The lower income limit required to obtain entrepreneurs’ unemployment security will also change next year as a result of a change in the correction coefficient applied. The lower income limit for accumulating the work requirement set for entrepreneurs is Euro 14,088 per year.

In other words, as an entrepreneur, you are covered by unemployment security and you can buy insurance from the Entrepreneur Fund, if the work income which your pension insurance (YEL or MYEL work income or partial business owners’ TyEL salary) is based on is at least Euro 14, 088 per year.

There will be no change in the Entrepreneur Fund’s membership fees next year, even though the fund does expect benefit expenses to go up as a result of the prevailing uncertain global situation. Our membership fee is 2,1 % of the share of your annual work income exceeding € 5,800.

According to Fund Manager Merja Jokinen, it is possible to keep membership fees unchanged since the fund has taken measures to assure its strong financial position.

“We have been working systematically to enhance the fund’s solidity to a level where a surprising unemployment growth will not put pressure on increasing membership fees in the short term. We are happy to be able to keep our current membership fee levels in this uncertain global situation“, Merja Jokinen says.

According to Merja Jokinen, unemployment among Entrepreneur Fund members has declined to a remarkable extent as compared to last year.

” In October, the Entrepreneur Fund paid income-related daily allowance to 651members, i.e., the unemployment rate among our members was 2,3 %. In October last year we paid daily allowance to 860 members. Even though we have not yet had any information to suggest more challenging conditions for entrepreneurial work, I do look into next year with some concern. High inflation, increased interest levels and electricity prices, as well as declined consumer confidence, have traditionally been signs of recession. Next year, we expect our benefit expenses to increase about 12 % compared to this year”, Merja Jokinen says.

The Entrepreneur Fund’s membership fee is an annual fee to be confirmed annually by the Financial Supervisory Authority. In 2023, the minimum work income (Entrepreneurs’ annual YEL/MYEL work income or partial company owners’ annual TyEL salary) to meet the work requirement for entrepreneurs is €14 088 per year. On this income level, the tax-deductible membership fee will be € 174,05, i.e., € 14,50 per month next year.

An extra index amendment will be made to affect social security benefits linked to the National Pensions Index on August 1, 2022. As a result, daily allowances, among other, will increase from € 34,50 to € 35,72.

In addition to the basic daily allowance, this extra index amendment will affect the amounts of increased component applicable to basic daily allowance, labour market subsidy, increased component applicable to labour market subsidy as well as child increases. Accordingly, income-related unemployment daily allowances, job alternation compensations, start-up grants and commuting and relocation allowances will also increase. In other words, the index amendment will increase the basic component equalling the basic daily allowance, which is used to calculate income-related daily allowances.

Index amendments are typically made at the turn of the year. However, this spring the Finnish Parliament approved a legislative initiative, based on which benefits linked to the National Pensions Index will increase by 3,5 percent now in August. The purpose of this extra index amendment is to safeguard benefit receivers’ solvency as inflation accelerates.

The below table shows how benefit levels, amounts and decreases will change starting August 1, 2022. For more information, please visit the websites of the Finnish Government.

Parliament has taken a decision on temporary amendments to the Unemployment Security Act. These amendments enable unemployment benefits to be paid starting from the first day of unemployment, without observing a five-day self-risk period during which no benefits would normally be paid. In addition, Kela can pay labour market subsidy to entrepreneurs during ongoing entrepreneurial business.

The law amendments will remain in force over the time period January 1 through February 28, 2022.

Self-risk time

Based on the amendment, payment of daily unemployment allowance starts on the first day of unemployment, i.e., without a five-day self-risk period. Normally, a five-day self-risk period without unemployment benefit would apply. For people working partially, the self-risk period is based on days of unemployment or lay-off.

The amendment concerning self-risk time is applicable in cases, where the first day of the self-risk period falls within the time period January 1 through February 28, 2022.

Please note that the amendment does not concern self-risk periods which have started in December or earlier, even though a part of the self-risk period would fall within January or February. Accordingly, unemployment benefits may be paid during self-risk periods falling within March or later, as long as the first self-risk period day has been in February.

Labour market subsidy for entrepreneurs

In accordance with the law amendment, entrepreneurs may be paid a labour market subsidy by Kela, in case their business income has been reduced as a result of the corona pandemic. However, labour market subsidy can be granted only in case a limit income of € 1,104 per month per person working for the company in an entrepreneurial position is met.

Benefits can be paid retroactively

In cases where unemployment has started on January 1, 2022, those concerned may already have received their first decisions on income-related allowance. In such cases, benefit payments to cover the self-risk period could not be granted at the time when the decision was made, since the law amendment was still in process. The remaining share covering the self-risk period will be paid as soon as the law amendment has been confirmed. Unemployment funds will take care of such retroactive payments without separate request.

For entrepreneurs, YEL work income forms the basis for pension and other social security. In 2022, the lowest possible pension insurance annual work income to accrue entrepreneurs’ work requirement is Euro 13,573 (Euro 13,247 in 2021). If your pension insurance (YEL or MYEL) annual work income was Euro 13,247 or below last year, your work income has not been automatically updated by your pension insurance company to meet the minimum requirement for 2022 but will be slightly below that amount after the index increase. Please contact your pension insurance company in order to update your pension insurance level to meet your need for 2022.

The Financial Supervisory Authority has confirmed the Entrepreneur Fund’s proposal for membership fee for 2022. As per our proposal, next year our membership fee will be 2,1 % of the share of any yearly work income exceeding Euro 5,800. So, at its lowest, the Entrepreneur Fund’s tax-deductible membership fee will be Euro 13,60 per month, i.e., Euro 163,23 per year.

According to Fund Manager Merja Jokinen, lower unemployment rates as well as favourable economic development within the fund enabled lowering membership rates. Among fund members, unemployment rates did not burst to meet the worst expectations during the corona period, and general unemployment rates have clearly declined. Right now, unemployment rates are on the same level where they were during the later part of 2019, before the corona pandemic hit.

”Economic outlooks for 2022 are also moderately good, and we do not expect unemployment rates to pick up to any significant extent during next year”, Merja Jokinen says. 

Along with reduced unemployment numbers, Merja Jokinen underlines the fact that the fund’s economy is on a solid basis. ”We have been working systematically to enhance the fund’s financial solidity to a level, where surprisingly increasing unemployment rates will not put pressure to increase membership fees on a short-term basis”, Merja Jokinen says.

”We also try to keep our membership fee as stable as possible to avoid any surprising yearly increases”, the Fund Manager continues.

According to Merja Jokinen, any grounds for reducing membership fee levels are always based on careful consideration in order to avoid having to go back to increased fees next year. ”The corona period was exceptional and a source of uncertainty, but we strongly believe that we will slowly be going back to more normal conditions.” 

Increased lower limit for entrepreneurs’ unemployment security

The lower income limit required to obtain entrepreneurs’ unemployment security will also change next year as a result of a change in the correction coefficient applied. The lower income limit for accumulating the work requirement set for entrepreneurs is Euro 13,573 per year. In other words, as an entrepreneur, you are covered by unemployment security and you can buy insurance from the Entrepreneur Fund, if the work income which your pension insurance (YEL or MYEL work income or partial business owners’ TyEL salary) is based on is at least Euro 13, 573 per year.

Examples of work income, membership fee and daily allowance in 2022

In accordance with the above decision by the Financial Supervisory Authority, next year, our membership fee will equal 2,1 percent of the share of your yearly work income exceeding Euro 5,800, which your unemployment insurance is based on. What is the easiest way to find out what this means in your case? There is a simple calculation formula.

Example: If your yearly work income is Euro 20,000, first deduct the sum 5,800. Now you have 14,200, of which 2,1 percent is 298,20. This amount, Euro 298,20, will be your yearly membership  fee. Membership fees are deductible in your personal taxation.

Daily allowance paid by the fund is inclusive of basic daily allowance, Euro 34,50. Unemployment daily allowance receivers supporting children under 18 years will be paid daily allowance plus child increase, which amounts to Euro 5,41 for one child, a total of Euro 7,95 for two children and a total of Euro 10,25 for three or more children.

In June 2020, the exempt amount observed within unemployment security was increased to Euro 500 by way of temporary law amendment. Starting December, the exempt amount will be back to Euro 300. The change takes force according to application period start date. This means that the exempt amount Euro 500 will still apply to application periods starting no later than November 30, 2021. For application periods starting December 1, 2021, or later, the exempt amount will be back to Euro 300 (€ 279 per four weeks).

Exempt amount refers to the extent of income from part-time work or short-term jobs, or income from part-time entrepreneurial work, which do not affect your daily allowance. For the part that your salary exceeds the exempt amount, each Euro earned cuts your allowance by fifty cents. More information about adjusted daily allowances: https://yrittajakassa.fi/en/did-you-become-unemployed/during-unemployment/how-do-part-time-and-full-time-work-affect-your-allowance/

Regulations for the commuting and relocation allowance back to normal

Unemployed persons may qualify for a commuting and relocation allowance, if they accept employment involving a workplace located far away from their current place of residence. The commuting and relocation allowance amounts to Euro 726 -1 045 per month. Allowance can be paid for a maximum of two months.

By way of a temporary law amendment, travel time requirement for a two-way commuting distance was reduced from three hours to two hours for full-time work. For part-time work, the commuting distance has already been two hours. You meet this two-hour commuting distance if your travel time to work, one-way, is more than one hour.

Regulations for the commuting and relocation allowance will go back to normal, and a commuting distance of three hours will be required again for full-time work starting December 1, 2021. This change takes force according to start date of employment contract. For employment contracts starting no later than November 30, 2021, a commuting and relocation allowance may be obtained for full-time work based on a commuting distance of two hours. For employment contracts starting December 1, 2021, or later, the commuting distance requirement will be three hours.

Parliament has approved a law amendment, according to which the provisions regarding increased exempt amount will continue to end of November. Eased requirements regarding commuting and relocation allowances will also continue.

Exempt amount means that earnings-related daily allowance receivers may earn € 500 per month (€ 465 per four week application period) until earnings start affecting their daily allowances. For earnings exceeding € 500, each euro earned will reduce the daily allowance by 50 cents. Without increase, the exempt amount is € 300 per month.

According to the law amendment, the exempt amount € 500 concerns application periods starting no later than November 30, 2021. Accordingly, for application periods starting December 1, 2021 or later, the exempt amount is € 300.

You may use our calculator to get an estimation on how part-time work or short-term jobs affect your daily allowance.

The calculator observes the exempt amount € 500, and also shows how salaries exceeding the exempt amount as well as maximum and minimum amounts affect your daily allowance. Maximum amount means that the total of daily allowance and paid work cannot exceed the salary, which your earnings-related daily allowance is based on. Minimum amount means that the amount of daily allowance must always at least equal the amount which would be paid as a basic daily allowance by KELA.

Travel time requirement for commuting and relocation allowances to remain at two hours

Unemployed persons may qualify for a commuting and relocation allowance, if they accept employment involving a workplace located far away from their present place of residence. The commuting and relocation allowance is between € 726 and € 1045 per month. Allowances can be paid for a maximum of two months.

By way of this temporary law amendment, the travel time requirement for a two-way commuting distance has been reduced from three hours to two hours. This amendment applies to full-time work. For part-time work, the commuting distance has already been two hours. You meet this two hour commuting distance if your travel time to work, one-way, is more than one hour.

As a result of the law amendment, a commuting and relocation allowance for full-time work can be obtained based on a commuting distance of more than two hours, providing that your employment relationship starts no later than November 30, 2021. For employment relationships starting December 1, 2021 or later, a commuting distance of three hours applies.

The Finnish Parliament has approved a law amendment, based on which entitlement to labour market subsidy for entrepreneurs alongside ongoing entrepreneurial business will continue. Even with ongoing business, entrepreneurs may be entitled to a labour market subsidy from Kela, in case their business revenue has decreased as a result of the corona virus pandemic. Kela can pay a labour market subsidy to entrepreneurs until November 30, 2021.

The Entrepreneur Fund can nevertheless pay an earnings-related daily allowance only to fund members who have terminated their entrepreneurial business.

In order to be paid a labour market subsidy or an earnings-related daily allowance, applicants must register as jobseekers with the TE Office online. Benefits can be applied for retroactively for as long as three months, but benefits can be paid only for time periods when applicants have been registered with the TE Office.

Under which circumstances can entrepreneurs be paid a labour market subsidy?

Entrepreneurs can be temporarily entitled to a labour market subsidy based on a sudden and unexpected decline in market demand as a result of the corona virus pandemic. Labour market subsidy is a form of employment benefit.

A labour market subsidy can be paid, if

• an entrepreneur’s fulltime work has ended, or
• revenues from entrepreneurial business are below € 1,089,67/month per person working for the company in an entrepreneurial position.

Full-time work must have ended, or revenues must have been reduced as a result of the coronavirus pandemic. Payment of this subsidy does not require entrepreneurial business to be terminated.

In order to be paid a labour market subsidy, applicants must register as jobseekers with the TE Office, and the TE Office must give its labour market policy statement to Kela regarding each applicant’s entitlement to labour market subsidy. Each applicant can then proceed to apply for a labour market subsidy from Kela. More information: https://www.kela.fi/tyottomyysturva-yrittaja

Positive economic and employment developments are expected to take off once a sufficient number of residents have been vaccinated. Recent news has served to weaken trust and subsistence in to bear with the ongoing situation. Right now, increased efforts in Finland and the EU to improve the situation beyond what we can actually see in public would be needed.

The Entrepreneur Fund did well in 2020. We increased our staff resources right away in spring and were well prepared for an increase in benefit payments. Support measures put in place for entrepreneurs were a great help for our members. Businesses were not terminated to any large  extent. Our members mainly made use of the € 2,000 support available to sole entrepreneurs and labour market subsidy provided by Kela.

As a whole, we paid out benefits to 1,657 members, as compared to 1,594 last year. On a monthly basis, we paid out benefits to 734 members in January and to 976 in December. We are still finalising our calculations concerning extent of employment periods, but periods of unemployment have been clearly longer than last year.

We paid out some € 14,6 Million in benefit, which is 14 % more than € 12,6 Million last year.

Increasing membership count

When the corona pandemic started in March, we could see a burst of new membership applications – 650 new members joined the fund. The monthly average for the whole year was 430 new members. In all, 5,000 new members joined. This was our best outcome after the so-called new conditions took force in 2015, i.e., when there was a substantial increase in the lower limit for YEL work income required for membership. Our membership count is now approaching 31,000.

Entrepreneurs had to face the fact that successful business is not due to one’s own measures only, external factors can have a dramatic affect. Some 4,500 memberships were terminated. The main reasons for resigning the fund were salary work and retirement.

As a whole, there has been clear improvement in recognition and awareness and the Entrepreneur Fund is in a good position to continue its operations. 2021 does seem a little diffuse, but we are prepared for a strong unemployment increase. Yesterday brought some good news: the temporary labour market subsidy for entrepreneurs will continue until end June. It would be important to arrange for one more application round for the support available to sole entrepreneurs as well.

Now the entire population is becoming seriously exhausted and the situation seems unbearable. Listening to our entrepreneurs is important. Government measures are of central importance, but more should be done. All of us working in the entrepreneur field do all we can to contribute to keeping companies up and running. My sincere wish to all entrepreneurs all over the country: Stay together, stand up for your staff and your business – this helps us all to keep going!

Wishing you plenty of fighting spirit,

Merja Jokinen

Fund Manager

Entrepreneur Fund