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The average daily allowance, which is linked to earnings, is 1,690 euros per month. Under the new law, it will be cut to 1,350 euros after two months.


The government led by Finance Minister Riikka Purra (ps) and Prime Minister Petteri Orpo (kok) decided to cut income-related unemployment insurance, which will take effect in early September. Oti Lake
Petri Oppen (kok) The government’s decision to weaken unemployment benefits and increase general VAT came into effect on Sunday, 1 September.
At the beginning of September, the grading of earnings-related daily allowance will come into effect. Until now, people who are entitled to earnings-related allowance can receive the full amount of earnings-related daily allowance for 400 days if they have worked for more than three years before losing their job. If you have worked for less than three years, you will receive the full amount of earnings-related daily allowance for 300 days.
After the reforms, income-related employees will only receive 80% of the full amount after just two months, and this will drop to 75% after eight months of unemployment.
Maximum reduction of 200,000
According to the Unemployment Funds Association, the average daily income before tax is €1,690 per month. As a result of the new legislation, the average income allowance will be cut to €1,350 after two months and to €1,270 after eight months. According to the Unemployment Funds Association, this will affect approximately 150,000 to 200,000 people per year in stages.
The phase-in applies to those who started receiving the income-related daily allowance only after the beginning of September. It will not affect those who were previously in merit-based employment.
Employment conditions extended to one year
The employment conditions for the earnings-related daily allowance will also be extended. Employment conditions refer to how long you have to work to be entitled to earnings-related benefits. Until now, the employment condition was six months, which will now be increased to one year.
Furthermore, the working conditions will become income-based. Therefore, the working conditions are met based on the salary income paid during the calendar month. People who earn at least 930 euros per month during the year are entitled to income-related unemployment support. People who earn less can have their working conditions months considered halved, i.e. in this case you must earn at least 465 euros per month.
Wage subsidy work does not accrue work conditions
The changes also mean that municipalities are no longer obliged to employ people who are over 57 and meet the work conditions. In addition, people over 60 can no longer accrue employment conditions for employment promotion services.
In addition, wage-subsidized work no longer qualifies for employment for daily allowances. Employers who hire unemployed job seekers may be given wage subsidies equal to more than half of their wage costs.
The government’s goal is to get more people saving and working by cutting unemployment insurance. However, the reform has been criticized for arguing that employment effects are not necessarily achieved by cutting benefits.
Service prices will increase
In addition to the cuts to unemployment insurance, an increase in the general rate of VAT from 24% to 25.5% will also come into effect at the beginning of September.
The VAT increase will affect the price of services such as haircuts. VAT on food prices will not increase, but other grocery products will be affected by the tax increase, such as soap and toilet paper, like clothes.
The state aims to generate around €1 billion in additional revenue per year from the VAT increase.
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