Parliament has approved the remaining part of the law amendments planned for this year to affect unemployment security. Among other, the most recent law amendment package enables gradation for earnings-related unemployment allowances. Initially, gradation will affect all receivers of earnings-related unemployment allowance, entrepreneurs included.

Gradation for earnings-related unemployment allowances means that future unemployment security amounts will be reduced as follows

• to 80 % of the original amount, once unemployment benefits have been paid 40 days and further
• to 75 % of the original amount once, unemployment benefits have been paid 170 days.

Earnings-related daily allowance is paid for a maximum of five days per week, so 40 benefit days means about two months and 170 benefit days about eight months.

Earnings-related unemployment allowances will be gradated in case the work requirement, based on which earnings-related daily allowance is paid, can comprise work in accordance with the new eurorised model for September 2024 or later. For entrepreneurs, this means that business operations must have ended, and unemployment must have started as of September 2, 2024 or later.

The change does not affect daily allowance periods already started.

We will include gradation in our daily allowance calculator in autumn.

Wage-earners’ work requirements to be extended, work requirement to become income-based

In addition to gradation, wage-earners’ work requirement will be extended from present six months to 12 months starting September. Wage-earners’ work requirement will also be eurorised, i.e., based on income. In the future, wage-earners’ entitlement to daily allowance will be assessed based on salary earned before unemployment, not on actual work hours.

Parliament has approved a law amendment according to which provisions regarding extent of unemployment security will be cut and entitlement to benefits restricted. Changes will partly take force at the beginning of 2024, while some changes will start affecting benefit amounts and entitlement to benefits later in the course of 2024.

This is the first of a total of two law amendment entities to affect unemployment security. A second government proposal concerning changes to unemployment security is due to be presented in February 2024. This second law amendment entity comprises gradation for earnings-related daily allowances and discontinuation of age-related exceptions.

Self-risk periods to extend starting January

The law amendment will extend the self-risk period from five days to seven days. Self-risk period refers to a number of days at the start of unemployment, which do not qualify for earnings-related daily allowance.

Holiday allowances will also start affecting entitlement to earnings-related daily allowances starting January. If you have been employed full-time for a minimum duration of 2 weeks and this employment ends, your paid-out holiday allowances will be periodised.

Holiday allowance periodisation and self-risk periods do not elapse in parallel. Self-risk periods start after holiday allowances have been periodised, if applicable.

Child increases and exempt amounts to be discontinued starting April

Payment of child increases applied within unemployment security will be discontinued at the beginning of April. Accordingly, child increases will be paid for January to March only next year.

The current exempt amount € 300 applicable to work earnings will also be discontinued at the beginning of April. Exempt amount refers to the right of daily allowance receivers to earn € 300 before such work or business earnings start affect their daily allowances. Once this law amendment has taken force, work earnings will reduce unemployment security by 50 cents per each euro for the total work income.

No index increases on unemployment security

Parliament has also approved a law amendment, based on which index increases will be frozen for the years 2024 to 2027. In the case of earning-related unemployment security, this means that unemployment security basic components and turning points will remain at 2023 levels.

Law amendments will take force as follows:

Self-risk periods will be seven days for self-risk periods starting January 1, 2024 or later.

Holidays allowances paid based on employment contracts expiring on January 1, 2024, or later, will prevent payment of earnings-related daily allowance for a set period of time.

No child increases will be paid on unemployment days starting April 1, 2024, or later.

No exempt amounts will be considered when calculating daily allowances for daily allowance application periods starting April 1, 2024, or later.

Reduced child increase starting January 1, 2024

This year, an extraordinary raise in unemployment security child increases was made. This extraordinary raise will be discontinued at the beginning of 2024.

Parliament has approved a proposal to freeze index increases for the years 2024-2027. As a result of this, no customary index increases will be made to child increases at the turn of the year. No child increases will be paid after April 1, 2024.

Click below to read the brochure of Entrepreneur Fund.

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.

Entrepreneur Fund’s telephone service is closed on the 14th of December. We have normal service once again in Thursday 15th of December. We are sorry for the inconvenience.

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.

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.

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.