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
36Report of the Board of Directors 2021
Promoting and constantly monitoring
employee wellbeing are key commitments for
the Fund. The wellbeing of the personnel was
assessed by conducting an extensive survey
in the spring of 2021. According to the survey,
our personnel appreciates the possibility to
work remotely and hopes for increased self-
management. The average rate of absence
due to illness was 10.02 (10.35) days per
person.
In 2021, the focus of staff training was
on developing managerial competence
and on developing our employees’ digital
skills. Particular areas of emphasis for the
management included coaching and early
intervention skills. Our aim is to create
an excellent management culture in the
Fund through leadership coaching. The
Employment Fund continued the Studia
Generalia lecture series from 2020, where
visiting experts gave lectures to our staff. The
aim of the lectures is to improve wellbeing
and self-management skills among our staff.
The average number of training days
per person was 2.33 (2.26). Training was
provided remotely in the form of virtual
learning.
Due to the COVID-19 pandemic, 2021 was
another year spent working almost entirely
remotely. Over the year, we prepared our
move to new premises in Ruoholahti,
Helsinki. Our staff was actively involved in
the process, and we were able to move to the
new premises at the turn of the year. The new
activity-based office will facilitate even more
collaborative ways of working when we are all
able to work on site again.
During the year, we also reformed our
organisation to ensure that we are even better
positioned to achieve our objectives and
provide services in an efficient and customer-
oriented manner.
Personnel
37Report of the Board of Directors 2021
A glimpse into the coming year
A glimpse into the coming year
The employment rate and
the number of unemployed
jobseekers have demonstrated
positive trends in early 2022.
However, restrictions put in
place due to the COVID-19
pandemic have affected
employment in some sectors.
Developments in the coming
months will show whether
restrictions can be lifted and
society reopened on a larger
scale.
Compared to the previous year, some
changes are visible in the financial operating
environment. Basic economic factors remain
reasonably positive, but in the financial
market, the year is off to an uncertain start.
The stock market in particular has seen
greater fluctuations. At the time of drafting the
financial statements, the economic outlook for
the Employment Fund remains the same as
predicted in December 2021. Our assessment
at the time was that the costs of funding
unemployment benefits would decrease due
to the economy gradually growing stronger
and employment improving. We expect
this trend to continue in 2022. Modest
improvements in employment, combined with
a higher amount of unemployment insurance
contributions, should lead to the changes
in our net position being close to zero in
2022. By our estimate, the value of the net
assets in our business cycle buffer will be
approximately EUR 700 million at the end of
the year.
In 2022, we will continue to develop our
essential services and related information
systems to ensure that we are able to perform
our statutory tasks even more efficiently, and
serve our customers even better. We are also
involved in preparing legislation to phase
out the additional days of unemployment
insurance and replace them with a new
security package for employees dismissed
after the age of 55. The new package will be
financed by us.
In January 2022, we moved to our new
premises in Ruoholahti, Helsinki. Once the
COVID-19 situation allows us to operate
fully at our new premises, we will have the
opportunity to develop our working methods
and practices in a new activity-based office
environment.
38Report of the Board of Directors 2021
Corporate governance
Corporate governance
The corporate governance statement for the
Employment Fund in 2021 has been prepared
pursuant to the Securities Market Act and
the recommendation on reporting of the
Finnish Corporate Governance Code for Listed
Companies, which took effect on 1January 2020.
COMPLIANCE WITH THE FINNISH
CORPORATE GOVERNANCE CODE 2020 AND
DEVIATIONS FROM THE RECOMMENDATIONS
The Employment Fund is an independent
institution established by law that has issued
shares or interests for public trading. The
Employment Fund has issued bonds quoted on
Nasdaq OMX Helsinki Ltd, which will mature in
2023 and 2027. In addition, the Employment
Fund has a commercial paper that is due in 2022.
The Employment Fund conducts its operations,
where applicable, in compliance with the
Finnish Corporate Governance Code, which
is publicly available on the Securities Market
Association’s website (www.cgfinland.fi).
The operations and responsibilities of the
bodies of the Employment Fund are based on
the Act on the Financing of Unemployment
Benefits (555/1998), the Decree on the
Financing of Unemployment Benefits
(1176/1998) and the Decree on the Rules of
Procedure of the Employment Fund (862/1998).
The Decree on the Rules of Procedure of the
Employment Fund (862/1998) has applied to
the Employment Fund since 1 January 2019.
Due to the Employment Fund’s form of
activity and background, its operations differ
from the Finnish Corporate Governance Code
on the following recommendations:
• Recommendations 1, 2, 3 and 4:
The Employment Fund’s most senior
decision-making body is not a general
meeting or similar organ, but the Supervisory
Board appointed by the Government,
in accordance with the Decree on the
Regulations of the Unemployment Insurance
Fund (862/1998). The Decree includes
provisions on matters to be decided in
the meetings of the Supervisory Board
and the related procedures, as well as the
notice to the meeting. For this reason, the
recommendations concerning the general
meeting, the notice to the meeting, the general
meeting documents and the election process
for the Board of Directors are not applicable as
such to the Employment Fund’s operations.
• Recommendations 5, 6, 7, 8 and 9:
The Employment Fund’s Supervisory
Board elects the members of the Board
of Directors in accordance with the
principles set out in the Decree on the
Rules of Procedure of the Employment
Fund (862/1998). The Decree does not
restrict the terms of office of members of
the Board of Directors. However, in practice,
the Supervisory Board confirms the
members, chair and vice chair of the Board
of Directors annually. For this reason, the
recommendations concerning the election,
term of office, composition, diversity and
independence of the members of the Board
of Directors are not applicable to the
Employment Fund’s operations.
• Recommendations 10 and 19:
The Employment Fund’s Supervisory Board
elects the members of the Board of Directors
in accordance with the principles set out
39Report of the Board of Directors 2021
in the Decree on the Rules of Procedure of
the Employment Fund (862/1998). The
Employment Fund has no shareholders or
similar owners, so there is no evaluation
of whether significant shareholders are
independent of the management and the
recommendation concerning a shareholders'
nomination committee is not applicable.
• Recommendations 17 and 18:
The regulations governing the Employment
Fund’s operations do not impose an
obligation to establish special committees.
Therefore, the Fund does not have any
committees, other than an audit committee.
• Recommendation 21:
In accordance with the Decree on the
Rules of Procedure of the Employment
Fund (862/1998), the Supervisory
Board elects the members of the Board
of Directors, and the Board of Directors
elects the Chair from among its
members (alternately from among the
representatives of the employers and
employees), so the recommendation
concerning the restriction of the
managing director’s membership in the
Board is not applicable.
• Recommendation 22:
The Supervisory Board decides on the
remuneration of the Board of Directors.
The Ministry of Social Affairs and Health
decides on the remuneration for meetings
for the Supervisory Board and the
principles of compensation for travelling
expenses. The Board of Directors decides
on the remuneration and the terms and
conditions of the service contract of
the managing director, as well as the
principles of remuneration for other
management staff.
• Recommendation 23:
The Employment Fund has no shareholders
or similar owners, wherefore the
recommendations relating to shares and
share-based remuneration for the members
of the Board of Directors will not be applied.
• Recommendation 28:
The Employment Fund is not a corporation,
so the regulations on related-party
transactions are not applicable to the
Employment Fund’s operations within the
meaning of the Corporate Governance Code.
However, the Employment Fund complies
with IFRS standards and monitors related-
party transactions as described below.
SUPERVISORY BOARD
According to the Decree on the Rules
of Procedure of the Employment Fund
(862/1998), the Employment Fund’s
most senior decision-making body is the
Supervisory Board, which has 18 members.
The Finnish Government appoints the members
of the Employment Fund’s Supervisory Board,
six of whom are representatives nominated
by the Confederation of Finnish Industries,
three by the Commission for Local Authority
Employers, three by the Central Organisation
of Finnish Trade Unions (SAK), three by
the Finnish Confederation of Professionals
(STTK) and three by the Confederation of
Unions for Professional and Managerial Staff
in Finland (Akava). The term of the members
of the Employment Fund’s Supervisory Board
is three calendar years.
The Supervisory Board elects a chair and vice
chair from among its members for one calendar
year at a time, one of whom is an employer
representative and the other one an employee
representative. The chairmanship is held in turn
by representatives of employers and employees,
alternating annually. In 2021, the Chair of the
Supervisory Board was Jari Jokinen.
On 22 October 2020, based on the proposal of the
labour market parties, the Government appointed
the members of the Employment Fund’s
Supervisory Board for the term 2021–2023.
Corporate governance
40Report of the Board of Directors 2021 Corporate governance
The members of the Supervisory Board in 2021 were:
Name Year of birth Education Main occupation
Jari Jokinen, Chair 1967 Master of Science (Technology) Executive Director, Tekniikan Akateemisten Liitto TEK ry
Antti Zitting, Vice Chair 1956 Master of Science (Technology) Chairman of the Board, Sacotec oy
Riku Aalto 1965 Master of Administrative Sciences President, Industrial Union
Teija Asara-Laaksonen 1957 secondary school graduate Vice President, Trade Union for the Public and Welfare Sectors (JHL)
Jorma Haapanen 1964 Master of Agriculture and Forestry Sciences Preparation Director, Western Uusimaa Wellbeing Services County
Tomi Lantto 1970 Master of Economic Sciences CEO, Antell Oy
Antti Korpiniemi 1961 Master of Agriculture and Forestry Sciences CEO, Berner Ltd
Kirsi-Marja Lievonen 1962 Licentiate of Laws trained on the bench HR Director, City of Vantaa
Petri Lindroos 1965 Master of Education Director of Negotiations, Trade Union of Education in Finland (OAJ)
Salla Luomanmäki 1963 Master of Arts Executive Director, Akava Special Branches
Jorma Malinen 1959 Automation Designer President, Trade Union Pro
Matti Mettälä 1963 Master of Laws trained on the bench EVP, Kesko Corporation
Taina Niiranen 1966 Master of Administrative Sciences Director of Health and Wellbeing Services, Parkano municipality
Olli Nikula 1967 Master of Economic Sciences CEO, Saint-Gobain Finland Ltd
Silja Paavola 1956 Auxiliary Nurse Chair, SuPer ry
Millariikka Rytkönen 1975 Midwife-nurse, Master’s degree Chair, Tehy ry
Annika Rönni-Sällinen 1976 Master of Laws Chair, Service Union United PAM
Teemu Kokko 1961 Doctor of Science (Business Administration) Managing Director, Haaga-Helia University of Applied Sciences
41Report of the Board of Directors 2021
Meeting practice and access to information
The ordinary meeting of the Supervisory
Board is held twice a year, in the spring before
the end of May and in the autumn no later
than in October. An additional meeting of
the Supervisory Board is held whenever the
chair of the Supervisory Board or the Board
of Directors deems it necessary, or when at
least two members of the Supervisory Board
request in writing that an additional meeting
be held for a reason specified in the request.
The notice to the meeting must be delivered
in a verifiable manner to the members of the
Supervisory Board no later than eight days
before the meeting.
The meeting of the Supervisory Board can
be constituted a quorum when the chair or
the vice chair and at least one half of the
members are present at the meeting. Those
attending the meeting must include both
employer and employee representatives.
The decisions of the Supervisory Board are
based on a simple majority. In the event of a
tie, the decision is then based on the opinion
supported by the chair of the meeting. In the
event of an election in which the voting ends
in a tie, the result is then decided by drawing
lots. In the event that the question concerns
a proposal for unemployment insurance
contributions and the voting ends in a tie, the
opinion supported by both the chair and the
vice chair then becomes the decision.
The Supervisory Board elects the chair and
vice chair of the Supervisory Board for one
calendar year at a time. One must be an
employer representative and the other an
employee representative. The chairmanship is
held in turn by representatives of employers
and employees, alternating annually.
In 2021, the board convened four times.
Corporate governance
42Report of the Board of Directors 2021
BOARD OF DIRECTORS
According to the Decree on the Rules
of Procedure of the Employment Fund
(862/1998), the Employment Fund must
have a Board of Directors composed of 14
members. The members are nominated by
the Supervisory Board such that seven of
the Board members are representatives
of employer organisations and seven are
employee representatives. The Board of
Directors has to have a chair and vice
chair, one of whom must be an employer
representative and the other one an employee
representative. The chairmanship is held in
turn by representatives of employers and
employees, alternating annually.
The Board of Directors constitutes a quorum
when the chair or the vice chair and at least
seven members are present at the meeting.
Those attending the meeting must include
both employer and employee representatives.
The decisions of the Board are based on
a simple majority. In the event of a tie,
the decision is then based on the opinion
supported by the chair of the meeting.
The Board of Directors is responsible for
the Employment Fund’s administration and
the proper organisation of its operations.
The Board of Directors follows the
development of the Employment
Fund with the help of monthly
reports and other information delivered by the
management. The main duties and operating
principles of the Employment Fund’s Board
of Directors should be specified in the written
rules of procedure. The Board of Directors
must carry out a self-assessment of its
performance once a year.
Corporate governance
The Board of Directors is responsible for the Employment Fund’s
administration and the proper organisation of its operations.
43Report of the Board of Directors 2021
The members of the Board of Directors in 2021 were:
Name Year of birth Education Main occupation
Vesa Rantahalvari, Chair 1967 Master of Administrative Sciences Senior Expert, Confederation of Finnish Industries (EK)
Saana Siekkinen, Vice Chair 1972 Master of Social Sciences President, Central Organisation of Finnish Trade Unions (SAK)
Tuomas Aarto 1973 Master of Laws trained on the bench Director General, Service Sector Employers Palta
Sture Fjäder 1958 Master of Economic Sciences
President, Confederation of Unions for Professional and
Managerial Staff in Finland (Akava)
Riikka Heikinheimo 1963 Doctor of Philosophy Director, Confederation of Finnish Industries (EK)
Minna Helle 1971 Master of Laws Deputy CEO, Technology Industries of Finland
Minna Etu-Seppälä 1972 Master of Laws trained on the bench Director, Chemical Industry Federation of Finland
Markku Jalonen 1960 Licentiate of Social Sciences Managing Director, Local Government and County Employers KT
Ilkka Kaukoranta 1986 Master of Political Sciences Chief Economist, SAK
Heikki Taulu 1973 Master of Social Sciences
Economist, Confederation of Unions for Professional and
Managerial Staff in Finland (Akava)
Lainà Patrizio 1985
Doctor of Political Science,
Master of Economic Sciences Chief Economist, STTK
Antti Palola 1959 Sea Captain Chair of the Board, Finnish Confederation of Professionals STTK
Jorma Palola,
until July 31, 2021 1954 Licentiate of Laws Chief Negotiator, Local Government and County Employers KT
Pirjo Väänänen 1971 Master of Social Science Head of Social Affairs, SAK
Henrika Nybondas-Kangas,
as of August 1, 2021 1974 Master of Laws trained on the bench Chief Negotiator, Local Government and County Employers KT
Corporate governance
44Report of the Board of Directors 2021
Meeting practice and access to information
The Chair convenes the meeting of the
Board of Directors. The notice concerning
the meeting of the Board of Directors must
be delivered to all members of the Board of
Directors in good time before the meeting in
order to ensure the possibility of the members
of the Board of Directors to attend the
meetings. The Board of Directors meets 8–12
times per year and, if necessary, more often.
If all the members approve, the meeting of
the Board of Directors may be held as a phone
conference or by email in case of urgent and
specific matters.
Chair’s duties
The Supervisory Board elects the Chair of
the Board of Directors and the Vice Chair
of the Board of Directors for one calendar
year at a time. In 2021, the Chair was Vesa
Rantahalvari.
Chair of the Board
• convenes meetings of the Board of
Directors
• approves the agenda prepared by the
Managing Director for the meetings of the
Board of Directors
• is responsible for drafting the minutes of
every meeting of the Board of Directors
• maintains contact with the Managing
Director and the members of the Board of
Directors between meetings, if necessary,
and
• is responsible for ensuring that this
working order is complied with in the
work of the Board of Directors
• approves the invoices of the Managing
Director.
Operations of the Board of Directors
In 2021, the Board of Directors convened 14
times. On the basis of the rules applying to the
Employment Fund, the Board of Directors does
not have any permanent committees. However,
it can decide to establish working groups or
committees for the purpose of assisting the
Board of Directors with the preparation of
certain matters falling within the competence
of the Board of Directors. The Board of Directors
has had an audit committee since 2019.
MANAGING DIRECTOR
The Employment Fund has a Managing
Director who is responsible for the Fund’s
management in accordance with guidelines
and orders issued by the Board of Directors.
The Managing Director is responsible for
ensuring that the Employment Fund’s
accounts comply with the law and that its
financial affairs have been arranged in a
reliable manner. The Managing Director must
also provide the Board of Directors and its
members with the information necessary for
the Board of Directors to perform its duties.
The Employment Fund’s Managing Director is
Janne Metsämäki, LL.M. (b. 1960).
Corporate governance
In 2021, the Board of Directors convened 14 times.
45Report of the Board of Directors 2021
MANAGEMENT GROUP
The Management Group supports the Managing Director in leading the
Employment Fund’s operations and achieving the Employment Fund’s
strategic and operational goals. The Management Group convenes
weekly.
In 2021, the members of the Management Group were:
Name
Year of
birth Education Duties/responsibilities
Virpi Halme 1976 Master of Laws
Director, Development
and Technology
Katja Knaapila 1966
Master of Business
Administration
Director, HR and
Communication
Juho Oksanen,
until May 31,
2021 1978
Master of Science
(Economics and Business
Administration), Master of
Social Sciences
Director, Development
and Renewal
Tapio Oksanen 1958 Master of Economic Sciences Chief Financial Officer
Merli Vanala,
until May 31,
2021 1964 Master of Arts
Director, Customer
Relations
Tuulikki Saari,
as of August 9,
2021 1979 Master of Arts
Director, Customer
Relations
Due to organisational reforms, the composition and responsibilities of
the Management Group changed slightly as of June 1, 2021.
LEGALITY AND COMPLIANCE OF OPERATIONS
The Employment Fund’s activities comply with the law, the guidelines
and regulations applying to the Fund, and the requirements of good
governance.
RESPONSIBILITIES OF INTERNAL CONTROL
AND RISK MANAGEMENT
The Employment Fund’s Board of Directors decides on the bases
of internal control and risk management, and it requires that the
Employment Fund’s operations are organised so as to enable adequate
internal control and risk management across every level of the
organisation and in all its activities.
Corporate governance
46Report of the Board of Directors 2021
The principles of the Employment Fund’s
internal control and risk management apply
to all of the Employment Fund’s functions,
and each employee is responsible for
implementing them.
The Employment Fund’s internal control is
based on a ‘three lines of defence’ model.
Principles of organising
insider administration
During 2020, the Employment Fund issued
two bonds (each worth EUR 600 million).
With respect to the issuance of the bonds,
the Employment Fund has complied with the
requirements laid down in insider legislation,
including the provisions applicable to
issuers of bonds. The principles and
guidelines on insider administration have
been approved by the Employment Fund's
Board of Directors.
Principles concerning related parties
The regulations on related-party transactions
set out in the Limited Liability Companies Act
are not applicable to the Employment Fund’s
operations. However, the Employment Fund
complies with IFRS standards and guidelines
regarding related-party transactions (IAS24).
The related parties of the Employment Fund
include the members of the Supervisory
Board, members of the Board of Directors,
the Managing Director, the main auditor,
the members of the Management Group,
and their spouses, trustees, and controlled
undertakings.
Transactions involving related parties are
handled in accordance with the guidelines
on related-party transactions approved by
the Board of Directors. There were no related-
party transactions in 2021. The list of related
parties is maintained by the Employment
Fund’s Compliance Officer.
CONTROL ENVIRONMENT
The Managing Director serves as the
Employment Fund’s most senior executive
decision-maker with the assistance of the
Management Group. The Management Group
is responsible for ensuring that the functions
of the Fund have adequate resources in order
to perform their duties, which are determined
by law or based on decisions made by the
Board of Directors.
Corporate governance
47Report of the Board of Directors 2021 Remuneration report
Remuneration report
The Employment Fund is not a corporation,
so the regulations on remuneration principles
and reporting are not applicable as such to
the Employment Fund’s operations. Therefore,
the Employment Fund’s remuneration report
for 2021 has been drawn up, where applicable
for the Employment Fund, in compliance with
the Corporate Governance Code 2020
(www.cgfinland.fi), published by the
Securities Market Association.
FEES AND OTHER BENEFITS PAID TO THE
MEMBERS OF THE SUPERVISORY BOARD
On 22 October 2020, based on the proposal
of the labour market parties, the Government
appointed the members of the Employment
Fund’s Supervisory Board for the term from
1January 2021 to 31 December 2023.
The Ministry of Social Affairs and Health
decides on the remuneration for meetings
for the Supervisory Board and the principles
of compensation for travelling expenses. On
12 September 2019, the Ministry of Social
Affairs and Health decided that the fees for
the members of the Supervisory Board are
as follows: for the Chair, EUR 300 per month
and EUR 400 per meeting, for the Vice Chair
and other members, EUR 300 per meeting.
In 2021, the Supervisory Board convened
four times. One of the meetings was held
remotely via email. No remuneration is paid
for attending email meetings.
48Report of the Board of Directors 2021
In 2021, the fees for the members of the Supervisory Board were paid as follows:
Name
Meeting fee of
members of the
Supervisory Board
Annual fee of the
Chairman of the
Supervisory Board Travel expenses
Total on
31 December
2021
Attendance at
meetings of the
Supervisory Board *
Jokinen Jari, Chair 1,100 3,600 4,700 3/3
Zitting Antti, Vice Chair 900 44 944 3/3
Aalto Riku 900 900 3/3
Asara-Laaksonen Teija 900 900 3/3
Haapanen Jorma 900 900 3/3
Kokko Teemu 900 900 3/3
Korpiniemi Antti 900 900 3/3
Lantto Tomi 900 900 3/3
Lievonen Kirsi-Marja 600 600 2/3
Lindroos Petri 900 900 3/3
Luomanmäki Salla 900 900 3/3
Malinen Jorma 600 600 2/3
Mettälä Matti 900 900 3/3
Niiranen Taina 900 900 3/3
Nikula Olli 900 900 3/3
Paavola Silja 600 600 2/3
Rytkönen Millariikka 600 600 2/3
Rönni-Sällinen Annika 900 900 3/3
Total 15,200 3,600 44 18,844
* The table shows the meetings subject to a meeting fee.
Remuneration report
49Report of the Board of Directors 2021
FEES AND OTHER BENEFITS PAID TO THE MEMBERS OF THE
BOARD OF DIRECTORS
The Supervisory Board decides on the remuneration of the Board of
Directors. On 29 August 2019, the Supervisory Board decided that the
fees for the members of the Board of Directors are as follows:
Fee EUR
per month
Fee EUR
per meeting
Chair of the Board 1,000 400
Vice Chair of the Board 800 300
Other members of the
Board of Directors 500 250
No other remuneration or supplementary pension arrangements are in
place for the members of the Board of Directors.
In 2021, the Board of Directors convened 14 times. The meetings
included one discussion meeting and one strategy meeting, which
were not subject to a meeting fee.
In 2021, the fees for the members of the Board of Directors were paid
as follows:
Name
Annual
fees of the
Board of
Directors
Meeting
fees for the
Board of
Directors
Total on
31 December
2021
Attendance
at meetings
of the Board
of Directors *
Rantahalvari Vesa,
Chair
12,000 4,800
16,800
12/12
Siekkinen Saana,
Vice Chair
9,600 3,600
13,200
12/12
Aarto Tuomas
6,000 3,000
9,000
12/12
Etu-Seppälä Minna
6,000 3,000
9,000
12/12
Fjäder Sture
6,000 2,000
8,000
8/12
Heikinheimo
Riikka
6,000 2,750
8,750
11/12
Helle Minna
6,000 3,000
9,000
12/12
Jalonen Markku
6,000 2,750
8,750
11/12
Kaukoranta Ilkka
6,000 3,000
9,000
12/12
Lainà Patrizio
6,000 3,000
9,000
12/12
Nybondas-Kangas
Henrika
2,500 1,250
3,750
5/12
Palola Antti
6,000 3,000
9,000
12/12
Palola Jorma
3,500 1,500
5,000
6/12
Taulu Heikki
6,000 3,000
9,000
12/12
Väänänen Pirjo
6,000 2,500 8,500 10/12
Total 93,600 42,150 135,750
* The table shows the meetings subject to a meeting fee.
Remuneration report
50Report of the Board of Directors 2021
The fees for the audit committee were EUR400 per meeting for the
Chair and EUR250 per meeting for the members of the committee. In
2021, the audit committee convened five times.
In 2021, the fees for the members of the audit committee were paid as
follows:
Name
Meeting fees
for the audit
committee
Total on
31 December
2021
Attendance at
meetings of the
audit committee
Kaukoranta Ilkka,
Chair 2,000 2,000 5/5
Palola Jorma,
Vice Chair 750 750 3/5
Helle Minna 1,250 1,250 5/5
Taulu Heikki 1,250 1,250 5/5
Nybondas-Kangas
Henrika 500 500 2/5
Total 5,750 5,750
REMUNERATION SCHEME FOR THE MANAGING DIRECTOR
As of 2016, a separate remuneration scheme approved by the Board
has been applied to the Managing Director. The Board of Directors
decides on the payment of any bonuses. The Management Group’s
bonuses are based on an annual remuneration programme approved
by the Board of Directors. Based on a proposal of the Managing
Director, and in accordance with confirmed bonus criteria, the Board of
Directors decides on the payment of bonuses.
The salaries and other benefits and fees paid to the Managing Director
for 2021 are shown in the following table. Social security contributions
are excluded.
Position
Salary
and fringe
benefits
Variable
performance-
related bonus
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Managing
Director 165,743 4,683 170,426 167,034
TERMS OF EMPLOYMENT OF THE MANAGING DIRECTOR
The terms of the employment contract of the Managing Director have
been determined by a decision of the Board of Directors and verified
with a written agreement. The remuneration of the Managing Director
consists of a fixed salary and fringe benefits (meal, telephone and car
benefits), as well as a variable performance-related bonus. Performance
targets and any remuneration to be paid are approved by the Board
of Directors. The retirement age and pension accrual of the Managing
Director are based on general employment pension legislation. The
Fund has not provided a supplementary pension arrangement for the
Managing Director. The Managing Director’s notice period is based on
the Employment Contracts Act for both parties.
Remuneration report
51Report of the Board of Directors 2021
REMUNERATION FOR THE MANAGEMENT GROUP
The remuneration of the Employment Fund’s Management Group
consists of a fixed salary and fringe benefits (meal and telephone
benefits), as well as a variable performance-related bonus that
cannot exceed 10 per cent of the annual salary including benefits.
The Management Group’s performance bonus is based on an annual
remuneration programme approved by the Board of Directors.
Based on a proposal of the Managing Director, and in accordance
with confirmed bonus criteria, the Board of Directors decides on the
payment of bonuses.
The salaries and other benefits and fees paid to the Management
Group during 2021 are shown in the following table. Social security
contributions are excluded.
Position
Salary
and fringe
benefits
Variable
performance-
related bonus
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Management
Group 593,127 19,244 612,371 552,358
TERMS OF EMPLOYMENT OF THE MANAGEMENT GROUP
The terms of employment for Management Group members have been
defined in a written contract. The retirement age and pension accrual
of the Management Group members are based on general employment
pension legislation. The Fund has not provided a supplementary
pension arrangement for the Management Group members. The
Management Group members’ notice period is defined in the
employment contract for both parties.
Remuneration report
52
Financial
statements
53Financial statement 2021
Financial Statements (IFRS) 2021
Statement of changes in net position
STATEMENT OF CHANGES IN NET POSITION
EUR thousand Note
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Contributions collected
Unemployment insurance contributions
5 3,334,855 3,340,330
Total contributions collected 3,334,855 3,340,330
Financing contributions paid
Financing contributions paid
6 -3,724,310 -3,926,051
Administrative expenses
7 -25,505 -20,672
Total financing contributions paid -3,749,815 -3,946,723
Net fair value gains on investments
14 4,124 -13,072
Financing costs
8 -666 -3,344
CHANGE IN NET POSITION -411,502 -622,809
54Financial statement 2021
STATEMENT OF NET POSITION
EUR thousand Note 31 Dec 2021 31 Dec 2020
ASSETS
Non-current assets
Property, plant and equipment
9 3,735 730
Intangible assets
10 3,614 6,902
Other receivables
13 328 328
Total non-current assets 7,677 7,960
Current assets
Unemployment insurance
contribution receivables
11 3,356 7,097
Accruals of unemployment
insurance contributions
11 622,246 535,768
Other receivables
13 46,210 41,751
Investment assets
15 1,046,293 1,194,442
Cash and cash equivalents
16 292,326 636,292
Total current assets 2,010,431 2,415,352
Total assets 2,018,108 2,423,312
NET ASSETS
For previous periods 1,044,765 1,667,574
For the period -411,502 -622,809
Total net position 633,263 1,044,765
EUR thousand Note 31 Dec 2021 31 Dec 2020
LIABILITIES
Non-current liabilities
Bonds
17 1,198,945 1,199,122
Total non-current liabilities 1,198,945 1,199,122
Current liabilities
Loans
17 100,242 87,512
Unemployment insurance
contribution liabilities
11 1,846 1,800
Other liabilities
18 83,813 90,113
Total current liabilities 185,900 179,425
Total liabilities 1,384,845 1,378,547
Total net position and liabilities 2,018,108 2,423,312
Statement of net position
55Financial statement 2021
CASH FLOW STATEMENT
EUR thousand 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020
Unemployment insurance contributions collected 3,252,016 3,440,824
Financing contributions paid -3,763,083 -3,908,302
Interests paid -2,884 -5,151
Net cash and cash equivalent used in ordinary
operations -513,951 -472,629
Cash flows from investments
Purchases of property, plant, and equipment 0 -43
Purchases of intangible assets -683 -2,462
Investments in financial instruments -1,245,581 -2,970,114
Sales of investment instruments and
realised income 1,403,696 2,629,648
Other non-current assets 0 0
Net cash and cash equivalents generated from
investments 157,431 -342,972
Loans withdrawn and repaid 12,553 1,287,593
Net cash and cash equivalents generated from
financing activities 12,553 1,287,593
Net increase/decrease in cash and cash equivalents -343,966 471,992
Cash and cash equivalents at the beginning of the
financial period 636,292 164,300
Cash and cash equivalents at the end of the
financial period 292,326 636,292
Cash flow statement
Notes to the financial statements 56Financial statement 2021
Notes to the financial statements
Accounting policies of the financial statements
1 GENERAL INFORMATION
The Employment Fund (“the Fund”) (business
ID 1098099-7), established in 2019, is an
independent institution managed by labour
market parties and supervised by the
Ministry of Social Affairs and Health and
the Finnish Financial Supervisory Authority,
whose main objectives are to finance
unemployment benefits and grant adult
education allowances. The Fund also directs,
develops and supervises the implementation
of the collection procedure of unemployment
insurance contributions and determines and
collects the employer’s liability component
of unemployment allowances. In addition,
the Fund manages employer’s training
compensations. The training compensation
is based on the Act on Compensations for
Training (1140/2013). The Employment
Fund is domiciled in Helsinki. In 2021,
the office address was Kansakoulukuja 1,
00100 Helsinki (from 10 February 2022, the
Employment Fund’s address is Itämerenkatu
11-13, 00180 Helsinki).
The principal accounting policies applied
in the financial statements of the Fund are
set out below. These policies have been
consistently applied to financial periods
presented unless otherwise stated.
2 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND COMPARABILITY
OF FINANCIAL PERIODS
2.1 Basis of preparation
The Employment Fund’s financial statements
have been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the European Union,
conforming with the IAS standards and
IFRS standards as well as SIC and IFRIC
interpretations applicable as per 31 December
2021. IFRS refers to the standards and
interpretations applicable to corporations
and set out in the Finnish Accounting Act and
other provisions issued under it in accordance
with the procedure laid down in Regulation
(EC) No 1606/2002 of the European
Parliament and of the Council. The notes to
the financial statements also comply with
Finnish accounting and corporate legislation
supplementing IFRS standards.
The Employment Fund is a non-profit,
government-affiliated fund whose operations
are based on the Act on the Financing of
Unemployment Benefits, the Decree of the
Financing of Unemployment Benefits and
on the Decree on Rules of Procedure of the
Employment Fund with amendments, as
stated in section 1.
The Employment Fund collects and pays
unemployment insurance contributions.
The Fund does not carry out such business
activities where it would generate revenues
arising from the sale of goods or rendering
of services. Due to the nature of the Fund’s
operations, the Fund does not generate
revenues, and common revenue recognition
principles do not apply. IFRS standards do
not directly regulate the structure of the
Notes to the financial statements 57Financial statement 2021
IFRS financial statements of a fund like the
Employment Fund, or the basis for recognition
and measurement of transactions. The
Employment Fund applied the framework of
IFRS standards and general principles for
recognition and measurement when it prepared
its IFRS financial statements. Due to these
factors, the primary statements of the Fund’s
IFRS financial statements are the statement
of changes in net position, the statement of
net position, and the cash flow statement.
The changes in net position for the financial
period consist of the sum of unemployment
insurance contributions collected and paid,
gains on investments and financial items.
The difference between the Fund’s assets
and liabilities reflects the accumulated
net position, which is also referred to as
the business cycle buffer. A more detailed
description of the business cycle buffer is
provided in note 4.2. The Employment Fund
has no shares or equity. Therefore, these
IFRS financial statements do not include the
statement of changes in equity. However, the
statement of changes in the net position is
presented as a separate primary statement.
During the presented financial periods, the
Fund did not have any such transactions
that should have been recognised in other
comprehensive income. Therefore, these
IFRS financial statements do not include a
statement of other comprehensive income.
The Employment Fund does not operate as an
insurer as it does not issue or hold insurance
or reinsurance contracts. Therefore, the
Fund’s operations are not within the scope
of IFRS 4 Insurance Contracts. The principal
valuation method used in the financial
statements is the acquisition cost, although
financial assets and liabilities recognised at
fair value through profit or loss are measured
at fair value. The financial statements are
presented in euros unless otherwise stated.
The preparation of financial statements
in conformity with IFRS requires the use
of certain critical accounting estimates.
It also requires management to exercise
its judgement in the process of applying
the accounting policies of the financial
statements. The significant accounting
estimates and judgements are described in
note 3.
There are no new IFRS standards or IFRIC
interpretations that are not yet effective and
that would be expected to have a material
impact on the Employment Fund.
2.2 Foreign currency translation
The financial statements are prepared in
euros which is the Employment Fund’s
functional and presentation currency. The
Fund’s foreign currency transactions are
translated into the operating currency at the
exchange rates prevailing on the transaction
dates. Deposits denominated in foreign
currencies are measured at fair value through
profit and loss, and the effects of changes in
exchange rates have been presented as part of
the total fair value change.
2.3 Unemployment insurance contributions
The Employment Fund assesses and collects
unemployment insurance contributions based
on chapter 7 of the Act on the Financing of
Unemployment Benefits. Employers have
reported the salaries they have paid to
employees in the Incomes Register since
1January 2019. The unemployment insurance
contributions have been assessed on the
basis of the income information reported
to the Incomes Register. At the same time,
the contributions have been assessed using
more up-to-date information about the actual
payroll sums. Unemployment insurance
contributions are assessed four times per year
based on the payroll information for the three
preceding calendar months. Unemployment
Notes to the financial statements 58Financial statement 2021
insurance contribution income is recognised
in the financial statements on an accrual
basis, and the unemployment insurance
income for the final quarter of the year is
recognised in the balance sheet under pre-
payments and accrued income.
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.
Liability components of employer’s
unemployment allowances
The Employment Fund assesses and collects
liability component compensation of
unemployment allowances from employers.
The liability component of unemployment
security applies to employers whose
payroll amount, serving as the basis for the
calculation of the unemployment insurance
contribution, exceeds a minimum level of
EUR2,169,000 (in 2021). An employer may
be obligated to pay the employer’s liability
component if they have dismissed or laid
off an older employee whose employment
relationship has lasted at least three years
and the employee has been unemployed
or laid off for a long time. Unemployment
benefit expenses are financed by the liability
components.
Collected liability component contributions
that cover the cost of daily unemployment
allowances are recognised as income for
the period when the amount of income can
be reliably measured. In order to cover the
cost of additional daily allowances, the
collected liability components are recognised
as income within several financial periods
based on the estimate of the realisation of
corresponding expenses.
Conduct according to chapter 12, section 3 of
the Employment Contracts Act
According to the Employment Contracts Act,
when a court of law handles a reconciliation
matter, it must provide the Employment
Fund with the opportunity to be heard. As
a rule, 75% of the earnings-related daily
unemployment allowance received by the
employee during the indemnity period
is deducted from the indemnity imposed
on the employer for wrongful termination
of employment. The court must order the
employer to pay the amount deducted from
the compensation to the Employment Fund
and inform it of the final judgment or ruling
on the case. 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.
Receivables subject to debt-collection
The Fund collects and monitors neglected
unemployment insurance contributions, those
subject to enforcement, and contributions
due by companies in bankruptcy or debt
restructuring proceedings. As the receivables
do not include any significant financial
components, the Fund has used the simplified
model permitted by IFRS9.
2.4 Subsidies to unemployment funds
Under the Act on the Financing of
Unemployment Benefits (555/1998), with
regard to the financing of earnings-related
unemployment allowances, the Employment
Fund is liable for the costs incurred from
unemployment allowances, employment
promotion measures, and from job alternation
compensation, insofar as the state or
individual unemployment funds are not liable
for these. The above-mentioned benefits are
paid from the unemployment funds.
Notes to the financial statements 59Financial statement 2021
In addition, the Employment Fund is liable for
the insurance contributions for unemployed
persons and recipients of the adult education
allowance that are paid through the Finnish
Centre for Pensions to the employment
pension institutions.
According to the Decree on the
Implementation of the Act on Unemployment
Funds (272/2001), the Employment Fund
is tasked with processing prepayment
applications and payment decisions and
monitoring the sufficiency of prepayments.
The Fund makes prepayments to the
unemployment funds twice a month in
accordance with the budget approved at
the end of the previous financial period.
The Fund receives monthly statistics from
the Financial Supervisory Authority on the
accumulated allowances paid by the funds to
their customers, and based on that, the Fund
has accrued the prepayments and actual
payments to each fund either as a receivable
or liability in its accounts. This accrual is
recognised by benefit type.
The funds for the government contribution
paid to unemployment funds are received
from the Ministry of Social Affairs and
Health. The Fund transfers the prepayments
of government contributions to the
unemployment funds on the first banking
day of each month. In 2021, the Ministry of
Social Affairs and Health paid government
contributions to the Fund as fixed monthly
prepayments, unless otherwise proposed by
the Employment Fund.
The income received from the ministries and
the expenditures paid to the unemployment
funds have been recognised in amounts
corresponding to the benefit payments made
by the funds to their customers. The Ministry
of Social Affairs and Health will confirm the
financial statements of the unemployment
funds on the basis of final information in
summer 2022, at which point the Fund will
make equalisations in the account balances
between the unemployment funds and the
state.
Under section 4 of the Act on the Financing
of Unemployment Benefits, the Employment
Fund has sole responsibility for funding
the increased earnings-related component
laid down in section 6 of the Act on
Unemployment Security. From the beginning
of 2015, the means by which the higher
income earnings-related unemployment
allowances are calculated was changed
so that the level of allowances decreased
slightly. The same change was carried out
regarding the supplementary earnings-
related allowances. These changes implement
the reduction of unemployment allowances
as specified in the Finnish Government’s
framework decision. The change decreases
expenditure related to earnings-related daily
unemployment allowances. To implement
government savings, the Employment Fund
pays the amount of savings (approximately
EUR 50.3 million) yearly to Kela to finance
basic social security under section 23 of
the Act on the Financing of Unemployment
Benefits (555/1998).
Payments to the Finnish Centre for Pensions
and State Pension Fund and their interest rates
The Employment Fund’s second-largest
expense has been the contribution paid
to the Finnish Centre for Pensions to
cover the pension liabilities and expenses
arising from taking into account the time of
unemployment, education and job alternation
leave (Employees’ Pension Act [395/2006],
sections 74 and 182). The amount of this
contribution is determined by estimating
the average amount of pension contributions
that would be paid for the unpaid periods that
constitute the basis of the accrued pension
Notes to the financial statements 60Financial statement 2021
security. As stated above, the Fund is liable to
pay the contribution laid down in sections 62
and 133 of the State Employees’ Pensions Act
(1295/2006) to the State Pension Fund.
Payments made to the Finnish Centre for
Pensions for the financial year in accordance
with section 12c of the Employees Pensions
Act (561/1998) are based on an estimate
provided by the Finnish Centre for Pensions
and adjusted in the financial statements.
The difference between the payments made
and the adjusted estimate is recognised
as prepayments and accrued income or
accruals and deferred income. The final
payment amount is received from the
Finnish Centre for Pensions in the spring
of the year following the financial year, and
the difference between the final payment
and payment estimate used in the financial
statements is presented as an adjustment, an
equalisation payment for the previous year,
in the following year’s financial statements.
The revised payment for the year and the
equalisation payment for the previous year
have been specified in the notes to the
financial statements.
The Finnish Centre for Pensions assigns
interest on the charges imposed on the
Employment Fund according to the TyEL
premium insurance interest rate. The revised
payment included in the financial statements
accrues interest until the end of the financial
year (debiting interest). The Finnish Centre
for Pensions refunds the interest to the
Unemployment Insurance Fund according
to the actual payments and payment dates
(compensatory interest).
The final payment amount determined in
the following year accrues interest until the
clearance date agreed between the Finnish
Centre for Pensions and the Employment
Fund (previous year’s debiting interest).
Compensatory interest is correspondingly
calculated for all payments made by the
Fund in the previous year (compensatory
interest for the previous year’s payments).
The debiting and compensatory interests
for payments to the State Pension Fund are
calculated in a manner identical to the above.
Settlement to Kela of income from the
unemployment insurance contributions
of employees who are not members of an
unemployment fund
Under sections 8 and 23 of the Act on
the Financing of Unemployment Benefits
(555/1998), the Fund makes an annual
prepayment to Kela from the employees’
unemployment insurance contribution
income, corresponding to the percentage
of employees who are not members of an
unemployment fund. The amount of the
settlement is estimated from data collected
by Statistic Finland, and the estimate is
confirmed by the Ministry of Social Affairs
and Health. The final amount of the payment
is based on a calculation prepared by the
Ministry of Social Affairs and Health of the
amount of benefits financed in this manner
paid by Kela during the financial period.
Adult education benefits
The Employment Fund grants and pays adult
education allowance and scholarships for
qualified employees in accordance with the
Act on Adult Education Benefits (1276/2000).
The Employment Fund is also responsible
for financing the adult education allowances
for employees and scholarships for qualified
employees working for employers other
than the State. The State is responsible
for financing adult education allowances
for entrepreneurs and scholarships for
qualified employees working for the State.
The responsibility for financing is stipulated
in section 30 of the Act on Adult Education
Benefits.
Notes to the financial statements 61Financial statement 2021
Financing of pay security
Under section 31 of the Pay Security Act
(866/1998), the Employment Fund is responsible
for the State’s pay security expenses. Pay security
expenses are paid once per year, normally in
the spring of the following year, to the Ministry
of Economic Affairs and Employment, based
on an invoice sent by the Ministry.
Member State invoicing for
unemployment allowances
Article 65 of Regulation (EC) No 883/2004 of
the European Parliament and of the Council
on the coordination of social security systems
(basic regulation) provides for situations
in which a person becomes unemployed
after working in a Member State other than
their country of residence. In Finland, the
Employment Fund has been designated as
the competent body when implementing this
basic regulation with regard to earnings-
related unemployment insurance. The Fund’s
responsibilities include the payment and
collection of the compensation laid down in
paragraphs 6 and 7 of Article 65, incurred
from unemployment allowance paid to the
members of unemployment funds.
The Fund applies for compensation
from Member States depending on how
the unemployment funds have paid the
unemployment allowances to those who have
been working in another Member State. In
turn, Member States apply for compensation
from the Employment Fund. The benefits will
be fully repaid, but not more than the amount
that would have been paid in the country
of employment. Income and expenses are
recognised on a cash basis.
Training compensation
In addition, the Employment Fund manages
employers’ training compensation. The
training compensation is based on the Act
on Compensations for Training (1140/2013).
The training compensation is a monetary
support to develop competence for those
employers who are not eligible for a training
deduction granted by the Business Income
Tax Act or Agricultural Income Tax Act. Such
employers include municipalities, churches
and non-profit organisations. The purpose
of training compensation is to improve the
employer’s opportunities to organise training
for its employees, to develop their vocational
competence.
Training compensation can be received
for a maximum of three training days
per employee annually. The financing of
training compensation has been designated
so that each calendar year, the Ministry of
Finance pays the amount that the Fund has
refunded to employers in the form of training
compensation based on an application from
the Employment Fund.
Pensions and employee benefits
The Employment Fund only has defined
contribution pension schemes. Statutory
pensions are managed by a pension
insurance provider. Pension contributions
are recognised as expenses for the financial
period in which the payments are incurred.
The Fund has a bonus system for the
employees. The Board of Directors decides on
the payment of any bonuses on the Managing
Director’s proposal and in compliance with
the bonus criteria. Realised bonuses are
recognised as expenses for the financial
period relevant to the bonus system.
2.5 Property, plant and equipment
Property, plant and equipment includes the
Fund’s machinery and equipment and the
leasehold improvements. Property, plant and
equipment are measured in the statement
of the net position at the historical cost
minus the accumulated depreciation and
impairment charges.
Notes to the financial statements 62Financial statement 2021
Leasehold improvements are added to the
premises improvement’s carrying amount
when it is probable that future economic
benefits associated with the item will flow to
the Fund. The expenses of ordinary repair and
maintenance costs are reported in the period
in which they are incurred.
Depreciation on property, plant and
equipment is calculated using the straight-
line method over their estimated useful lives.
As a rule, the residual value is estimated to be
zero. Assets’ residual values and useful lives
are reviewed when financial statements are
prepared. Depreciation periods are adjusted if
the estimate changes significantly. Estimated
useful lives by asset class are as follows:
• Leasehold improvements 5 years
• Machines and equipment 3 years
Gains and losses on disposal and
decommissioning of property, plant and
equipment are calculated as the difference
between net proceeds and the carrying
amount. Gains and losses on disposals are
included in the administrative expenses in
the statement of changes in net position.
2.6 Intangible assets
Intangible assets with finite useful life include
acquired or internally produced computer
software, and other intangible assets
when it is probable that future economic
benefits associated with the asset will flow
to the Fund and the cost can be measured
reliably. Implementation costs related to
the cloud computing service arrangement,
which is a service contract, are primarily
recorded as expenses incurred when the
relevant implementation service is obtained.
Implementation costs related to the cloud
service arrangement are only capitalised
and amortised over a longer period of time
in cases where the implementation service
is not distinct from the service that allows
access to the software, or when the costs
relate to the creation of a separate intangible
asset.
The cost of an internally generated intangible
asset is defined as the sum of directly
attributable production costs allocated to the
asset.
Costs associated with maintaining computer
software are reported as expenses incurred.
Research costs are recognised as an
expense in the financial period in which
they are incurred. Development costs that
are attributable to the design and testing of
software, or to significant changes to existing
software, are capitalised only when they meet
the above-mentioned criteria of recognition to
the statement of net position.
Intangible assets with finite useful life are
measured at historical cost less amortisation
and impairment charges. Amortisation of
intangible assets is calculated using the
straight-line method over their useful lives.
Estimated useful lives by asset class are as
follows:
• Computer software 3 years
• Software development expenditure
3years
2.7 Impairment of non-financial assets
At the end of each financial period, it is
assessed whether there have been any
events or changes in circumstances that
indicate that the value of an intangible asset
or an item of property, plant and equipment
subject to amortisation or depreciation may
have changed. If there are any indicators
of impairment, the recoverable amount is
determined.
Notes to the financial statements 63Financial statement 2021
The recoverable amount is the asset’s fair
value less the costs of disposal or the value in
use, whichever is higher. Value in use refers
to the asset’s expected future net cash flows
that have been discounted to net present
value by using the determined discount
rate. An impairment loss is recognised in
the statement of changes in net position for
the amount by which the asset’s carrying
amount exceeds its recoverable amount.
The useful life of a depreciated asset is
reviewed in connection with the recognition
of impairment losses.
Impairments are reversed if circumstances
change and an asset’s recoverable amount
changes after the recognition of the
impairment, but not to an amount higher
than the carrying value would be without the
impairment charge.
2.8 Financial assets and liabilities
Financial assets
The Employment Fund applies the IFRS 9
(Financial Instruments) standard, which was
published by the International Accounting
Standards Board and took effect on 1 January
2018. IFRS 9 specifies how an entity should
classify and measure financial assets. It also
includes a model for impairment charges
based on expected losses and general
requirements for hedge accounting. IFRS9
requires financial assets to be classified
into three measurement categories: those
measured at amortised cost, those measured
at fair value through other comprehensive
income and those measured at fair value
through profit and loss. For financial
liabilities, the standard retains most of the
IAS 39 requirements. For impairment, a
model based on expected credit losses is
used.
The Employment Fund’s financial assets
consist of investments as well as cash and
cash equivalents. At the date of acquisition,
the management of the Fund classifies the
financial assets into classes that determine
the basis of valuation. All financial assets are
recognised on the trade date; that is the day
when the Fund commits to buy or sell the
asset.
Investments are presented in the statement
of net position as current assets unless
their maturity is over 12 months and the
management intends to dispose of them more
than 12 months after the reporting date.
Investments are initially recognised at fair
value. Transaction costs are recognised
directly as expenses. After initial recognition,
the investments are measured at fair
value on each reporting date, and realised
and unrealised changes in fair value are
recognised in the statement of changes in
net position in the period in which they arise.
Net changes in fair value are presented in the
statement of changes in net position on the
line “Net income from measuring investments
at fair value”. All interest and dividend income
from investments are included in the net
change of the fair value. The basis for defining
fair value is presented in note 15.
Financial assets are de-recognised when the
rights to receive cash flows have expired or
have been transferred to another party such
that all the risks and rewards have been
transferred.
Notes to the financial statements 64Financial statement 2021
Cash and cash equivalents
Cash and cash equivalents include cash in
hand and deposits held at call with banks.
Loans
Loans are recognised initially at fair value, the
net of the transaction costs incurred. Loans
are subsequently carried at amortised cost.
Any difference between the proceeds (net of
transaction costs) and the redemption value
is recognised in the statement of changes in
net position over the period of the loan using
the effective interest method.
Fees paid on loan facilities are recognised
as the transaction costs of the loan to the
extent that it is probable that some or all of
the facility will be withdrawn. In this case,
the fee is deferred and recognised in the
statement of net position until the loan is
withdrawn. To the extent there is no evidence
that it is probable that some or all the loans
of the facility will be withdrawn, the fee is
capitalised as a prepayment for liquidity
services and amortised over the period of the
facility.
2.9 Rental agreements
IFRS 16 specifies the requirements
concerning recognition, valuation and
information to be presented in the financial
statements. The standard introduces a single
lessee accounting model. In principle, all
leases with a term of more than one year
are recognised in the balance sheet, unless
the underlying asset is of low value. On the
first day of the lease, the lessee recognises
a liability for its obligation to make lease
payments (i.e., a lease liability) and an asset
item for its right to use the asset (i.e., a fixed
asset item). The lessee must recognise the
interest expenses on the liability and the
planned depreciation on the asset item. In
addition, the lessee must redefine the amount
of the lease liability in conjunction with
certain events (such as a change in the term
of the lease or changes to the lease payments
due to index adjustments). The Fund uses the
transition relief permitted by IFRS 16 with
regard to short-term leases (with terms of
less than 12 months) and leases of low-value
assets.
Notes to the financial statements 65Financial statement 2021
3 CRITICAL ACCOUNTING
ESTIMATES AND JUDGEMENTS
The preparation of financial statements
in conformity with IFRS requires the
management to make estimates and
assumptions that have affected the income,
expenses, assets and liabilities presented
in the financial statements. Judgement is
also needed in the application of accounting
policies. The estimates are based on the
best information available at the reporting
date. The evaluation is based on both earlier
experience and assumptions about the future
that are most probable on the reporting
date. Actual results can differ from these
decisions made based on these estimates and
assumptions. Possible changes in estimates
are recognised in the period in which the
estimate is adjusted and all subsequent
periods. The planning and management of
the Employment Fund’s finances are largely
based on forecasts of the development of
the unemployment rate, unemployment
expenses, the employment rate and wages.
Under normal conditions, the Fund must set
the insurance contributions at a sufficient
level so that all projected expenses can be
covered with the insurance contributions.
The unemployment insurance contributions
(contribution rates) are set for one year at a
time. When the contributions are changed,
the employers’ and employees’ contributions
are changed by the same percentage. The
forecast deviation in the change in net
position between the budget prepared
in August in the preceding year and the
financial statements, which are prepared
more than a year later, has averaged 5% of
expenses over the last five years. In 2021,
the forecast deviation was on par with the
average from the previous years.
If necessary, the Fund exercises judgement in
applying the valuation methods used in the
measurement of fair value insofar as the fair
values are not received as direct prices from
active markets.
Fair value determination of current money
market investments is based on the
discounted cash flows, and management
has used judgement when it has concluded
that the change of credit risk does not have a
material impact on the change of fair values
of investments due to their short duration
and high credit rating. The Fund’s critical
assumptions concerning the future and key
uncertainties in the reporting date are related
to the factors mentioned above.
Credit losses
The Employment Fund applies the IFRS 9
standard model for expected losses when
estimating impairment charges associated
with uncertain unemployment insurance
contribution receivables. In this model,
expected losses are recognised for the entire
validity period of the financial asset, and
the model is based on the amount of the
outstanding receivables and the time period
for which they remain outstanding. The
parameters applied in the model are based on
an estimate of the amount of unemployment
insurance contribution receivables, liability
component receivables, ECA receivables,
benefit receivables and interest receivables
to be recognised as credit losses on the
reporting date. Expected credit losses
throughout the entire period of validity
are calculated by multiplying the gross
carrying value of the unpaid receivables by
the expected proportion of loss. Changes to
expected credit losses are recognised through
profit and loss.
Notes to the financial statements 66Financial statement 2021
Segment reporting
The IFRS 8 Operating Segments standard
requires entities to disclose information
to enable users of financial statements to
evaluate the nature and financial effects of the
business activities in which the entity engages
and the economic environments in which
it operates. As defined in the standard, an
operating segment is a component of an entity:
A. that engages in activities from which it
may earn revenues and incur expenses
B. whose operating results are regularly
reviewed by the entity’s most senior
executive decision-maker to make
decisions about resources to be
allocated to the segment and assess its
performance, and
C. for which discrete financial information is
available.
Further, according to the definition of the
standard, the function of the most senior
executive decision-maker is to allocate
resources to and assess the performance of
the operating segments of an entity.
The Employment Fund is tasked with
collecting unemployment insurance
contributions, the level of which has been
determined by the public authorities. The
Fund pays the collected contributions
onwards, mainly to unemployment funds.
The Employment Fund uses the collected
contributions for conservative investment
activities in order to cover current financing
contributions. The Fund also covers any
deficits it incurs with loan financing.
The Employment Fund is a non-profit,
government-affiliated fund. The management
monitors the Fund’s activities as a single
entity, which consists of the contributions
collected and benefits paid, resulting
in a change in net position. The Fund’s
management does not actually allocate
resources to the entity’s activities or review
the effectiveness of operations.
For these reasons, the Employment Fund’s
management has made the assessment that
the presentation of segment information
is not appropriate. Presenting segment
information would not improve the ability of
a reader of the financial statements to assess
the Fund’s operations, nature of the operating
environment and financial effects. According
to the Employment Fund’s management, the
nature of the Fund’s operations and operating
environment and the financial impacts
are fairly presented in the IFRS financial
statements.
Notes to the financial statements 67Financial statement 2021
4 FINANCIAL RISK MANAGEMENT
The Fund seeks to limit financial and
investment risks to a level where their
realisation will not result in significant losses
for the Fund to the extent of creating pressure
to increase contributions or endanger the
liquidity of the Fund. The investment and
financing activities and risk limits of the
Employment Fund are provided for in more
detail in the investment principles approved
by the Supervisory Board and the investment
plan and debt-management plan approved by
the Board of Directors.
As a rule, the market risk of investments is
measured by using the stress-test method, in
which a risk indicator expressed as annual
volatility is assigned to each investment
class on the basis of historical fluctuations
in value. The Employment Fund’s financial
risks relate mainly to investments, and
they comprise market risk, credit and
counterparty risk and liquidity risk.
Investments are diversified in accordance
with the investment principles confirmed
by the Supervisory Board across various
asset classes so as to reduce financial
risks. Risk limits are set to such a level
that their realisation would not result in
the Fund incurring losses that would give
rise to pressures to increase the level of
contributions. The Fund may enter into
derivative contracts for hedging purposes;
however, derivatives were not used during
the periods presented.
The Fund measures all its investments at fair
value because they have been designated as
financial assets at fair value through profit
and loss. The investments are itemised in
note 15, along with their fair values by asset
class.
4.1Financial risk factors
Market risk
The main market risk factor for the Fund’s
investments and liabilities is the interest
rate risk. The Fund’s investment portfolio
is dominated by fixed-income investments
(money market investments and bonds).
The Fund may make investments directly,
or indirectly through investment funds. At
the end of the review period, 27% (17%) of
investments were indirect investments.
Notes to the financial statements 68Financial statement 2021
On 31 December 2021 and 31 December 2020, the market risks for the
investments were as follows:
31 Dec 2021 Risk (%)
Capital
EUR thousand
Risk
EUR thousand
Bank deposits 0.50% 289,826 1,449
Money market 1.00% 356,447 3,564
State and municipal bonds 4.00% 194,018 7,761
Bank bonds 4.50% 252,160 11,347
Corporate bonds 5.00% 162,983 8,149
Shares 25.00% 38,159 9,540
Alternative investments 10.00% 42,865 4,287
Total risk 3.45% 1,336,458 46,097
31 Dec 2020 Risk (%)
Capital
EUR thousand
Risk
EUR thousand
Bank deposits 0.50% 739,733 3,699
Money market 1.00% 287,607 2,876
State and municipal bonds 4.00% 395,552 15,822
Bank bonds 4.50% 307,391 13,833
Corporate bonds 5.00% 78,879 3,944
Shares 25.00% 4 1
Alternative investments 10.00% 21,476 2,148
Total risk 2.31% 1,830,641 42,322
The total risk was 3.45% (2.31%) of the Fund’s assets and 1.4% (1.2%) of
the Fund’s income in 2021. The risk posed by the investment portfolio
is moderate due to its conservative structure and moderately low risk
level of the securities in the portfolio.
All money market investments carry variable interest rates (100%).
Altogether, 9% (9%) of the bonds were at variable rates. Variable-rate
investments expose the Fund to a cash flow interest rate risk, while
investments at fixed rates expose the Fund to a fair value interest rate
risk.
If on 31 December 2021 the Euribor rates and interest rate curve
(swap rates) had been 0.5 percentage points higher while all other
the variables remained constant, the total change in net position
would have been reduced by EUR 6.06 (8.40) million. Respectively, if
on 31December 2021 the Euribor rates and interest rate curve (swap
rates) had been 0.5 percentage points lower, the total change in net
position would have been increased by EUR 6.06 (8.40) million.
Notes to the financial statements 69Financial statement 2021
Credit risk
The credit risk of the investments is managed by issuer credit limits.
Limits for each issuer are determined by taking account of the
absolute size, economic position and future outlook of the issuer. The
Fund continuously monitors the credit standing and future outlook of
the issuers, and when changes occur, the limits are either increased or
decreased. The Fund mainly invests in banks in the Nordic countries
which have high credit ratings, states with strong credit ratings
(Finland, Germany, the Netherlands, Belgium, France, Austria and
Sweden), companies mainly in Finland and some in Sweden, and
municipalities. Cash and cash equivalents are only held at banks with
high credit ratings.
The spread duration of the credit risk included in the investments at
the end of the period under review was 1.49 (1.64) years.
The average credit rating of the investment portfolio is evaluated
on Standard & Poor’s rating scale, which is based on historical
probabilities of credit losses. The credit rating of the investment
portfolio was estimated to be BBB+ on 31 December 2021 (BBB+).
The following table describes the Employment Fund’s fixed-income
investments and creditworthiness by group. The figures are expressed
in thousands of euros.
Investments
distributed by
the issuer’s rating
(EUR thousand) *
31 Dec
2021
31 Dec
2021 (%)
31 Dec
2020
31 Dec
2020 (%)
AAA 61,332 4.9% 139,286 7.7%
AA+ 110,224 8.8% 206,946 11.5%
AA 51,395 4.1% 63,630 3.5%
AA- 403,849 32.2% 767,022 42.5%
A+ 119,822 9.5% 74,908 4.2%
A 63,722 5.1% 118,532 6.6%
A- 121,257 9.7% 122,900 6.8%
BBB+ 55,768 4.4% 46,341 2.6%
BBB 180,243 14.4% 137,429 7.6%
BBB- 31,265 2.5% 54,679 3.0%
BB+ 6,812 0.5% 22,913 1.3%
BB 3,649 0.3% 6,280 0.3%
BB- - 0.0% - 0.0%
B+ - 0.0% - 0.0%
B - 0.0% 220 0.0%
B- - 0.0% 8,008 0.4%
CCC+ - 0.0% - 0.0%
CCC - 0.0% 198 0.0%
NR 46,100 3.7% 35,231 2.0%
Total 1,255,438 100.0% 1,804,523 100.0%
* The Fund’s investments in bonds mainly consist of state and bank bonds.
Their creditworthiness has been determined using the S&P credit rating. Most
of the banks that the Fund has invested in have good credit ratings. However,
not every regional bank and company has an official credit rating, so the credit
quality of these entities is determined using credit ratings received from a
third party.
Notes to the financial statements 70Financial statement 2021
The amount of the Employment Fund’s unemployment insurance
contribution receivables, liability component receivables, ECA
receivables, benefit receivables, and interest receivables, are included
in the credit risk. The most important factor in the realisation of the
aforementioned credit risk is related to cases in which customers
liable for paying unemployment insurance contributions become
insolvent (due to bankruptcy, corporate restructuring or debt
restructuring). In 2021, the number of pending bankruptcy petitions
was higher than in 2020 but remained lower than in 2019. The
Bankruptcy Act was amended to limit the creditors’ right to petition
for bankruptcy from May 2020 to September 2021. The trend in the
number of bankruptcies in 2022 largely depends on the development
of the COVID-19 pandemic. So far, the number of pending bankruptcy
petitions has not returned to pre-pandemic levels.
Liquidity risk
The Fund aims to manage liquidity risk as follows:
1. Liquid realisable investments
2. Short-term loans
3. Maintaining unemployment insurance contributions at a
reasonable level and increasing them as necessary
To secure its liquidity, the Fund has investments in liquid money
market instruments with less than a year’s maturity at an amount that
equals the Fund’s expenses for one month. When the liquidity buffer
decreases below the above limit, the Fund uses short-term borrowing
to cover the temporary liquidity deficit. For this purpose, the Fund
has a commercial paper programme totalling EUR 300 (300) million,
of which EUR 200 million remain unused. In addition, the Fund has
EUR800 (800) million in state-guaranteed revolving credit facilities
(RCF) with five commercial banks. The revolving credit facility has not
been utilised.
Committed credit facilities, not in use
EUR million 31 Dec 2021 31 Dec 2020
Facilities expiring within a year
RCF (State guarantee) * 800
Facilities expiring after a year
RCF (State guarantee) 800
Total 800 800
Uncommitted credit facilities, not in use
EUR million 31 Dec 2021 31 Dec 2020
Commercial paper programme 200 212
Total 200 212
* The contracts are subject to an extension option of 12 months.
The Employment Fund also secured its liquidity through debt
financing during 2021. For financing, the Fund relies on domestic
markets for commercial papers.
The Employment Fund has the following issuer credit ratings as
confirmed by Standard & Poor’s (30 September 2021):
• Long-term credit rating AA+, stable outlook
• Short-term credit rating A-1+, stable outlook
At the end of the period under review, EUR 1,200 (1,200) million in
bonds, and EUR 100 (87.5) million in commercial papers were in use.
No short-term bank loans were in use on 31 December 2021 (EUR 0).
Notes to the financial statements 71Financial statement 2021
The fixed interest rate periods for loans in the statement of the net asset calculations were as presented in the table.
31 Dec 2021
Loans
Nominal value
EUR million
Fixed interest rate
period in years Interest rate (%) Due date Credit rating
Bond 2023 600 1.46 0.00% 16.6.2023 AA+
Bond 2027 600 5.46 0.01% 16.6.2027 AA+
Commercial papers 100 0.25 -0.30% 1–12 months No rating
Total 1,300 3.20
31 Dec 2020
Loans
Nominal value
EUR million
Fixed interest rate
period in years Interest rate (%) Due date Credit rating
Bond 2023 600 2.46 0.00% 16.6.2023 AA+
Bond 2027 600 6.46 0.01% 16.6.2027 AA+
Commercial papers 88 0.18 -0.12% 1–12 months No rating
Total 1,288 4.16
Notes to the financial statements 72Financial statement 2021
The following tables show the Employment Fund’s financial liabilities by group based on the maturities of outstanding contracts.
Maturities of financial
liabilities based on contracts
(EUR thousand) 31 Dec 2021
Less than
6 months 6–12 months 1–3 years 4–7 years
Total cash flow
based on contracts
Book value
assets/liabilities
Accounts payable 861 861 861
Loans 100,060 0 600,120 600,180 1,300,360 1,299,187
Liabilities associated with
right-of-use assets 3,735 3,735 3,735
Total 104,656 0 600,120 600,180 1,304,956 1,303,783
Maturities of financial
liabilities based on contracts
(EUR thousand) 31 Dec 2020
Less than
6 months 6–12 months 1–3 years 4–7 years
Total cash flow
based on contracts
Book value
assets/liabilities
Accounts payable 418 418 418
Loans 87,560 0 600,120 600,180 1,287,860 1,286,634
Liabilities associated with
right-of-use assets 574 574 574
Total 88,552 0 600,120 600,180 1,288,852 1,287,626
Notes to the financial statements 73Financial statement 2021
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.
Numerical methods of assessment are used to monitor and analyse
the responsibility of the Employment Fund. 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 aggregated 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. Furthermore, the
analysis is meant to demonstrate the impact of the Fund. This is
done by classifying the investment items into different responsibility
themes based on their effectiveness, measuring the share of
companies that comply with the EU taxonomy, and examining
the weighting of investment in various sectors connected to UN
Sustainable Development Goals.
According to the latest analysis by the asset management company
commissioned to assess the responsibility of our investments, 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 our history of measurement, and
continue to do so.
For direct investments in corporate bonds, the historical performance
of our portfolio has developed in a positive direction, and several
Notes to the financial statements 74Financial statement 2021
metrics point to results outperforming the benchmark. Particularly
positive observations from the results include a reduction in weighted
carbon intensity, as well as lower-than-benchmark levels of water
consumption and exposure to sectors with negative impacts on the
environment or human health.
There have been substantial changes to the proportion of equity
investments and the related strategy, making it difficult to assess
historical performance. The most relevant observation is the
current situation, in which our responsibility profile either does
not significantly deviate from the benchmark index in terms of the
ESG factors, or the results outperform the benchmark. As a whole,
the environmental footprint of our equity investments significantly
outperforms the benchmark index for the investable universe. With
regard to our responsibility profile, it is important to note that most of
the equity funds employ extensive exclusion criteria and are defined
as Article 8 Funds in accordance with the EU SFDR classification. In
these funds, sustainability is integrated into portfolio management.
4.2 Business cycle buffer
In accordance with section 3 of the Act on the Financing of
Unemployment Benefits, in order to ensure liquidity and balance out
changes in unemployment insurance contributions due to foreseeable
economic fluctuations in the national economy, the Employment
Fund maintains a business cycle buffer that accrues on the basis of
the difference between the Fund’s income and expenses. In 2021, the
maximum amount of buffer corresponded to the annual expenditure
for an unemployment rate of six percentage points. During times of
severe economic downturn, the Fund may maintain a deficit equal
to the amount of expenditure. The investment of assets accrued in
the buffer is regulated by the Fund’s investment principles, as well
as the investment plan approved on an annual basis. The use of debt
financing is also regulated by the debt servicing plan.
The maximum amount of buffer is calculated by dividing
the Employment Fund’s annual expenditure by the average
unemployment rate for the year and multiplying the result by six. The
following table presents the amount of the business cycle buffer and
the minimum and maximum amounts of the buffer as specified in the
Act.
EUR million
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Business cycle buffer 633 1,045
Maximum amount of buffer 2,220 2,078
Minimum amount of buffer -2,220 -2,078
Notes to the financial statements 75Financial statement 2021
5 UNEMPLOYMENT INSURANCE CONTRIBUTIONS
EUR thousand 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020
Employer’s unemployment insurance contributions
Employer’s insurance contributions 1,156,781 990,144
Employer’s insurance contributions, co-owners 2,082 2,003
Total 1,158,862 992,147
Employee’s unemployment insurance contributions
Employee’s insurance contributions 1,238,402 1,070,893
Employee’s insurance contributions, co-owners 2,705 1,157
Total 1,241,107 1,072,050
Collection fee income and credit losses
Interest on overdue employer contributions 340 268
Interest on overdue employee contributions 281 445
Collection fee income 159 190
Total 780 903
Liability components of employer’s unemployment allowances
Liability components 14,944 14,113
Accruals 7,826 12,266
Total 22,770 26,379
Compensation in accordance with the Employment Contracts Act (ECA)
Compensation and lay-off income according to the ECA 1,127 1,046
Settlement to the Ministry of Social Affairs and Health -473 -635
Total 654 412
Contributions from the Ministry of Social Affairs and Health
Earnings-related unemployment allowance 896,630 882,897
Lay-off allowance 0 333,360
Job alternation compensation 9,225 9,800
Equalisation payment for the previous year 2,635 0
Adult education benefits 2,192 2,381
Supplementary financing of administrative expenses 0 20,000
Total 910,681 1,248,438
Total unemployment insurance contributions 3,334,855 3,340,330
Notes to the financial statements 76Financial statement 2021
6 FINANCING CONTRIBUTIONS PAID
EUR thousand
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Contributions paid by the Employment Fund
Other earnings-related unemployment
allowance -875,669 -820,091
Additional days of allowance -115,638 -118,512
Lay-off allowance -442,243 -413,129
Job alternation compensation -11,960 -12,641
Compensation for administrative expenses -12,656 -8,716
Equalisation payment for the previous year -4,627 622
Total -1,462,793 -1,372,467
Government contribution paid to
unemployment funds
Other earnings-related unemployment
allowance -878,234 -866,040
Lay-off allowance 0 -333,360
Job alternation compensation -9,225 -9,800
Unemployment allowance / entrepreneurs -8,623 -10,201
Compensation for administrative expenses -9,773 -6,656
Supplementary financing of administrative
expenses 0 -20,000
Equalisation payment for the previous year -3,572 937
Total -909,426 -1,245,120
Finnish Centre for Pensions
Equalisation payment for the previous year -66,779 -17,813
Payment for the current financial period -835,000 -851,800
Total -901,779 -869,613
EUR thousand
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
State Pension Fund
Equalisation payment for the previous year -1,139 -571
Payment for the current financial period -10,087 -8,625
Total -11,226 -9,196
Social Insurance Institution of Finland
Equalisation payment for the previous year 1 0
Basic allowance, additional component,
employment programme additional benefit -239,000 -207,300
Total -238,999 -207,300
Adult education benefits
Scholarships for qualified employees -10,415 -10,617
Adult education allowance -175,307 -186,858
Collection expenses for benefits -6 -4
Total -185,728 -197,479
Ministry of Economic Affairs and
Employment
Payment for the current financial period -14,391 -24,909
Total -14,391 -24,909
Member State invoicing for unemployment
allowances
Invoiced by Member States -40 -85
Invoiced by the Fund 73 119
Total 33 33
Total financing contributions paid -3,724,310 -3,926,051
Notes to the financial statements 77Financial statement 2021
7 ADMINISTRATIVE EXPENSES
EUR thousand
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Personnel expenses
Salaries, bonuses, and benefits -7,887 -6,955
Pension expenses
– defined contribution plans -1,341 -1,118
Social security expenses -258 -211
Total -9,486 -8,283
Personnel expenses, management salaries,
and bonuses
Management Group (excl. Managing Director) -635 -563
Managing Director -169 -162
Board of Directors and Supervisory Board -155 -153
Pension expenses
– defined contribution plans -151 -134
Total -1,110 -1,013
Other administrative expenses
IT expenses -3,019 -2,735
Other personnel expenses -575 -715
Expenses for office premises -975 -188
Office expenses -2,114 -1,430
Other expenses -4,410 -2,968
Amortisation -4,801 -4,268
Other income 0
Total -15,893 -12,304
Auditor’s fee
Statutory audit -92 -85
Other fees -33 0
Total -126 -85
Total administrative expenses -25,505 -20,672
Number of personnel
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Employees
Full-time employees 135 139
Part-time and temporary employees 16 32
Total 151 171
Notes to the financial statements 78Financial statement 2021
8 FINANCING COSTS
EUR thousand 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020
Loan financing expenses
Revolving credit facility fees -2,350 -2,221
Accrued expenses from loans -267 -137
Interest expenses from loans 730 288
Total -1,887 -2,070
Total financing costs -1,887 -2,070
Notes to the financial statements 79Financial statement 2021
9 PROPERTY, PLANT AND EQUIPMENT
EUR thousand
Renovation of
office premises
Machines
and equipment
IFRS 16
Right-of-use asset Total
Acquisition costs, 1 Jan 2021 1,013 1,741 3,257 6,011
Additions 0 0 3,735 3,735
Decreases -1,013 -1,741 -3,257 -6,011
Acquisition costs, 31 Dec 2021 0 0 3,735 3,735
Accumulated depreciation, 1 Jan 2021 1,013 1,697 2,571 5,281
Depreciation during the period 0 43 686 729
Accrued depreciation of decreases -1,013 -1,741 -3,257 -6,011
Accumulated depreciation, 31 Dec 2021 0 0 0 0
Carrying value, 1 Jan 2021 0 43 686 730
Carrying value, 31 Dec 2021 0 0 3,735 3,735
EUR thousand
Renovation of
office premises
Machines
and equipment
IFRS 16
Right-of-use asset Total
Acquisition costs, 1 Jan 2020 1,013 1,741 3,257 6,011
Additions 0 0 0 0
Acquisition costs, 31 Dec 2020 1,013 1,741 3,257 6,011
Accumulated depreciation, 1 Jan 2020 1,013 1,597 1,302 3,912
Depreciation during the period 0 100 1,269 1,369
Accumulated depreciation, 31 Dec 2020 1,013 1,697 2,571 5,281
Carrying value, 1 Jan 2020 0 144 1,955 2,099
Carrying value, 31 Dec 2020 0 43 686 730
Notes to the financial statements 80Financial statement 2021
10 INTANGIBLE ASSETS
EUR thousand Software
Software development
expenses
Intangible assets
in progress * Total
Acquisition costs, 1 Jan 2021 910 11,250 1,975 14,135
Additions 0 0 667 667
Transfers between items 0 2,642 -2,642 0
Acquisition costs, 31 Dec 2021 910 13,892 0 14,802
Accumulated depreciation, 1 Jan 2021 803 6,428 0 7,231
Depreciation during the period 53 3,903 0 3,956
Accumulated depreciation, 31 Dec 2021 856 10,331 0 11,187
Carrying value, 1 Jan 2021 107 4,821 1,975 6,902
Carrying value, 31 Dec 2021 54 3,560 0 3,614
EUR thousand Software
Software development
expenses
Intangible assets
in progress * Total
Acquisition costs, 1 Jan 2020 787 8,162 2,413 11,362
Additions 123 3,088 2,650 5,861
Decreases 0 0 -3,088 -3,088
Acquisition costs, 31 Dec 2020 910 11,250 1,975 14,135
Accumulated depreciation, 1 Jan 2020 743 3,603 0 4,346
Depreciation during the period 60 2,825 0 2,885
Accumulated depreciation, 31 Dec 2020 803 6,428 0 7,231
Carrying value, 1 Jan 2020 44 4,559 2,413 7,015
Carrying value, 31 Dec 2020 107 4,821 1,975 6,902
* The item, “Intangible assets in progress”, consists of capitalised development costs, giving rise to an internally generated intangible asset.
Capitalised development expenditure in 2021 mainly consisted of the development of a data system to support the revised processing of education benefits.
Notes to the financial statements 81Financial statement 2021
11 RECEIVABLES AND PAYABLES FROM UNEMPLOYMENT INSURANCE CONTRIBUTIONS
Receivables from unemployment insurance contributions
EUR thousand 31 Dec 2021 31 Dec 2020
Receivables from employer’s unemployment insurance
contribution * 922 4,402
Receivables from employee’s unemployment insurance
contribution * 1,980 1,941
Overdue contribution and collection fee receivables * 455 754
Receivables from unemployment insurance contributions 3,356 7,097
Deferred unemployment insurance contribution receivables 622,164 535,768
Total unemployment insurance contribution receivables 625,520 542,866
Unemployment insurance contribution liabilities
EUR thousand 31 Dec 2021 31 Dec 2020
Prepayments 298 332
Refunds 1,548 1,468
Total unemployment insurance contribution payables 1,846 1,800
* includes credit loss provisions for insurance contribution receivables (note 12).
Notes to the financial statements 82Financial statement 2021
12 LIFETIME EXPECTED CREDIT LOSSES FROM THE UNEMPLOYMENT INSURANCE RECEIVABLES -
AND FROM THE ADULT EDUCATION BENEFITS TO BE RECOVERED (IFRS 9)
EUR thousand
Employer’s unemploy-
ment
insurance contribution
receivables
Employee’s unemploy-
ment
insurance contribution
receivables
Overdue contribution and
collection fee receivables
for unemployment insur-
ance contributions
Adult education
benefits to be
recovered* Total
1 Jan 2021 -2,640 -4,944 -522 -120 -8,225
Change -312 -498 -78 -19 -906
31 Dec 2021 -2,951 -5,442 -600 -139 -9,132
1 Jan 2020 -2,910 -3,834 -150 -1,894 -8,788
Change 271 -1,110 -372 1,774 563
31 Dec 2020 -2,640 -4,944 -522 -120 -8,225
* The credit loss model applied to adult education benefits to be recovered was changed in 2020.
Notes to the financial statements 83Financial statement 2021
13 OTHER RECEIVABLES
Total non-current other receivables
EUR thousand 31 Dec 2021 31 Dec 2020
Other receivables (rental deposit) 328 328
Total non-current other receivables 328 328
Total current other receivables
EUR thousand 31 Dec 2021 31 Dec 2020
Receivables from unemployment funds 14,311 16,527
Finnish Centre for Pensions, compensatory interest 9,437 0
Education allowance receivables 1,678 1,855
Receivables from the Government related to training
compensation 3 0
Employer’s liability component receivables and
compensation based on the Employment Contracts Act 1,500 637
Receivables from the State Pension Fund 102 93
Receivables from the Ministry of Social Affairs and Health 5,072 19,668
Receivables from the Social Insurance Institution of Finland 46 36
Prepayments 312 794
Tax assets 10 1
Pay security (Ministry of Economic Affairs and Employment) 13,821 2,141
Total current other receivables 46,292 41,751
Total other receivables 46,621 42,079
Notes to the financial statements 84Financial statement 2021
14 NET FAIR VALUE GAINS ON INVESTMENTS
EUR thousand 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020
Dividend income 659 731
Gains on disposals 1,980 2,102
Other income 38 37
Net interest income 3,460 4,011
Net foreign exchange gains 10 147
Net change in value 9,115 -3,137
Losses on disposals -10,889 -16,711
Other expenses -247 -250
Net gains on investments 4,124 -13,072
Notes to the financial statements 85Financial statement 2021
15 INVESTMENTS
Investments in financial assets have been designated as financial
assets at fair value through profit and loss, and are measured at
fair value. Measurement of these assets is largely based on either
quoted prices, or valuations based on available market data. Financial
instruments carried at fair value have been divided into three
hierarchy levels based on whether they are traded in active markets,
and to what extent the inputs are based on observable market data, as
follows:
Level 1 The valuation is based on quoted prices in active markets for
identical financial assets and liabilities.
Level 2 The inputs used in valuations are also based, either directly or
indirectly, using valuation techniques on observable inputs other than
those on Level 1.
Level 3 The valuation is based on information other than observable
market data.
Notes to the financial statements 86Financial statement 2021
In the tables below, investments have been specified by financial instrument classes and divided into fair value hierarchy levels.
No reclassifications have been made between the hierarchy levels during the financial period.
EUR thousand
31 Dec 2021 Level 1 Level 2 Level 3 Total
State and municipal bonds 118,939 75,079 194,018
Bank bonds 232,603 232,603
Corporate bonds 148,066 148,066
Investments in funds and shares 221,257 18,815 240,072
Mezzanine funds 1,988 1,988
Deposits 105,140 105,140
Certificates of deposit 21,017 21,017
Municipal papers 1,000 1,000
Commercial papers 61,512 61,512
Alternative investments 40,877 40,877
Total 720,864 282,563 42,865 1,046,293
EUR thousand
31 Dec 2020 Level 1 Level 2 Level 3 Total
State and municipal bonds 295,501 100,121 395,623
Bank bonds 287,424 287,424
Corporate bonds 78,879 78,879
Investments in funds and shares 168,447 13,847 182,295
Mezzanine funds 2,904 2,904
Deposits 62,370 62,370
Certificates of deposit 41,078 41,078
Municipal papers
Commercial papers 125,283 125,283
Alternative investments 18,566 18,566
Total 830,252 342,700 21,470 1,194,422
Notes to the financial statements 87Financial statement 2021
Changes in Level 3 financial assets measured at fair value
EUR thousand 1 Jan 2021
Unrealised
profit/loss
Realised
profit/loss Purchases Sales 31 Dec 2021
Mezzanine funds 2,904 454 19 -1,389 1,988
Alternative investments 18,566 1,074 21,237 40,877
Total 21,470 1,528 0 21,256 -1,389 42,865
EUR thousand 1 Jan 2020
Unrealised
profit/loss
Realised
profit/loss Purchases Sales 31 Dec 2020
Mezzanine funds 2,037 877 10 -19 2,904
Alternative investments 17,449 -756 421 2,009 -558 18,566
Total 19,485 121 421 2,019 -577 21,470
Deposits, certificates of deposit, commercial papers and municipal
papers at Level 2 have been valued using the discounted cash flow
method based on the Euribor or swap curve and on the forward rate,
insofar as elements of foreign currencies are involved. Based on the
management’s judgement, the discount factor has been adjusted for
the effect of changes in the credit risk of the investment. However, the
adjustment has not had a material impact.
Investments classified at Level 3 are mezzanine funds that are
valued based on valuations prepared by the issuer. Investment funds
have been measured at the net asset value of the fund as reported
by the fund manager as of the reporting date, and they have been
classified as Level 1, 2 or 3 assets by their market activity and
marketability. Equity investments are quoted on the Helsinki Stock
Exchange, and they have been classified at Level 1. The amount of
equity investments is minor.
Notes to the financial statements 88Financial statement 2021
16 CASH AND CASH EQUIVALENTS
EUR thousand 31 Dec 2021 31 Dec 2020
Bank deposits 292,326 636,292
Total cash and cash equivalents 292,326 636,292
17 LOANS
Long-term loans
EUR thousand 31 Dec 2021 31 Dec 2020
Employment Fund bonds 1,198,945 1,199,122
Total long-term loans 1,198,945 1,199,122
Short-term loans
EUR thousand 31 Dec 2021 31 Dec 2020
Commercial papers 100,242 87,512
Total short-term loans 100,242 87,512
Notes to the financial statements 89Financial statement 2021
18 OTHER LIABILITIES
EUR thousand 31 Dec 2021 31 Dec 2020
Accounts payable 861 418
Accruals 15,099 4,995
Liability component income accruals 11,270 19,561
Finnish Centre for Pensions, capital accruals 0 1,000
Ministry of Economic Affairs and Employment,
pay security accruals 28,212 27,049
Finnish Centre for Pensions, debiting interest 8,319 1,366
Accrual for the State Pension Fund 610 914
Ministry of Social Affairs and Health, liability 9 8
ECA Ministry share 564 687
Administrative expense accruals 531 207
Liabilities to unemployment funds 7,937 28,069
Holiday pay accruals 1,144 1,096
Lease liability 3,735 574
Benefits withholding tax liability 5,689 4,143
Interest accruals -166 26
Total other liabilities 83,813 90,113
Notes to the financial statements 90Financial statement 2021
19 LIABILITIES AND RECEIVABLES NOT RECOGNISED
IN THE STATEMENT OF NET POSITION
EUR thousand 31 Dec 2021 31 Dec 2020
Committed capital 5,250 5,250
Realised -5,039 -5,027
Total investment commitments 211 223
Investment funds acquire call investments based on the financing
needs of the investment fund. The commitments have no maturity
date.
Operating lease commitments
The Fund has rented its office and warehouse premises and a car on
non-cancellable lease contracts. On the balance sheet date, there are
four years and three months remaining on the lease of the office and
warehouse premises, after which the contract becomes cancellable
and subject to a notice period of nine months. The remaining term of
the lease for the car is two years and ten months.
Notes to the financial statements 91Financial statement 2021
20 RELATED PARTIES
Related parties of the Fund consist of the Supervisory Board, the
Board of Directors and the Management Group. The Employment
Fund’s Supervisory Board is appointed by the Government based
on a proposal made by the labour market parties. The Supervisory
Board prepares the proposal for the level of unemployment insurance
contributions in its autumn meeting. The Board of Directors is
appointed by the Supervisory Board. The Financial Supervisory
Authority supervises the Employment Fund’s operations. Furthermore,
the Ministry of Social Affairs and Health is also entitled to receive
information about the Fund’s activities.
The government contributions payable to the unemployment funds
are received from the Ministry of Social Affairs and Health. The Fund
regularly pays benefits to the Finnish Centre for Pensions, State
Pension Fund, Social Insurance Institution of Finland (Kela) and the
Ministry of Economic Affairs and Employment.
The salaries, bonuses and benefits paid to the related parties are
summarised in the table attached, including social security contributions.
More detailed breakdowns by each body are included in the section
presenting the Employment Fund’s remuneration report for 2021.
Fees and other benefits paid to the Board of Directors and the
Supervisory Board
EUR thousand
1 Jan–31 Dec
2021
1 Jan–31 Dec
2020
Salaries, bonuses, and benefits 155 153
Pension expenses
– defined contribution plans 26 24
Total 181 177
Remuneration of the Management Group members
(excluding the Managing Director)
EUR thousand 31 Dec 2021 31 Dec 2020
Salaries, bonuses, and benefits 635 563
Pension expenses
– defined contribution plans 97 85
Total 732 648
Managing Director’s salaries and bonuses
EUR thousand 31 Dec 2021 31 Dec 2020
Salaries, bonuses, and benefits 169 162
Pension expenses
– defined contribution plans 28 25
Total 197 187
92Financial statement 2021
SIGNATURES ON THE ANNUAL REPORT AND FINANCIAL STATEMENTS
Helsinki, 22 February 2022
Saana Siekkinen,
Chair
Markku Jalonen,
Vice Chair
Signatures
Tuomas Aarto
Minna Etu-Seppälä
Sture Fjäder
Riikka Heikinheimo
Minna Helle
Ilkka Kaukoranta
Patrizio Lainà
Henrika Nybondas-Kangas
Antti Palola
Vesa Rantahalvari
Heikki Taulu
Pirjo Väänänen
Janne Metsämäki,
Managing Director
94Financial statement 2021
Auditor’s Report
To the Supervisory Board of the Employment Fund
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of
the Employment Fund (business identity code
1098099-7) for the year ended 31 December,
2021. The financial statements comprise
the statement of net position, the statement
of changes in net position and statement of
cash flows and notes including a summary of
significant accounting policies.
In our opinion the financial statements give
a true and fair view of the fund’s financial
performance and financial position in
accordance with International Financial
Reporting Standards (IFRS) as adopted by the
EU and comply with statutory requirements.
Our opinion is consistent with the additional
report submitted to the Board of Directors.
Basis for Opinion
We conducted our audit in accordance
with good auditing practice in Finland.
Our responsibilities under good auditing
practice are further described in the
Auditor’s
Responsibilities for the Audit of the Financial
Statements
section of our report.
We are independent of the fund in accordance
with the ethical requirements that are
applicable in Finland and are relevant to our
audit, and we have fulfilled our other ethical
responsibilities in accordance with these
requirements.
We have not provided any non-audit services
to the fund.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Materiality
The scope of our audit was influenced
by our application of materiality. The
materiality is determined based on our
professional judgement and is used to
determine the nature, timing and extent of
our audit procedures and to evaluate the
effect of identified misstatements on the
financial statements as a whole. The level of
materiality we set is based on our assessment
of the magnitude of misstatements
that, individually or in aggregate, could
reasonably be expected to have influence on
the economic decisions of the users of the
financial statements. We have also taken
into account misstatements and/or possible
misstatements that in our opinion are
material for qualitative reasons for the users
of the financial statements.
Auditor’s report
95Financial statement 2021
Key Audit Matters
Key audit matters are those matters that,
in our professional judgment, were of most
significance in our audit of the financial
statements of the current period. These
matters were addressed in the context of our
audit of the financial statements as a whole,
and in forming our opinion thereon, and we
do not provide a separate opinion on these
matters. The significant risks of material
misstatement referred to in the EU Regulation
No 537/2014 point (c) of Article 10(2) are
included in the description of key audit
matters below.
We have also addressed the risk of
management override of internal controls.
This includes consideration of whether there
was evidence of management bias that
represented a risk of material misstatement
due to fraud.
Key audit matters How the matter was addressed in the audit
Determination and collection of unemployment insurance contributions
(note 5 to the financial statements)
• The determination and collection of
unemployment insurance contributions by
the Employment Fund is based on legislation.
The unemployment insurance contributions
which have been presented in the statement
of changes in net position for the year 2021,
amounted to EUR 3.3 billion.
• The unemployment insurance contributions
must be determined in such a way so that
the Employment Fund is able to meet
the obligations being responsible for.
Unemployment insurance contributions are
determined once per calendar year, in the
preceding year.
• The Employment Fund determines the
contribution amounts and makes prepayment
decisions based on the contribution rates
which have been ratified by Parliament and the
Employment Fund collects these prepayments.
• The Employment Fund monitors defaults
concerning the obligation to pay unemployment
insurance contributions.
• As the amount of unemployment insurance
contributions is significant in the financial
statements and the determination and
collection of the contributions is subject to legal
requirements, it has been identified as a key
audit matter.
• Our audit has included assessing the process
to determine the unemployment insurance
contributions and evaluating the control
environment.
• We have evaluated the process of invoicing,
collecting and managing unemployment
insurance contributions and have performed
substantive testing on chains of transactions.
• We have assessed and tested the controls for
determining and receiving contributions and for
monitoring of payments received.
• We have verified the correctness of the relevant
payment rates applied in the IT system
environment.
• In addition, we have familiarised ourselves
with the methods for accruing unemployment
insurance contributions in accordance with
the accruals principle and accounting for
impairment of unemployment insurance
receivables.
• The audit has also included testing of the
controls in place over the flow of key data,
change management and the transfer of
information between systems.
Auditor’s report
96Financial statement 2021
Responsibilities of the Board of
Directors and the Managing Director
for the Financial Statements
The Board of Directors and the Managing
Director are responsible for the preparation
of consolidated financial statements that
give a true and fair view in accordance
with International Financial Reporting
Standards (IFRS) as adopted by the EU, and
of financial statements that give a true and
fair view in accordance with the laws and
regulations governing the preparation of
financial statements in Finland and comply
with statutory requirements. The Board of
Directors and the Managing Director are
also responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether due
to fraud or error.
In preparing the financial statements,
the Board of Directors and the Managing
Director are responsible for assessing the
fund’s ability to continue as a going concern,
disclosing, as applicable, matters relating to
going concern and using the going concern
basis of accounting. The financial statements
are prepared using the going concern basis
of accounting unless there is an intention
to liquidate the fund or cease operations, or
there is no realistic alternative but to do so.
Auditor’s Responsibilities for the
Audit of the Financial Statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee
that an audit conducted in accordance with
good auditing practice will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually
or in the aggregate, they could reasonably be
expected to influence the economic decisions
of users taken on the basis of the financial
statements.
As part of an audit in accordance with good
auditing practice, we exercise professional
judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the financial statements,
whether due to fraud or error, design and
perform audit procedures responsive to
those risks, and obtain audit evidence
that is sufficient and appropriate to
provide a basis for our opinion. The risk
of not detecting a material misstatement
resulting from fraud is higher than for
one resulting from error, as fraud may
involve collusion, forgery, intentional
omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal
control relevant to the audit in order
to design audit procedures that are
appropriate in the circumstances, but not
for the purpose of expressing an opinion
on the effectiveness of the fund’s internal
control.
• Evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting estimates
and related disclosures made by
management.
• Conclude on the appropriateness of the
Board of Directors’ and the Managing
Director’s use of the going concern basis
of accounting and based on the audit
evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant
doubt on the fund’s ability to continue
Auditor’s report
97Financial statement 2021
as a going concern. If we conclude
that a material uncertainty exists, we
are required to draw attention in our
auditor’s report to the related disclosures
in the financial statements or, if such
disclosures are inadequate, to modify our
opinion. Our conclusions are based on the
audit evidence obtained up to the date
of our auditor’s report. However, future
events or conditions may cause the fund
to cease to continue as a going concern.
• Evaluate the overall presentation,
structure and content of the financial
statements, including the disclosures,
and whether the financial statements
represent the underlying transactions
and events so that the financial
statements give a true and fair view.
We communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit
and significant audit findings, including any
significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with
governance with a statement that we have
complied with relevant ethical requirements
regarding independence, and communicate
with them all relationships and other matters
that may reasonably be thought to bear on our
independence, and where applicable, related
safeguards.
From the matters communicated with those
charged with governance, we determine those
matters that were of most significance in the
audit of the financial statements of the current
period and are therefore the key audit matters.
We describe these matters in our auditor’s
report unless law or regulation precludes
public disclosure about the matter or when, in
extremely rare circumstances, we determine
that a matter should not be communicated in
our report because the adverse consequences
of doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
Auditor’s report
98Financial statement 2021
OTHER REPORTING REQUIREMENTS
Information on our audit engagement
Employment Fund was established in 2019
and became a public interest entity during the
financial year 2020. We have been the fund’s
auditors since its establishment.
Other Information
The Board of Directors and the Managing
Director are responsible for the other
information. The other information comprises
the report of the Board of Directors and the
information included in the Annual Report,
but does not include the financial statements
and our auditor’s report thereon.
Our opinion on the financial statements does
not cover the other information.
In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
With respect to the report of the Board of
Directors, our responsibility also includes
considering whether the report of the Board
of Directors has been prepared in accordance
with the applicable laws and regulations.
In our opinion, the information in the report of
the Board of Directors is consistent with the
information in the financial statements and
the report of the Board of Directors has been
prepared in accordance with the applicable
laws and regulations.
If, based on the work we have performed,
we conclude that there is a material
misstatement of the other information, we are
required to report that fact. We have nothing
to report in this regard.
Helsinki, 23 February, 2022
KPMG OY AB
Marcus Tötterman
Authorised Public Accountant, KHT
Auditor’s report
