BACKGROUND FOR THE OPERATIONS OF THE UNEMPLOYMENT FUNDS

Act on Unemployment Funds

The operations of the unemployment funds are regulated by the Act on Unemployment Funds and the payment of benefits by the relevant acts.

Unemployment funds are communities operating under the principle of mutual responsibility, whose members are either wage earners or entrepreneurs. The purpose of unemployment funds is to provide its members with income security as referred to in the Act on Unemployment Security and income support under the Act on the Public Employment Service as well as other related educational benefits.

The unemployment funds are prohibited from engaging in operations other than those referred to in the act. Furthermore, they are prohibited from contacts with associations, organisation or consortiums which would jeopardise the independence of the fund.

Funding

The funding of unemployment allowance under the Act on Unemployment Security and job alternation allowance under the Act on Job Alternation is made up of a state subsidy corresponding to the basic component, unemployment insurance contributions, employer contributions regarding unemployment security, and membership fees under the Act on Unemployment Funds.

As a rule:

- the basic daily allowance (EUR 25.63 per day in 2010) is the share paid by the State

- the unemployment fund pays 5.5 per cent

- the unemployment insurance fund pays the remainder.

The share of unemployment insurance funds is collected in the form of unemployment insurance contributions made by the employer and employee, which are confirmed annually.

More information on the website of the Unemployment Insurance Fund: www.tvr.fi.

The funding of income security for entrepreneurs comes from the State (basic security) and entrepreneurs' unemployment funds (remainder).

Steering and supervision

The supreme authority charged with the management, steering and development of the implementation of unemployment security is the Ministry of Social Affairs and Health as concerns matters relating to subsistence security and the Ministry of Employment and the Economy as concerns matters relating to the labour market.

The implementation of benefits at the unemployment funds is supervised by the Financial Supervisory Authority.

The Financial Supervisory Authority monitors and verifies that the unemployment funds comply with legislation and good insurance practice and that their operational practices are appropriate. The Financial Supervisory Authority monitors and assesses the financial standing of the entities under its supervision, as well as their management, monitoring and risk management systems, their operating conditions, and changes in their operating environment.