Roundup: Finnish gov't encourages entrepreneurship, cuts back unemployment benefits

The Finnish government is persuading those without jobs to consider becoming self-employed.

Labor Minister Jari Lindstrom has said the government would both reduce unemployment benefits and make the launch of small businesses easier.

But the move has met mixed reactions in the Nordic country.

For several decades, Finland has provided a fairly functioning safety net for the unemployed. Monthly benefits based pro rata on the salary level of the last job are paid for 500 days. Thereafter an unemployed person will be eligible for a more modest support. There is a separate support system for housing costs.

With the planned reform, the government wants to see as many unemployed as possible move from the relative comfort of the benefit system, and either to accept a job or to become self-employed.

Lindstrom admitted on Monday that self-employment would probably be feasible for only a fraction of the unemployed, but the option is offered.

If approved by the parliament, salary-adjusted unemployment compensation would be reduced to 400 days in most cases. The unemployed would also have to accept jobs in another profession from the first day they lose job, if getting rehired in their original profession looks unlikely.

Under the new system, the unemployed person could not reject a job offer, even if the new salary would be less than what the benefits would bring in.

The transition from employment to entrepreneurship means that a worker gets much less benefit from the public safety net in a way. If the business does not go well, basic income support is possible, but it is a far cry from the levels of most unemployment benefits.

Ann-Mari Patshijew, owner of a small cosmetics business, told national broadcaster Yle that people should be told the hard realities.

"Entrepreneurs are like without the protection of the law and outside social security at the time when they start," she said.

Yle reported that self-employed people in the service sector such as hair dressers make an average of 15,000 euros (about 17,100 U.S. dollars) in gross in a year. While employees are represented by unions, entrepreneurs cannot negotiate as cohorts as that would amount to cartel type of obstruction of competition.

The current center-right Finnish government has been pursuing improvement in the competitive edge of Finland through increased work input without a pay increase.

Critics have said the underlying agenda is to create a low-wage class in the country. And small entrepreneurs could end up in that kind of role.

Jaana Paanetoja, professor of labor law at Lapland University, said the government has embarked on a completely new vistas in labor law. She complained that the government is putting forward proposals before it has considered whether they are feasible.

Last year, the Finnish government spent five billion euros in providing unemployment benefits, income support and other measures. There are currently 361,000 unemployed in Finland. Lindstrom said part of benefits could be used to encourage establishing an enterprise in the future.

In an immigration dimension of the new plan, the government is to ease recruiting of specialists from non-EU/EEA countries. Residence permits would be available for qualified immigrants planning to launch a start-up business.

So far, foreign specialists from non EU/EEA countries have been required to obtain a work permit based on confirmed employment in Finland. The system would also be simplified. (1 euro = 1.14 U.S. dollars) Endit