Managing Director’s review
Despite the exceptional circumstances, we managed our main tasks well
The Employment Fund started the year 2020 with a good financial standing, as the Fund’s business cycle buffer was almost at its maximum allowed level and the Fund’s long-term loans had been paid off in the previous year. At the beginning of 2020, we successfully started utilising the income data reported in the national Incomes Register for the processing of adult education allowance applications. In March 2020, the coronavirus pandemic lead to substantial changes in the functioning of societies around the world. Finland was no exception, and this was also reflected in the activities of the Employment Fund. We switched to working almost entirely remotely in mid-March. At the same time, our staff quickly adapted to working remotely and learned new ways of working.
Right from the onset of the coronavirus outbreak, it was clear that the precarious economic and employment situation would pose major challenges to the Fund’s finances and liquidity. In March, the Board of the Employment Fund called on the government of Finland to secure the Fund’s liquidity and the financing of unemployment allowances. Many different measures and successful cooperation with the government and financial institutions ensured that we were able to cover the significantly increased unemployment benefit costs and pay the necessary unemployment allowances. Securing funding for unemployment allowances was a particularly important step for us, as an unemployment allowance may be the only source of income for the people who receive it.
Measures to secure liquidity
In the spring, the Employment Fund agreed on a revolving credit facility worth 800 million euros with five Nordic banks. The facility was backed by a state guarantee. In June, we issued two bonds in the amount of 1,200 million euros.
The Finnish state also secured our funding by contributing a sum equal to the basic unemployment allowance paid as a daily allowance to laid-off workers in 2020. This was important because layoff costs increased significantly during the spring and summer.
The result for 2020, i.e. the change in net assets, was significantly in deficit, which was covered with the assets in the business cycle buffer. The economic outlook for 2021 is uncertain, but the economy is expected to pick up as the coronavirus pandemic is likely to slow down with the rollout of vaccinations. However, the number of unemployed jobseekers is expected to remain at a high level in 2021.
In August, the Supervisory Board of the Employment Fund decided to propose to the Ministry of Social Affairs and Health a moderate increase in unemployment insurance contributions for 2021 to secure the Fund’s ability to cover unemployment benefit costs.
Parliament approved the amended Act on Adult Education Allowance in the spring of 2020, and it entered into force at the beginning of August. At the Fund, we prepared for these future changes, for example, by introducing a new online service and processing system for allowance applications, as well as by automating the processing of payment applications. Not all objectives were met according to the original schedule, but we were able to secure the processing of applications and the payment of adult education allowances during the autumn through joint efforts. We also prepared for the second phase of the Incomes Register, where the benefits we grant will be reported to the Incomes Register, and the benefits data reported to the Incomes Register will be utilised in the processing of applications from 2021 onwards.
In 2020, we collaborated extensively with our key stakeholders. We continued to study the recognition and reputation of the Employment Fund among the general public and influencers. The results revealed that the public’s trust and the support of our stakeholders have remained at a reasonable level.
In December, the Finnish government made certain decisions that will affect the operations of the Employment Fund. Additional days of unemployment insurance will be phased out from 2023 onwards. At the same time, the Employment Fund will no longer collect liability components. The decision is accompanied by a new security package, which would be funded by the Employment Fund.
At the end of the year, the Ministry of Social Affairs and Health appointed surveyors to assess how the current tasks, forms of support and services of the Employment Fund for employers and individuals support continuous learning and work ability from the perspective of employers, individuals and society.
Despite the exceptional circumstances, we have managed our main tasks well in 2020. All our operations are based on a competent and enthusiastic staff, and all the employees of the Fund deserve great thanks for their efforts. This year has required a great deal of teamwork from all of us. The development of the Employment Fund’s operations will also continue in 2021.