Executive summary

Over the past decade, Finland’s labour market has been characterised by high participation and employment rates (79.3% and 73.8% respectively in 2022) in comparison with other OECD countries and a relatively stronger recovery in employment and participation after the COVID-19 pandemic. Unemployment has also continued to recover, standing at 6.9% in 2022, though it is still relatively high compared to other OECD countries. Moreover, about one in four unemployed people in 2021 were unemployed for more than one year and 6.8% of the labour force who were not actively looking for work, would be willing to take work if it was offered. There are also large labour market disparities across population groups, with youth, older people, men and those with a low education level facing higher unemployment rates than other groups.

However, generally less than half of jobseekers in Finland contact the public employment service (PES) to search for work (44% in 2020), implying that there is a large number of individuals who do not use the support that is available to them. Strengthening the outreach of the PES may also go some way to improving job matching for jobseekers but also strengthening labour market ties for those marginally attached. Ambitious ongoing reforms aim to transform ALMP delivery through changes to job-search obligations and enhanced support and a transfer of responsibility from central government to municipalities.

Finland spends 0.86% of GDP on ALMPs, close to twice as much as the OECD on average (0.45%). A big part of ALMP funding (0.36% of GDP) is spent on training for jobseekers, which is well justified to promote adult learning, address labour shortages and support transitions in the labour market. To ensure public money is well spent, it is crucial that these programmes are evaluated in terms of reaching the people in need and being effective in connecting people with good jobs. This is the focus of this report which explores Finland’s rich and good-quality administrative data to evaluate the impact of the two main training programmes available to jobseekers: the labour market training (LMT) and self-motivated education with unemployment benefits (SMT).

Finland has been able to generate substantial evidence on the outcomes of key ALMPs despite limited resources devoted to related research. This is done mainly through a well-established and transparent system to contract out research and a large range of administrative data which can be linked across registers. The research results are disseminated systematically but more could be done to strengthen the connection with policy making and ensure the results are taken into consideration in policy design.

Finland could do more to ensure training programmes reach the people who need them and benefit from them the most, while improving their effectiveness for other groups. In addition, some steps could be taken to further improve the framework for ALMP impact evaluation and promote evidence-informed policy making. The key policy recommendations emerging from this review include:

Ensure sound evidence on the effectiveness of ALMPs and changes in the ALMP system, including by extending the use of pilots and trials before large-scale implementation and conducting cost-benefit analyses in a systematic way.
Strengthen the role of the Ministry of Economic Affairs and Employment as the driver for evidence-based policy making in the field of ALMPs, by building a long-term strategic view on research and allocating more resources to research activities.
Use the ongoing ALMP reforms to build evidence on the effectiveness of the different features of institutional set-ups and operating models of ALMP provision by ensuring that evidence building is embedded in such ongoing reforms.
Improve data coverage, quality and availability for analysis and research on ALMPs by scaling up funding for Statistics Finland to support research activities and strengthening data exchange between administrative registers to support employment counsellors, jobseekers and employers, as well as to ensure data accuracy.
Improve targeting and effectiveness of SMT and LMT by focusing them to those groups who benefit the most from these programmes while re-designing them to improve the labour market outcomes of groups that are not yet experiencing the beneficial effects of these measures.
Use SMT and LMT to promote labour mobility and reduce labour market shortages by strengthening these programmes towards sectors and occupations with labour shortages and ensuring labour mobility does not come at the expense of job quality.

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