A number of changes and cuts to unemployment and other social security benefits will be made during 2024. Legislative amendments will also affect the income of many artists. Viivi Kuosa, lawyer at the Artists’ Association of Finland, sheds some light on the implications of the changes and when they take effect.
The Government Programme plans a number of cuts to social security benefits. In December, Parliament passed the first of two legislative amendments concerning unemployment benefits as well as amendments concerning housing allowance, which will take effect in January-September 2024.
The other government proposal on changes to unemployment benefits is due to be submitted in February 2024. We will monitor the drafting of the legislation and notify of future changes when more detailed information on their content and schedule is available.
The legislative amendments will also have a negative impact on the incomes of many artists. The Artists' Association of Finland concurs with the statements made by Forum Artis, the national cooperation organ for Finnish artists' associations (links in Finnish at the end of this blog), on the changes and will continue its advocacy work as future legislative amendments are prepared.
Unemployment benefits
The waiting period before qualifying for unemployment benefit will increase from five days to seven if the first waiting day is on or after 1 January 2024.
The waiting period determines when unemployment benefit can start to be paid after the start of unemployment. Since the waiting period excludes Saturday and Sunday, the earlier five-day waiting period corresponded to a full week, whereas the new seven-day period corresponds to around one and a half weeks.
Holiday compensation payable at the end of an employment relationship will be phased if the employment relationship ends on or after 1 January 2024. Phasing would delay the start of qualifying for benefits.
If a person who becomes unemployed has untaken holidays at the end of a full-time employment relationship lasting more than two weeks, the holiday compensation paid for them delays the payment of unemployment benefit. This is known as phasing holiday compensation.
Since the phasing of holiday compensation and the waiting period do not run concurrently, the waiting period starts after the phasing of any holiday compensation.
The impact of the phasing of holiday compensation depends on how much untaken holiday the person concerned has. Holiday compensation is phased at the start of unemployment as follows:
The phasing of holiday compensation from paid employment is divided by the average daily pay from work = the number of days by which the start of the right to unemployment support is delayed.
The €300 exempt amount of adjusted unemployment benefit will be abolished. The exempt amount is not taken into account when calculating amount of employment benefit if the benefit application period starts on or after 1 April 2024.
The exempt amount means the amount of money an unemployed person can earn without any reduction in unemployment benefit. An unemployed person can currently earn €300 without the amount of benefit being reduced. The change will affect unemployed persons receiving adjusted unemployment benefit and mean there will no longer be an exempt amount and that any income from work will reduce unemployment benefit by €0.50 for every €1 earned.
Child increments to unemployment benefit will be abolished from 1 April 2024.
Child increments will be paid only for the first three months of 2024 and no longer be paid for unemployment days on or after 1 April 2024. The change will affect unemployed persons with children under the age of 18.
Prior work requirement will be extended to 12 months and start to accumulate based on the amount of earned income from 2 September 2024 onwards.
The prior work requirement will be extended by around six months to 12 months.
In addition, earned income paid during a calendar month counts towards the prior work requirement. Current prior work requirement accumulates based on a minimum of 18 hours of work in a calendar week. Going forward, the prior work requirement would be determined based on earned income of at least €930 in a calendar month. Going forward, also half months in which earned income is at least €465 but less than €930 would count towards the prior work requirement.
The length of the review period will remain unchanged at 28 months.
If a wage earner fulfils the prior work requirement by Sunday 1 September 2024 at the latest, the prior work requirement rules in force before 2 September 2024 will be applied.
An unemployed person fulfilling the prior work requirement for wage earners will be entitled to earnings-related unemployment allowance or basic unemployment allowance.
Other social security benefits
National Pension Index frozen as of 1 January 2024, which means that most benefits will not rise in line with the rise in consumer prices but remain at the 2023 level.
The freeze of the National Pension Index means that benefits, with some exceptions, will not rise in line with the rise in consumer prices. During 2024–2027, index increases will be made to only some Kela benefits.
However, if the upper limit of the index freeze is exceeded, i.e. the real level of benefits is reduced by more than 10.2%, normal index adjustments will again be made to benefit amounts.
The index freeze applies to the following benefits:
- labour market subsidy and basic unemployment allowance
- child care allowances
- study grant
- minimum amounts of rehabilitation allowance and sickness allowance under health insurance (sickness allowance, partial sickness allowance, parental allowance, special care allowance, tissue or organ donor allowance).
The index freeze does not apply to the following benefits:
- national pension
- guarantee pension
- survivors’ pension
- disability benefits
- basic amount of social assistance
- child maintenance allowance.
General housing allowance will be reduced. Most of the changes will take effect from 1 April 2024 and affect the household’s housing allowance when the allowance is next reviewed or when the allowance is granted to a household that does not yet receive housing allowance.
The following changes to general housing allowance apply from 1 April 2024:
- The €300 earned income deduction or the exempt amount will be abolished. Going forward, no earned income deduction will be made and all earned income will be taken into account when calculating the amount of income affecting housing allowance.
- The basic deductible will be increased from 42% to 50%.
- The compensation percentage of housing costs will be reduced from 80% to 70% based on the difference between acceptable housing costs and the basic deductible. This means that households will have to pay a larger share of housing costs themselves.
- Municipality categories 1 and 2 will be merged, which means a decrease in the housing allowance for Helsinki households.
In addition, general housing allowance will no longer be available for the housing costs of owner-occupied homes as of 1 January 2025.
The Government Programme includes entries under which an asset limit would be introduced for general housing allowance and the actual income of the self-employed person would be taken as the basis for assessing housing allowance for entrepreneurs instead of YEL earnings. Preparations on the relevant legislative amendments have not yet started and so will not enter into force in 2024.
Links:
Changes to Kela benefits in 2024
Statement by Forum Artis on the changes to unemployment benefits (in Finnish)
Statement by Forum Artis on changes to housing allowance (in Finnish)