantaged groups. Ministry of Labour (the scope of the ministry will enlarge in 2008) is the strategic body that supervises employment issues in Finland. Issues related to benefits, social support, health and rehabilitation of the disadvantaged groups are the responsibility of the Ministry of Social Affairs and Health and Social Insurance Institution. Training and skills are respectively the responsibility of the Ministry of Education. The strategy of the central administration is to co-operate cross-ministerially and negotiate for shared responsibility in issues concerning the disadvantages groups. On the local level the strategy has been more successful with the merging services in LAFOS. The Supported Employment Section within ETC seems to be the solution for coordination and intensive support strategy in Malta. It would be interesting to come to know to what extent the Section is prioritising horizontal collaboration and what kind of network models are under development. There seems to be lessons to be learned also to Finnish actors from the Ability Development Centre experiences in Malta. The role of the municipalities (total 416) is crucial in Finland. The municipalities as local authorities are responsible e.g for social and health services, basic education and activation of the most disadvantaged groups. The municipality is the main local partner for the employment authorities in planning and delivering services for the disadvantaged groups. 2. Potential transferability of the policy to Finland 4 Robert Arnkil, Vappu Karjalainen, Peppi Saikku, Timo Spangar, Sari Pitkänen (2007) Public Employment Services in Finland Today and Tomorrow. English summary of the intermediate evaluation of the Finnsih public employment service reform May 2007 Peer Review Assisting the Disadvantaged Groups 3

4 The reports by Godfrey Baldacchino and Felix Borg describe the development that has many parallels with the Finnish situation. Especially the question ' how to extend the labour force in a flexible and effective way in coming years' is a challenge to both countries although in different scale. There is growing evidence of labour and skill shortages in future and the issue is how to facilitate transition from unemployment or disability benefit to (open) labour market. The renewing recruitment of disabled people to labour market is a challenge in the Finnish employment and activation policy. According to a recent research 5 one third of the disabled (handicapped) people had good or excellent work ability and 40 % appreciate work or transition to labour market. More focused supporting schemes in entering labour market are needed (e.g more generous incentives for both the employers and the clients). A disabled person who is on pension can by law leave his/her pension 'to rest'. Economical incentives and more focused service support would facilitate the disabled persons (as well as the long-term unemployed) to make the transition to labour market. From this point of view Bridging the Gap Scheme of Malta is interesting. The experiences of policy evaluation in Malta emphasize for more external evaluation and individually focused longitudinal studies. In Finland the importance of policy evaluation is highly appreciated and the Ministry of Labour and Ministry of Social Affairs and Health have put out to tender evaluation projects. The current evaluation covers both the evaluation of the implementation and the impact of the Government Employment Programme ( ). Realtime evaluation of the Programme implementation has produced valuable feed-back information for the central administration and contributed in the assessment of the relevance of the national employment strategy. Dialogic learning arenas arranged between the researchers, the authorities, the workers and other experts have proved to be supportive when developing activation networks and multisectoral service delivery. The impact mechanism of the employment policy is complex and difficult to prove. Great emphasis has been put upon evidenced based results and good practices derived from them. Quantitative analyses alone, however, give quite simplified picture about the activation and employment processes. The challenge is to integrate different methodological approaches in evaluation in order to get multifaceted and more realistic understanding over the activation phenomenon. Godfrey Baldacchino is after tracer studies which are qualitative and longitudinal analysis producing data about individual transition processes and working as a complimentary element to that of statistical data. We in Finland share this kind of aspirations in developing the evaluation of employment policy. We need more detailed information about what works and how the local operating network really can facilitate the individual employment process. 5 Holm, Pasi & Hopponen, Anneli (2007) Vammaisten työkyky vuonna Pellervo Economic Research Institute Reports No.202. Helsinki May 2007 Peer Review Assisting the Disadvantaged Groups 4

5 3. Current policy issues in Finland Finland General Election was held in March Centre and conservative parties have majority in the new Government and the social democrats are in opposition after being in power for twelve years. The Ministry of Labour will be merged with the Ministry of Trade and Industry and a new large Ministry of Employment and Industries will be established in the beginning of The foreseeable policy will more strongly emphasise activation and employment of the long-term unemployed and other disadvantaged groups. It is possible that the "creaming" effect will emerge and the most vulnerable groups possibly drop out of service networks to benefits (labour market support and/or social assistance). In good scenarios the work-oriented policy development will continue involving also human capital approaches by supporting the disadvantaged groups with a wide range of individually arranged services. In this kind of policy process the following issues are crucial: How to develop intermediate labour markets so that they on one hand give support and open up a possibility to entering open labour market and on the other hand provide an alternative work for those who have severe problems and long path back to labour market? Potential of the social enterprises? Increase of the low productivity jobs? How to integrate LAFOS -services and intermediate labour markets in order to provide sustainable solutions for the disadvantaged groups? Which are the main components of a route to active citizenship and sustainable employment? Are there meaningful activities for an unemployed citizen e.g on the third sector and are those activities an acceptable arrangement instead of paid work for the most vulnerable people? Which authority or a combination of authorities should be responsible for that kind of development? What will be the role of municipalities in the long run in activation and employment of the disadvantaged groups? How to maintain and elaborate the shared responsibility of the municipalities and the state (labour administration) in activation and employment? How to address early support and holistic interventions to those who are on long sick leave or get redundant when factories are closed down or shifted abroad? May 2007 Peer Review Assisting the Disadvantaged Groups 5