2021
Annual Report
1 Jan–31 Dec 2021
ANNUAL REPORT 2021
3 Key matters in 2021
4 Managing Director’s review
6 Key figures 2021
7 Strategy, mission, vision and
values
10 REPORT OF THE
BOARD OF DIRECTORS
11 The Employment Fund’s duties
13 Collaboration with stakeholders
14 Unemployment insurance
contributions
19 Adult education benefits
28 Finance
31 Investment activities
34 Risk Management
35 Personnel
37 A glimpse into the coming year
38 Corporate governance
47 Remuneration report
52 FINANCIAL STATEMENTS
53 Financial Statements (IFRS) 2021
56 Notes to the financial statements
94 Auditor’s Report
2Annual Report 2021 Contents
Contents
3Annual Report 2021
Key matters in 2021
We reformed our
organisation and
made our benefit
service more
customer-oriented.
We financed unemployment
allowances and adult
education benefits with
3,750
million euros.
Our liquidity remained
at a good level.
Adult education
allowance was
paid to
28,322
individuals, an increase
of nearly 5% compared
to the previous year.
Key matters in 2021
4Annual Report 2021
Managing Director’s review
We managed to provide security for changes in working life by
performing our tasks reliably, while reforming our organisation
and developing our services.
Managing Director’s review
The second year of the COVID-19 pandemic
was the Employment Fund’s third year of
operations. This means that we have been
working remotely and in compliance with
pandemic restrictions for two thirds of the
new fund’s existence. Despite the effects of
the pandemic, we continued to excel in our
task in 2021 by financing unemployment
security and other types of social security.
We also supported adults in developing their
competences through adult education benefits.
OUR LIQUIDITY REMAINED
AT A GOOD LEVEL
In 2021, unemployment benefit costs
remained high due to the COVID-19 pandemic,
which left the Employment Fund’s financial
result clearly in deficit. However, Finland’s
economic growth improved in the second
half of the year, which was also reflected in a
reduction in unemployment and an increase
in employment. Despite the deficit, the Fund’s
financial result clearly exceeded the estimate
made when the 2021 budget was approved,
and our liquidity was good throughout the
year. We were able to collect unemployment
insurance contributions comprehensively
and excel in the financing tasks we are
responsible for. To secure financing, it was
decided to raise unemployment insurance
contributions by a moderate amount in 2022,
based on the Fund’s proposal.
A NEW FINANCING TASK
UNDER PREPARATION
The Employment Fund will face some
changes as the additional days of
unemployment insurance are phased out.
The additional days will be replaced by a new
security package, which the Fund will finance
by collecting a new security contribution
from employers. According to the legislative
proposal, the changes will take effect at the
start of 2023. ››
5Annual Report 2021
We have been preparing for their
implementation since early 2021. In addition,
we participated in preparatory work to
determine how the upcoming transfer of
Employment services to municipalities
will affect the financing of unemployment
benefits.
The possibility of expanding the scope
of our tasks concerning adult employees’
competence development was also examined
in the spring. The proposals presented in
June did not include an expansion of the
Fund’s current tasks, but there were several
proposals concerning the present tasks and
benefits. At the time of writing, the future of
the proposals remains unknown.
THE ADULT EDUCATION
ALLOWANCE REFORM CONTRIBUTED
TO THE AUTOMATION OF
APPLICATION PROCESSING
The reform of the adult education allowance
came into effect in August 2020. As a result,
the use of the adult education allowance
to combine study and work has increased
somewhat, which was one of the objectives of
the reform. The reform also led to a significant
increase in the number of applications,
as a two-stage application process was
introduced. We responded to the increase
by automating the processing of allowance
applications and updating our systems. We
aim to further increase the level of automation
in the future.
The effects of the adult education allowance
reform were assessed over the year, and the
Ministry of Social Affairs and Health reported
them to Parliament in December 2021.
We also reformed our organisation during
the year to ensure that we are even better
positioned to achieve our objectives and
provide services in an efficient and customer-
oriented manner. In the autumn, we finalised
our customer strategy, which facilitates
a systematic approach to developing our
services and operations in accordance with
the needs of our customers and operational
environment.
WE PREPARED OUR MOVE TO
NEW OFFICE PREMISES
In early 2021, we made the decision to move
to new premises in Ruoholahti, Helsinki.
Our personnel was extensively involved
in preparing the move, and based on their
feedback, the new premises were designed
as an activity-based office to support today’s
working life and facilitate varied ways of
working. We were able to move to the new
premises in early 2022. As COVID-19 is still
with us at the time of writing, we have not yet
been able to make more extensive use of the
new premises. We hope 2022 allows us to do so.
All in all, we managed to perform our tasks
to a high standard, and provide security for
changes in working life, as defined in our
strategy. Our highly skilled and competent
personnel deserve heartfelt thanks for all
their efforts last year.
JANNE METSÄMÄKI
Managing Director
Managing Director’s review
6Annual Report 2021
Key figures 2021
Key figures 2021
EUR million 2017 2018 2019 2020 2021
Change
EUR million Change %
INCOME
Employer contribution income 1,769 1,458 1,238 993 1,160 167 17%
Employee contribution income 1,243 1,519 1,379 1,073 1,241 168 16%
Government contributions 945 774 688 1,248 911 -337 -27%
Liability component income 54 50 39 26 23 -3 -12%
Net financial income -5 -7 8 -16 3 19
TOTAL INCOME 4,006 3,794 3,353 3,324 3,338 14 0%
EXPENSES
Unemployment funds -1,320 -1,068 -954 -1,372 -1,463 91 7%
Government contribution, funds -945 -774 -685 -1,245 -909 -336 -27%
Finnish Centre for Pensions -768 -620 -577 -870 -902 32 4%
Social Insurance Institution of Finland -208 -228 -206 -207 -239 32 15%
Adult education benefits -151 -187 -187 -197 -186 -11 -6%
Ministry of Economic Affairs and Employment -19 -20 -24 -25 -14 -11 -44%
State Pension Fund -13 -12 -8 -9 -11 2 22%
Administrative expenses -11 -13 -19 -21 -26 5 24%
TOTAL EXPENSES -3,435 -2,921 -2,659 -3,947 -3,750 -197 -5%
INCOME FOR THE PERIOD 572 872 694 -623 -412
NET POSITION 106 969 1,668 1,045 633
7Annual Report 2021
Strategy, mission, vision and values
Strategy, mission, vision and values
The strategy of the
Employment Fund includes its
mission, vision, strategic goals
and values.
Our mission is captured in our slogan:
We provide security for changes in working
life
. Our vision is to be a superior executor of
social security.
Our values are: our customers come first, we
renew, we evolve, we act, and we are a united
team.
In 2021, we continued to build the foundation
of the Employment Fund and advance
our strategic goals. Central to this was
ensuring operational compliance, promoting
digitalisation, and ensuring high-quality
services for our customers. We are constantly
striving to increase the efficiency and quality
of our operations and to improve the skills of
our employees to support this development.
In the autumn of 2021, we finalised our
customer strategy, which was approved by
the Employment Fund’s Board of Directors in
October. The new customer strategy facilitates
a systematic approach to developing our
services and operations in accordance with
the needs of our customers and operational
environment, i.e. we give priority to our
customers in accordance with our values.
Providing security
for changes in
working life
8Annual Report 2021
The Employment Fund’s strategy
Values
Vision
Superior
executor of
social security
Our customers
We renew
We evolve
We act
We are a
united team
Production of added
value by using data
and forecasts
Forerunner in developing
customer-based services and
Active and respected
actor in the Fund’s
network
Contented personnel
and an attractive
employer
Constant development
of unemployment
insurance contributions
Strategic goals
Mission
Providing security for
changes in working life
Forces of change
Evolving requirements for competences and education
Changes in the social security system
Fragmentation and unpredictability of political decision-making
Changes in education and study methods
Changes in work, working life and livelihood
Socioeconomic polarisation of regions and citizens
Expectations of customers and stakeholders, changes in consumer behaviour
Requirements/expectations for public service integration – one-stop shop
Strategy, mission, vision and values
9Annual Report 2021 Strategy, mission, vision and values
Our strategic goals are
• becoming a frontrunner in developing
customer-based services
• developing operational efficiency and
impact
• producing added value by using data and
forecasts
• to be an active and respected actor in the
Fund’s network
• to be an attractive workplace with
contended personnel
• ensuring the constant development of
unemployment insurance contributions.
Our action plan for 2021 was primarily
focused on these goals.
The fulfilment of these goals was monitored
and evaluated especially in terms of
efficiency, customer experience, and staff
satisfaction. The Employment Fund’s Board
of Directors regularly evaluates the Fund’s
progress towards its strategic goals. The
Board also holds an annual strategy meeting.
MISSION
We provide security for
changes in working life
VISION
Superior executor
of social security
VALUES
Our customers come first
We renew, we evolve, we act
We are a united team
We are constantly striving to
improve the efficiency and
quality of our operations.
10
Report of the
Board of Directors
11Report of the Board of Directors 2021
The Employment Fund’s duties
The Employment Fund’s duties
The Employment Fund’s
main duties are to finance
unemployment benefits,
assess and collect
unemployment insurance
contributions, and finance and
grant adult education benefits.
The Fund collects unemployment insurance
contributions paid by employers and
employees. The unemployment insurance
contribution percentages are confirmed
annually by an act of parliament.
Unemployment insurance contributions
have been assessed on the basis of income
information reported to the Incomes Register
since January 2019. In order to safeguard
the stable development of contributions
the Fund has a business cycle buffer, which
enables it to resist the pressure to increase
contributions when unemployment benefit
costs increase.
The benefits financed by the Employment
Fund include unemployment allowance paid
by unemployment funds and Kela, as well as
adult education allowance and scholarships
for qualified employees paid directly by the
Fund.
The Employment Fund is also responsible for
financing earnings-related pensions accrued
during periods when daily unemployment
allowances, job alternation compensation
and adult education allowances are paid.
The Employment Fund remits a payment
amounting to the basic daily allowance
paid by the State to contribute to the
daily unemployment allowances paid by
unemployment funds.
The Employment Fund’s operations are
supervised by the Financial Supervisory
Authority.
3,000
2,500
2,000
1,500
1,000
500
0
EUR
million
Financing contributions paid to
unemployment funds (EUR million)
Unemployment rate (%)
2017 2018 2019 2020 2021
The Employment Fund’s financing for
the unemployment funds
10
9
8
7
6
5
4
3
2
1
0
%
1,639
2,618
1,842
2,265
2,372
12Report of the Board of Directors 2021 The Employment Fund’s duties
1,241
Insurance and state
contributions collected
3,340
1,183
Figures for 2021
The State
insurance contributions.
EUR
million
million
1,463
accrued during
the Finnish Centre for
Pensions and the State
Pension Fund.
million
239
million
175
We fund the adult
insurance contributions.
In certain situations,
component and a compensation
for disputes concerning
EUR
million
911
EUR
million
EUR
million
Fund
million
14
We fund training
compensations
municipalities, parishes,
associations
and foundations).
million
10.4
We fund scholarships
million
909
contribution to
EUR
million
913
EUR
EUR
EUR
EUR
EUR
EUR
*Includes
Remaining
assets in the
business
EUR
633
million
Net assets (the business
EUR
412
million
Contributions
paid*
3,947
EUR
million
million
8.1
EUR
13Report of the Board of Directors 2021 Collaboration with stakeholders
Collaboration with stakeholders
The Employment Fund
collaborates extensively with
many different parties.
We perform our statutory tasks in close
collaboration with relevant ministries
(the Ministry of Social Affairs and Health,
the Ministry of Economic Affairs and
Employment, the Ministry of Finance, and the
Ministry of Education and Culture).
We are part of Finland’s mandatory social
insurance scheme, and in these matters we
collaborate with unemployment funds, the
Social Insurance Institution of Finland (Kela), the
Finnish Centre for Pensions, the Finnish Workers'
Compensation Centre (TVK), pension insurance
companies, and labour market organisations,
which are involved in the management of
the Employment Fund. As a provider of adult
education allowance, the Fund also collaborates
with educational institutions. We are also
building a partnership with the newly established
Service Centre for Continuous Learning and
Employment. In addition, the Employment
Fund’s tasks require effective cooperation
with banks and financial institutions.
We communicate and interact with our
stakeholders in a targeted way across
multiple channels, taking each stakeholder’s
needs into consideration. For instance, we
communicate with members of parliament,
and employers who pay unemployment
insurance contributions via a regular
newsletter. In 2021, we organised webinars
for educational institutions and customers
applying for adult education allowances.
On September 9, 2021, we organised a seminar
called “Adult education allowance as part
of continuous learning”. The seminar was
intended for our stakeholders who promote the
theme of continuous learning together with
the Fund. During the seminar we discussed
how employees can develop their vocational
competence throughout their career, how adult
education allowance supports continuous
learning, and how adult education allowance
schemes could be developed. The topics were
addressed by different presenters, combining
research knowledge and experiences of life-
long learning.
Our goal is to also act as an interesting
source of information for the media regarding
matters related to employees’ social security,
unemployment insurance contributions, and
competence development. We provide and
deliver information to the media and our
stakeholders and publish regular press releases.
14Report of the Board of Directors 2021
Unemployment insurance contributions
Unemployment insurance contributions
The Employment Fund
assesses and collects
unemployment insurance
contributions and
supervises the fulfilment of
responsibilities related to
the statutory unemployment
insurance contributions.
The duty to pay unemployment insurance
contribution is based on the Act on Financing
of Unemployment Benefits (555/1998).
Unemployment insurance contributions are
collected from employees who are over the
age of 17 and under the age of 65, as well as
from their employer. However, the employer is
not obliged to pay unemployment insurance
contributions if the total wages paid by the
employer during the calendar year does not
exceed EUR 1,300.
No unemployment insurance contributions
are paid from an entrepreneur’s earnings.
Part-owners as defined in the Unemployment
Allowance Act (1290/2002) are obligated to
pay unemployment insurance contributions,
but the contribution percentage is lower than
for employees.
All wages, bonuses or similar compensation
that have been paid or have been agreed
to be paid during employment or a service
relationship as compensation for work will be
considered income that can be used as a basis
for unemployment insurance contributions.
The employer pays both their own and
their employees’ unemployment insurance
contributions to the Employment Fund.
The employer deducts the employee’s
unemployment insurance contribution from
the employee’s wage and reports the amount
of wages paid to the Incomes Register. The
Employment Fund determines the amount
of unemployment insurance contribution
the employer must pay on the basis of the
income information reported to the Incomes
Register by the employer. The amount of
unemployment insurance contributions is
determined four times a year (in April, July,
October and January) based on the actual
wages paid by the employer.
The Employment
Fund determines the
unemployment insurance
contributions on the
basis of the income
information reported to
the Incomes Register.
15Report of the Board of Directors 2021
THE UNEMPLOYMENT INSURANCE
CONTRIBUTION IN 2021
On 27 August 2020, the Employment Fund’s
Supervisory Board made a proposal on the
unemployment insurance contributions in
2021 to the Ministry of Social Affairs and
Health. The contribution rates were increased
for 2021 as proposed. (In the annual report, all
the corresponding figures for 2020 have been
presented in brackets.)
In 2021, employees’ unemployment insurance
contribution was 1.40% (1.25%) of their
wages. Employers’ contribution was 0.50%
(0.45%) of paid wages, if wages were less
than EUR2,169,000 (2,125,500), and 1.90%
(1.70%) for the part of wages and salaries
that exceeded it. The average contribution
percentage for employers was 1.42% (1.25%).
The employee’s unemployment insurance
contribution for part-owners was 0.65%
(0.65%) of paid wages, and the employer’s
unemployment insurance contribution for
part-owners was 0.50% (0.45%) of their
wages.
The unemployment insurance contribution
for government enterprises was 0.50%
(0.45%) of paid wages, if the wages were
less than EUR 2,169,000 (2,125,500), and
1.15% (0.99%) for the part that exceeded
it. Universities’ contributions were 0.50%
(0.45%) of paid wages if the wages were less
than EUR2,169,000 (2,125,500), and 1.38%
(1.21%) for the part of wages and salaries that
exceeded it.
In 2021, the unemployment insurance
contribution income collected from employers
was EUR 1,160 (993) million in total, and
the liability component income paid by
employers was EUR 23 (26) million in total.
The unemployment insurance contribution
income paid by employees was EUR 1,241
(1,073) million in total.
Unemployment insurance contributions
The unemployment insurance
contribution rates were
increased for 2021.
Unemployment insurance
contributions collected
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2017 2018 2019 2020 2021
Employees
Employers
EUR
million
3,067
2,657
3,027
2,092
2,424
1,508
1,824
1,278
1,019
1,183
1,241
1,073
1,379
1,519
1,243
16Report of the Board of Directors 2021
THE INCOMES REGISTER HAS BEEN
SUCCESSFULLY INTRODUCED
Since 2019, unemployment insurance
contributions have been assessed on the
basis of the income information reported to
the Incomes Register by the employers. With
the introduction of the Incomes Register,
the procedure for paying contributions
changed from a prepayment model to an
actual earnings model. The amount of
unemployment insurance contributions is
determined based on the actual wages paid
by the employer.
Due to a legislative amendment, the
prepayment model previously used for the
determination of unemployment insurance
contributions was permanently waived on
1 January 2021. Prior to 2021, the amount
of unemployment insurance contributions
could still be determined as an advance at the
employer’s request.
After the introduction of the Incomes Register
and invoicing based on actual wages, the
Employment Fund has been able to make
more extensive use of automated decision-
making. In 2021, more than 99% of decisions
concerning unemployment insurance
contributions were issued automatically.
The degree of automation in determining
and invoicing unemployment insurance
contributions has been approximately
99% since the introduction of the Incomes
Register.
During 2021, customer contacts regarding
unemployment insurance contributions
steadily decreased. The decrease in
customer contacts shows that the use of
the Incomes Register and the new payment
model have become common practice
among employers.
EMPLOYERS’ TRAINING COMPENSATION
The purpose of training compensation is
to improve the employer’s opportunities to
organise training for its employees, to develop
their vocational competence. Employers
who are not entitled to deduct training costs
in their taxation are entitled to training
compensation. Municipalities, churches, non-
profit organisations and foundations among
other similar employers are eligible for
training compensation.
The Employment Fund grants and pays
training compensation based on the
information provided in the application filed
by the employer. The applications for training
compensation must be sent by the end of
January of the next calendar year.
In 2021, the Employment Fund refunded
approximately EUR 8.1 (11.6) million in
compensation to 555 (609) employers for
training that had taken place in 2020. The
total number of training days stated in the
applications filed by employers was 347,762
(557,100). Of the employers who received
training compensation, 292 (301) were cities
or municipalities.
SUPERVISION OF UNEMPLOYMENT
INSURANCE CONTRIBUTIONS
The Employment Fund supervises the
fulfilment of the responsibilities related
to the statutory unemployment insurance
contributions. The purpose of this supervision
is to ensure that the reported wages, which
determine the amount of the employer’s
unemployment insurance contributions,
correspond to the actual wages paid, and that
the unemployment insurance contributions
are determined correctly. In addition, the
supervision addresses any failures to pay
unemployment insurance contributions.
Due to the introduction of the Incomes
Register in 2019, the supervision is mainly
Unemployment insurance contributions
17Report of the Board of Directors 2021
based on salary information obtained from
the Incomes Register. In addition, information
gathered from the Tax Administration,
other authorities, and social insurance
providers is used for supervision. The
information gathered is compared to the
information provided by the employer.
Prior to the introduction of the Incomes
Register, supervision was largely based on
annual information received from the Tax
Administration, which was compared to the
salary information reported by the employer.
In 2021, the Employment Fund took 1,691
(1,773) cases under supervision. The
supervision concerned cases from the
period 2018–2021. The cases taken under
supervision resulted in approximately
EUR2 (4.1) million of additional payments
and approximately EUR 0.3 (0.4) million of
refunds.
LIABILITY COMPONENTS OF EMPLOYERS’
UNEMPLOYMENT ALLOWANCES
The Employment Fund may impose and
collect a liability component from an
employer if they have dismissed or laid off
an older employee and the employee has
been long-term unemployed or laid off.
Unemployment benefit expenses caused
by dismissals and layoffs are financed by
the liability components. Provisions on
the liability component and the collection
procedure are plaid down in section 8a of
the Act on the Financing of Unemployment
Benefits (1998/555).
Approximately 10,700 (7,700) liability
component cases were submitted to the
Employment Fund in 2021. According to the
Employment Fund's assessment, the increase
in the number of layoffs due to the COVID-19
pandemic, among other things, was reflected
in the number of liability component cases
submitted in 2021. The Fund imposed a
liability component payment on the employer
in around 1,200 (1,200) cases.
In 2021, liability component payments
amounted to approximately EUR 23 million
(26). The average processing time in cases
that led to a payment decision was 42 (58)
days.
COORDINATION ACCORDING TO THE
EMPLOYMENT CONTRACTS ACT
An employer who has ended an employee’s
employment contract in violation of the
provisions of the Employment Contracts
Act is liable to pay compensation to the
employee. The employer is also liable to pay
compensation if the employee has
been laid off in violation of the
provisions of the Employment
Contracts Act.
The increase in the number of layoffs due to the COVID-19 pandemic
was reflected in the number of liability component cases submitted.
Unemployment insurance contributions
18Report of the Board of Directors 2021
As a rule, 75% of compensation is
deducted from the earnings-related daily
unemployment allowance paid to the
employee after the employment relationship
has ended, when compensation is paid for
salary losses due to unemployment.
In the case of lay-offs, the deduction to the
Employment Fund is made from the earnings-
related daily unemployment allowance paid
to the employee during the period of wrongful
lay-off. The employer pays these shares to the
Employment Fund.
According to the Employment Contracts Act,
the courts must hear the Employment Fund
in disputes that relate to the termination
of employment or temporary lay-offs if the
claimant has received earnings-related daily
unemployment allowance after the termination
of employment or during the lay-off period. The
payment of the deduction to the Fund must also
take place when the employer and employee
reach a settlement on the compensation
payable for wrongful termination of
employment or lay-off. The Employment Fund
issued approximately 740 (790) statements
and contract comments during 2021.
EMPLOYERS’ SECURITY CONTRIBUTION
In 2020, the Finnish government decided
on measures to improve the labour market
position and working capacity of people over
the age of 55. One of these measures was to
remove the additional days of unemployment
insurance for those born in 1965 and later.
The additional days of unemployment
insurance would be replaced, among
other things, by a new security package
aimed at supporting the re-employment of
dismissed employees over the age of 55.
The new security package would provide
all over 55-year-olds with two months of
transition security training and one month of
redundancy compensation corresponding to
the employee’s salary.
According to the legislative proposal, if
an employer dismisses the employee for
production-related or financial reasons,
the employer may be liable to pay
security contribution. This would give the
Employment Fund a new statutory role from
January 1, 2023. Parliament is expected
to approve the legislative
amendments in the summer
of 2022.
The Employment Fund would finance the
security package by a security contribution,
which would consist of an equal share paid
by the dismissing enterprise and a common
share. The common share would be financed
from employers’ unemployment insurance
contributions.
In 2021, we were actively involved in the
preparatory work concerning the legislative
change and launched a project to implement
the employers’ security contribution scheme.
Unemployment insurance contributions
19Report of the Board of Directors 2021
Adult education benefits
Adult education benefits
The Employment Fund grants
and pays adult education
allowance and scholarships
for qualified employees
to support professional
capabilities as well as
competence development.
The adult education allowance is granted
to employees or full-time entrepreneurs in
order to finance their efforts to update their
vocational competence. Scholarships for
qualified employees are granted after having
completed vocational upper secondary level
qualifications, further vocational education or
specialist vocational qualifications.
Employees’ adult education benefits are
financed entirely from the unemployment
insurance contribution income. The
State is responsible for financing adult
education allowances for entrepreneurs and
scholarships for qualified employees working
for the State.
In 2021, adult education allowances and
scholarships totalled approximately EUR
185.7 million. The amount of adult education
benefits paid decreased by about 6%
compared to 2020.
ADULT EDUCATION ALLOWANCE
TO SUPPORT VOCATIONAL
COMPETENCE DEVELOPMENT
Adult education allowances have been granted
since 2001. Employees and entrepreneurs who
have been working for at least eight years may
apply for an adult education allowance. The
allowance is intended for maintaining and
developing professional competence and may
be granted for studies conducted under public
oversight in Finland. These studies can lead to
a full degree, a partial-degree or be further or
continuing vocational training.
THE ADULT EDUCATION ALLOWANCE
REFORM ENCOURAGED THE
COMBINING OF STUDY AND WORK
The adult education allowance scheme was
reformed by a legislative amendment, which
entered into force on 1 August 2020. The
main goal of the reform was to facilitate the
combining of study and work. In addition, the
aim was to encourage continuous learning
among low-skilled or low-paid workers.
20Report of the Board of Directors 2021
At the end of 2021, the Ministry of Social
Affairs and Health submitted a report to
Parliament on the effects of the reform.
The Employment Fund has also actively
monitored the effects of the reform and
contributed to the report.
According to the report, employment during
studies among adult education allowance
beneficiaries has increased since the reform.
However, the reform has not had a significant
effect on the use of adult education allowance
among low-skilled or low-paid workers. Due
to the COVID-19 pandemic, the effects of the
reform are still difficult to assess reliably.
THE POPULARITY OF ADULT
EDUCATION ALLOWANCE CONTINUED
TO INCREASE IN 2021
In 2021, adult education allowance was
paid to 28,322 (27,066) individuals. The
number of adult education allowance
beneficiaries increased by 4.6 per cent from
the previous year. 734 individuals received
entrepreneurs’ adult education allowance and
27,588 received employees’ adult education
allowance. Of all the beneficiaries, 65.1%, i.e.
18,443 individuals, received the reformed
adult education allowance.
A total of EUR 175.3 (186.9) million was paid
in adult education allowance. Despite the
increase in the number of applicants, the
total amount of adult education allowance
paid decreased by about 6 per cent from the
previous year. According to our assessment,
this was due to legislative reform, which
included changes to the calculation of the
allowance, as well as more beneficiaries
combining study and work.
Adult education benefits
The number of adult education allowance beneficiaries combining
work and study has increased since the legislative reform.
persons
EUR
million
Number of beneficiaries and
adult education allowances paid
30,000
27,500
25,000
22,500
20,000
17,500
15,000
12,500
10,000
7,500
5,000
2,500
0
200
180
160
140
120
100
80
60
40
20
0
2017 2018 2019 2020 2021
Number of beneficiaries based on the
old legislation (persons)
Number of beneficiaries based on the
new legislation (persons)
Adult education allowances paid
(EUR million)
24,356
24,848
25,701
4,673
18,443
22,393
9,879
21Report of the Board of Directors 2021
In the past, the majority of adult education
allowance beneficiaries have been women
under the age of 40. Also in 2021, a clear
majority, 75.8%, of beneficiaries were
women. 24.2% of beneficiaries were men.
The age distribution of the beneficiaries
also remained unchanged in 2021. 52.1% of
beneficiaries were 30–39 years of age, and
individuals over 40–49 years represented
a share of 29.9%. Individuals over 55
accounted for 4.4% of beneficiaries. The 2020
legislative reform has not been found to have
a significant impact on the gender or age
distribution of beneficiaries.
In 2021, 42.5% (41%) of beneficiaries studied
at universities of applied sciences, 27.4%
(28%) at vocational institutions, 25.3%
(28%) at universities and 4.8% (3%) at
other educational institutions. The majority
of beneficiaries, 82.8%, used the adult
education allowance for education leading
to a degree. 14.2% of beneficiaries used the
allowance for studies leading to a partial-
degree or further or continuing vocational
training, and 3.0% used it for other training.
Among beneficiaries who received the
reformed adult education allowance, the
share of those who used the allowance for
education leading to a degree was slightly
Adult education benefits
lower, about 78.4%. The share of those who
used the allowance for studies leading to
a partial-degree or further or continuing
vocational training was 17.6%, which means
that smaller study modules were slightly
more popular among those who received the
reformed adult education allowance.
Adult education allowance
beneficiaries by age group in 2021
Adult education allowance
beneficiaries by gender in 2021
Men
Women
76%
24%
25–29 yrs.
30–34 yrs.
35–39 yrs.
40–44 yrs.
45–49 yrs.
50–54 yrs.
55 yrs. or over
26.2%
25.9%
18.1%
11.8%
6.6%
7%
4.4%
22Report of the Board of Directors 2021
In 2021, as in the previous year, the most popular field of study for
students obtaining adult education allowances was social welfare,
health care, and sports, which accounted for 33.6% (34%).
The next most popular fields of study were social sciences business
and administration, 18.3% (18.2%), and technology and transport, 15.4%
(15.5%).
Adult education benefits
Adult education allowance by study field
40
35
30
25
20
15
10
5
0
Social welfare,
health care and
sport
Social sciences,
business and
administration
Humanities
and education
Technology
and transport
Culture Natural
resources
and
environment
Tourism,
hospitality
and business
Natural
sciences
Other education General
education
%
2017
2018
2019
2020
2021
23Report of the Board of Directors 2021
In terms of employment, the adult education
allowance was mostly used by those working
in the field of public administration and
national defence, whose share increased by
six percentage points to 24.2% (18.3%). The
next-largest sectors were health care and
social services, 20.3% (23.3%), and wholesale
and retail, 12.3% (12.0%). In the field of health
care and social services, the decline in the
popularity of the adult education allowance
was likely due to the challenges posed by the
COVID-19 pandemic, which may have made it
difficult to take study leave.
AUTOMATION FACILITATES THE
PROCESSING OF APPLICATIONS
The application process for employees’
adult education allowance was reformed in
connection with the legislative amendment
that entered into force on 1 August 2020.
The new application process is two-phased.
The applicant must first submit an initial
application, and the Employment Fund
will check the applicant’s eligibility for the
adult education allowance. After receiving
a decision on their initial application, the
applicant can apply for an allowance payment
retrospectively for each month.
The reform significantly increased the
total number of adult education allowance
applications received by the Employment
Fund. In 2021, the highest number of initial
Adult education benefits
Adult education allowance by employer’s operating sector
30
25
20
15
10
5
0
Public
administration
and national
defence;
mandatory social
insurance
Health care
and social
services
IndustryWholesale and
retail; motor
vehicle and
motorcycle
repairs
Professional,
scientific
and technical
activities
Education Transportation
and storage
Administration
and support
services
Accommodation
and food service
activities
Others
%
2017
2018
2019
2020
2021
24Report of the Board of Directors 2021
applications was received at the beginning
of the school year in August (4,365), in
September (2,791), and in July (2,590). In
2021, the average processing time for initial
applications was 17.3 days.
In terms of payment applications, the
busiest months were October, November,
and December, with more than 10,000
payment applications processed during
each. The majority (approx. 80%) of payment
applications are submitted in the first week
of the month, which can put pressure on our
resources. To manage this, we have sought
to expand the skills and responsibilities
of our staff responsible for unemployment
insurance contribution and benefit services,
and developed the automated processing
of payment applications. In 2021, the
average processing time for payment
applications was 1.1 days. 54,992 decisions
were issued automatically, which accounts
to approximately 63% of all payment
decisions.
Adult education benefits
Number of applications for adult education allowance
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
January February AprilMarch May June AugustJuly September October November December
Number
2020
2021
25Report of the Board of Directors 2021
SCHOLARSHIPS FOR QUALIFIED
EMPLOYEES ON THE BASIS OF A
VOCATIONAL QUALIFICATION
Scholarships for qualified employees were
introduced in 1996. An individual residing in
Finland is eligible for the scholarship if they
have completed an upper secondary level
vocational degree, a further vocational degree,
or a specialist vocational degree, are under
68 years of age, and have been working for
at least five years by the date they complete
the new degree. The scholarship for qualified
employees is a tax-exempt, lump-sum
payment, which was EUR400 in 2021.
THE POPULARITY OF SCHOLARSHIPS FOR
QUALIFIED EMPLOYEES REMAINED AT A
SIMILAR LEVEL TO PREVIOUS YEARS
In 2021, 25,949 beneficiaries received a
scholarship for qualified employees. 26,257
approvals for scholarships for qualified
employees were given, and a total of EUR 10.4
million was paid in scholarships, which is
about two per cent less than in the previous
year (EUR 10.6 million).
Scholarships are applied for after graduation
and therefore often at the end of the semester.
In 2021, the highest number of applications
was received in June (4,723), December
(3,742), and May (3,279). The total number
of applications received during these three
months accounted for 38.3% of the total
number of applications received during
the year. The average processing time for
scholarship applications was 6.5 days.
44.6% (42.7%) of the scholarships were
granted for completing a further vocational
qualification, 29.9% (31.2%) for completing
an upper secondary vocational qualification,
and 25.6% (26.1%) for completing a specialist
vocational qualification. In 2021, the
most common qualifications completed
by scholarship recipients were a further
vocational qualification in supervisory
work (8.7%), an upper secondary vocational
qualification in social welfare and health
care (7.9%), and a specialist qualification in
business management and leadership (7.8%).
A clear majority of scholarship recipients
were women, accounting for 63.6% of all
recipients.
APPEALS AND RECOVERY OF BENEFITS
PAID WITHOUT JUSTIFICATION
Applicants who are not satisfied with the
outcome of their application for scholarships
for qualified employees or adult education
allowances are entitled to appeal the decision.
Adult education benefits
Approvals and scholarships paid to
qualified employees
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
14
12
10
8
6
4
2
0
2017 2018 2019 2020 2021
Number
EUR
million
Approvals
Scholarships paid (EUR million)
24,588
30,274
26,187
26,511 26,257
26Report of the Board of Directors 2021
The first appellate body is the Social Security
Appeal Board (SAMU). The second and final
appellate body is the Insurance Court. In 2021,
the Appeal Board received 275 (173) complaints.
The Insurance Court received 20 (44)
complaints. The complaints mainly concerned
the recovery of benefits or the revision of
benefits, taking into account additional
income based on their date of payment.
If a benefit has been paid without justification
or the amount paid out was too high,
the excess must be recovered from the
beneficiary. A total of 1,973 (1,932) recovery
decisions were made.
DEVELOPMENT OF ADULT EDUCATION
BENEFITS’ PROCESSING OPERATIONS
In our benefit service, as in other units
of the Employment Fund, the year began
with organisational changes. The aim of
the reorganisation in the spring of 2021
was to reform our management system,
clarify our role and responsibilities, and
bring development closer to the business.
As part of the organisational change, the
Employment Fund established a process and
service development team to improve the
experience of customers and users of our
benefit service.
In 2021, we continued to develop the
basic systems of our benefit service and,
among other things, expanded the use of
the Incomes Register. At the beginning of
2021, we started to report the benefits we
have paid to the Incomes Register, and on
February 1, 2021, we completed the last
part of the integration when we started
using the pension and benefit information
reported to the Incomes Register in the
processing of applications. The introduction
of the Incomes Register has facilitated the
processing of applications and reduced the
need to request additional information from
customers.
In 2021, in addition to the continuous
development of the basic systems of
our benefit service, we developed our
online service. In 2021, 99% of benefit
applications were submitted through our
online service. We made changes to the
functionalities of the benefit applications
based on customer feedback. At the end
of April 2021, we introduced a messaging
Adult education benefits
The introduction of
the Incomes Register
has facilitated
the processing of
applications and reduced
the need to request
additional information
from customers.
27Report of the Board of Directors 2021
functionality to reduce email transactions.
With the introduction of the new messaging
functionality, our benefit customers' email
transactions decreased by 49% compared
to 2020. Between April and December 2021,
we responded to 39,280 customer messages
through the messaging functionality.
In 2021, 70.4% of our customers were
completely or very satisfied with our online
service.
The number of telephone inquiries
concerning benefits remained at the same
level as in previous years. In 2021, we
answered 38,700 calls. In the autumn of
2021, we introduced a callback function
in our telephone service, which allows the
customer to request a callback to avoid
waiting on hold if the line is busy. About one-
fifth of our customers choose the callback
option.
In 2021, we measured customer satisfaction
with a monthly survey conducted by
Taloustutkimus Oy. We are constantly striving
to improve our services for our adult education
benefit customers based on customer
feedback received through the survey.
In the autumn of 2021, we also launched
a pilot project to introduce a new service
website for our adult education allowance
customers, aikuiskoulutustuki.fi, in the
spring of 2022. Among other things, we
aim to improve the transparency of the
adult education benefit scheme, customer
experience, and the user-friendliness of the
application process.
In addition to the service website pilot
project, in 2021 we organised several
webinars aimed at our adult education
benefit customers and educational
institutions, in which we discussed adult
education benefits and their application
process. The number of participants has
varied between 30–100, and based on the
feedback, the events have been found to be
useful by the participants. In addition, we
posted instructional videos on our website
to facilitate the application process. In the
spring of 2021, we established a social
media presence on Facebook, where we
actively communicate with our customers
throughout the year.
Adult education benefits
28Report of the Board of Directors 2021
Finance
Finance
THE NET POSITION OF THE BUSINESS
CYCLE BUFFER DECREASED
In accordance with section 3 of the Act on
the Financing of Unemployment Benefits, the
Employment Fund maintains a business cycle
buffer in order to ensure liquidity and balance
out changes in unemployment insurance
contributions due to foreseeable economic
fluctuations in the national economy. The
business cycle buffer accrues on the basis
of the difference between the Fund’s income
and expenses. The maximum amount of the
buffer corresponds to the annual expenditure
for an unemployment rate of six percentage
points. During times of severe economic
downturn, the business cycle buffer may
be on the liabilities side, up to the amount
corresponding to the same expenditure.
2017 2018 2019 2020 2021
10
9
8
7
6
5
4
3
2
1
0
Employer payment Employee payment Unemployment rate, %
Unemployment insurance contribution rates
and unemployment rate %
%
1.60%
1.90%
1.50%
1.25%
1.40%
1.42%
1.25%
1.50%
1.91%
2.41%
7.7%
6.7%
7.4%
8.8%
7.7%
29Report of the Board of Directors 2021
The maximum value of the buffer is
calculated by dividing the annual expenditure
for which the Employment Fund is liable,
which was EUR 2,840 million in 2021, by
the average unemployment rate for the year
(7.7), and multiplying the result by 6. In 2021,
the maximum permitted value of the buffer
according to the Act was EUR2,220 million.
The Employment Fund’s net position was EUR
633 (1,045) million at the end of 2021.
According to the investment principles
accepted by the Supervisory Board, the Fund
is required to have liquid investments in
money market instruments with less than a
year’s maturity in an amount that covers one
month of the Fund’s expenses. This amount is
approximately EUR300million. On average,
the liquidity buffer described above was 2.5
times the minimum amount in 2021.
According to the 2022 budget submitted
to the Ministry of Social Affairs and Health,
the Fund’s net position will amount to EUR
467 million on 31 December 2022. When
the financial statements were prepared, the
Fund’s net position at the end of 2022 was
estimated to be around a positive sum of
EUR700million.
Finance
The Fund’s net position at the end of
2022 was estimated to be around a
positive sum of EUR700million.
Development of the business cycle buffer
2,500
2,000
1,500
1,000
500
0
-500
-1,000
-1,500
-2,000
-2,500
EUR
million
97
969
1,668
1,045
633
2017 2018 2019 2020 2021
Net position Maximum amount Minimum amount
30Report of the Board of Directors 2021
DEBT FINANCING
The Employment Fund has two bonds
worth EUR 600 million, issued in 2020
with maturities of three years (due 16 June
2023) and seven years (due 16 June 2027).
The Fund also has revolving credit facilities
(RCF) worth EUR 800 million, agreed with
five banks in 2020 with maturities of two
years (due 9 April 2022). The revolving credit
facility is guaranteed by the Finnish state.
The revolving credit facility was not utilised
during 2021.
In 2021, the Employment Fund implemented
a debt servicing plan by issuing commercial
papers with a value of EUR 100 million to
refinance commercial papers that were about
to mature (worth EUR 82.5 million).
Standard & Poor’s (S&P) has given the
Employment Fund a credit rating of AA+ with
a stable outlook. The Finnish government has
also been granted the same credit rating.
Finance
Change in net position
1,000
800
600
400
200
0
-200
-400
-600
-800
2017 2018 2019 2020 2021
EUR
million
-623
-412
572
872
694
31Report of the Board of Directors 2021
Investment activities
Investment activities
The Employment Fund carries
out investment activities
to the extent necessary to
manage the timing differences
in the cash flows generated
by its income and expenses,
and for liquidity management
purposes.
We manage our investment activities in
compliance with the investment principles
approved by the Supervisory Board, and the
investment plan set by the Board of Directors.
The value of investment and financial assets
possessed by the Employment Fund amounted
to EUR 1,339 (1,831) million at the end of 2021.
FINANCIAL OPERATING ENVIRONMENT
After the deep downturn of the COVID-19
pandemic, the global economy has swung
towards strong growth. It has been assessed
that the growth peaked in 2021, but it is
projected to remain reasonably strong in
2022, as well. From 2023 onwards, economic
growth is set to stabilise close to long-term
levels. Inflation, i.e. the increase in consumer
prices, increased in 2021 with rising raw
material prices as a particular driver. This
also began to show in the monetary policy
of the central banks. Several central banks
announced their intentions to gradually move
away from their heavily expansionary policy.
The first signs of tightening monetary policy
were already seen in 2021, as the US Federal
Reserve announced it would taper bond
purchases and consider raising interest rates
in 2022. The outlook for economic growth
is still subject to risks, especially in relation
to the COVID-19 pandemic and a prolonged
increase in inflation.
THE INVESTMENT MARKET
Considering the starting point, the
development of the investment market in
2021 was quite favourable. The development
of stock prices in the market was strong.
Especially in developed markets, the annual
yield was significantly better than average.
However, development was poor in the
Chinese market, where weakened growth
prospects, increased regulation, and issues in
the real estate sector gave particular reasons
for concern and added to investor insecurity.
The strongest growth phase of the stock
market was seen in the first half of the year,
and stock prices fluctuated slightly more
towards the end of 2021.
32Report of the Board of Directors 2021
The environment in the interest rate
market was characterised by slightly rising
interest rates last year. Annual returns from
government bonds with a low nominal yield
was negative in the euro zone, and returns
from corporate bonds also turned out lower
than average.
ALLOCATION OF INVESTMENTS
We invested actively in money market
instruments, bonds, funds, and equities,
as well as alternative investments.
Equity investments were reinstated as an
investment item in the investment plan for
2021. At the end of the financial period, EUR
721 (1,127) million of the Fund’s assets were
invested in money market instruments,
EUR 534 (682) million in bonds, EUR 38 (0)
million in equities, and EUR 43 (21) million in
alternative investments.
In 2021, we achieved a return of 0.7 (-0.7)
per cent on invested assets. The return
exceeded both the expectation entered in the
investment plan and the reference return on
our investment activities.
The investment plan for 2022 was approved
by the Employment Fund’s Board of Directors
on 21 December 2021. As part of the plan, it
was decided to increase the proportion of
alternative investments and to make a few
other changes to the allocation of funds.
RESPONSIBLE INVESTMENT
Responsibility in investment activities means
that we take responsibility and sustainability
factors into account in our investment
decisions.
When we make investment decisions, we
take environmental, social and governance
(ESG) factors into consideration in addition
to financial indicators. With the exception
of index investments, we integrate ESG
factors into all our investments insofar as
is possible. We do our part to ensure that
ESG factors are taken into consideration by
commissioning an external party to review
our investments two times per year and
report any deviations.
We exclude companies whose operating
methods are considered irresponsible with
regard to factors such as corruption, child
labour, employees’ rights and human rights
from our list of potential investments.
Furthermore, we invest in companies that
comply with the UN Global Compact wherever
possible.
Investment activities
Return on investments
2
1.5
1
0.5
0
-0.5
-1
2017 2018 2019 2020 2021
%
0.1
-0.6
-0.7
0.5
0.7
0.1
-0.1
Return on
investments
Reference rate
of return
-0.3
0.8
1.9
33Report of the Board of Directors 2021
Numerical methods of assessment are used
to monitor and analyse the responsibility
of the Employment Fund’s investments.
The goal is to provide a picture of the
Fund’s responsibility profile and map its
development as comprehensively and
diversely as possible. Similar metrics have
been used for monitoring since 2019. The
responsibility analysis includes a review
of operational responsibility metrics for the
investment items and the companies behind
them, such as commitment to equality, good
governance, and the development of variables
used to measure environmental impact.
According to the latest analysis by the asset
management company commissioned to
assess the responsibility of our investments
in 2021, our responsibility profile is good.
The results from the measurement methods
used did not fall significantly short of the
benchmark indices for the investment
market. In particular, the results related
to environmental impact have mostly
outperformed the benchmark indices for the
portfolio throughout the time we have been
measuring them, and continue to do so.
Investment activities
Investment spread
54%
3%
40%
Money market
Bonds
Shares
Alternative investments
Finnish Government T-Bill
OP Euro II A Fund
Danske Bank Bond
Finnish Government Bond
Nordea Focus Fixed Income Fund I
OP Corporate Bank Bond
Aktia Bank deposits
SEB Euro Short Rate BI Fund
German Government Bond
Nordea Bond
0 20 40 60 80
Largest investments
EUR million
EUR 44.9 million
EUR 30 million
3%
EUR 38.7 million
EUR 65.1 million
EUR 43.1 million
EUR 41 million
EUR 39.9 million
EUR 34.1 million
EUR 27.1 million
EUR 25.9 million
34Report of the Board of Directors 2021
Risk Management
Risk Management
The Employment Fund’s
internal control is based on a
‘three lines of defence’ model.
Risk management is an integral part of the
Employment Fund’s internal control, which
consists of all the practices and procedures
that aim to give the Fund’s Board of Directors
and Management a reasonable assurance
of the effectiveness of operations, the
achievement of set objectives, the reliability
and adequacy of financial and operational
information, as well as compliance with laws
and regulations.
Risk management measures enable threats
and opportunities related to the Employment
Fund’s operations to be identified, analysed,
and managed.
The Employment Fund has a full-time
risk manager tasked with supporting
and instructing the organisation on risk
identification and management. Since the
start of 2021, the Fund has also had a full-
time Compliance Officer to support internal
control. The Compliance Officer cooperates
with risk management to support the Board
of Directors, Management, and operations of
the Fund in complying with regulations and
internal guidelines. This is done by assessing
internal processes and procedures and
submitting observations and suggestions for
improvement to the Management, for example.
The risk manager and Compliance Officer
report directly to the Board of Directors, audit
committee, and Managing Director.
Systemic and regular risk management
ensures that the risks taken by the
Employment Fund are proportionate to
the Fund’s objectives and the risk appetite
specified in the Fund’s risk management
principles.
The significance of risk management has
been further highlighted, and a systemic
approach to it is an essential prerequisite
for the continuity of the Fund’s operations.
The COVID-19 pandemic has had a broader
scope of impact than expected, and from
the Employment Fund’s perspective, the
management of financial risks has been
particularly affected. Other focus areas for
risk management in 2021 included cyber
risks, strategic and reputational risks, as
well as operational risks, and regulatory
risks.
35Report of the Board of Directors 2021
Personnel
Personnel
At the end of 2021, the number of personnel
was 151 (171). As person-years of work, the
average number of personnel was 132 (140).
In 2021, the average number of employees
was 164, and the Fund paid EUR 7,929,867 in
salaries and EUR 134,267 in fringe benefits.
The Fund has implemented a compensation
system based on the complexity of work,
and a bonus system that supports the
achievement of the Fund’s strategic
objectives.
Men accounted for 46 (50) and women for 105
(121) of the personnel. The average employee
age was 41 (40), and the average duration of
employment at the Employment Fund was 6.0
years.
The Employment Fund’s Managing Director is
Janne Metsämäki, LL.M.
Number of employees in the
Employment Fund 2020–2021
200
175
150
125
100
75
50
25
0
30 Jun
2020
31 Dec
2020
30 Jun
2021
31 Dec
2021
persons
45
40
35
30
25
20
15
10
5
0
20–29
yrs.
30–39
yrs.
40–49
yrs.
50–59
yrs.
Over 60
yrs.
Age and gender distribution of
personnel in 2021
persons
Men Women
16
41
< 5
16
10
24
7
25
6
< 5
167
171
170
151