OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- Forthcoming titles
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Coping with the Job Crisis and Preparing for Ageing: The Case of Finland
Maintaining high participation and employment in the face of the recent recession and a rapidly ageing population are
major challenges for policy makers in Finland. The recession of the early 1990s showed that high unemployment can leave
long–lasting scars on labour markets, while rapid ageing requires longer working lives to ensure sustainable public finances.
Minimising the effect of the recession on the labour market calls for nominal wage increases in line with economic
conditions, greater flexibility in wage setting, ensuring earlier activation of unemployed and reforming unemployment and
social benefits to better support work incentives. Finland has an unusual combination of elevated unemployment
replacement rates and late referral to labour market activation, which contributes to high levels of inactivity and a large
number of beneficiaries. This combination risks building up greater structural unemployment over time. More ambitious
activation needs to be accompanied by lower replacement rates in the unemployment insurance and related schemes to
support labour market participation, job search and employment. Institutional responsibilities in labour market policies
should be simplified and made more transparent. With an already low effective retirement age, additional early permanent
exit from the labour market needs to be discouraged. The recent success of restricting access to the unemployment pipeline
should be followed up by a complete abolition of the system. Stricter criteria for entry into disability pensions should also
be applied. The 2005 pension reform was a step in the right direction, but the old–age retirement system should be further
adjusted to lower fiscal costs, raise the minimum retirement age and increase work incentives for older individuals.
This Working Paper relates to the 2010 Economic Survey of Finland.
(www.oecd.org/eco/surveys/Finland)
Keywords: pensions, unemployment pipeline, wage formation, disability, ALMP, unemployment, Finland, retirement, unemployment benefits
JEL:
J61: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Geographic Labor Mobility; Immigrant Workers;
J64: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Unemployment: Models, Duration, Incidence, and Job Search;
J26: Labor and Demographic Economics / Demand and Supply of Labor / Retirement; Retirement Policies;
J31: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Wage Level and Structure; Wage Differentials;
J68: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Mobility, Unemployment, and Vacancies: Public Policy;
J21: Labor and Demographic Economics / Demand and Supply of Labor / Labor Force and Employment, Size, and Structure
- Click to access:
-
Click to download PDF - 902.52KBPDF
-
Click to Read online and shareREAD