Changes to labour market subsidy, commuting and relocation allowance and the increased rate of unemployment benefits as of the beginning of 2025

The Finnish Parliament has approved the Government’s legislative proposals concerning changes to labour market subsidy, to commuting and relocation allowance and to unemployment benefits during participation in employment-promoting services.

This press release summarises all the changes to Kela unemployment benefits that will enter into force on 1 January 2025.

Most of the changes consist of cuts to unemployment benefits.

– The cuts to unemployment benefits may cause a slight increase in payments of general housing allowance and basic social assistance, says Antti Ristimäki, Legal Counsel at Kela.

An unemployed person’s income is taken into account when deciding if they can receive general housing allowance or basic social assistance and how much they can receive. Since the cuts to unemployment benefits may mean a lower income for some unemployed people, they may then be entitled to general housing allowance or social assistance, or they may get more of these benefits than previously.

Minimum amount of partial labour market subsidy to be reduced

The minimum amount of partial labour market subsidy paid by Kela will be reduced as of 1 January 2025.

Following the reduction, the minimum amount of partial labour market subsidy will be 35 per cent of the full amount. At present, the partial labour market subsidy always comes to a minimum of 50 per cent of the full amount.

A partial labour market subsidy is granted to an unemployed person who is living with their parents. The full amount of the labour market subsidy is granted if the parents’ income does not exceed EUR 1,781 per month in total.

In recent years, partial labour market subsidy has been paid to some 10,000 people per year. Many of the recipients of partial labour market subsidy are young unemployed people, simply because they are more likely to still be living with their parents. Nearly 90 per cent of the recipients of partial labour market subsidy are under 30 years of age.

Read more about how the partial labour market subsidy is calculated.

Compensation for informal or family caregivers will no longer reduce the amount of labour market subsidy for recipients who are living with their parents

Any compensation for informal or family caregivers that a parent receives will no longer reduce the labour market subsidy of an unemployed person living with their parents as of 1 January 2025.

This change only applies to situations where a parent acts as a caregiver on a not-for-profit basis.

At present, compensation for informal and family caregivers is taken into account as income for a parent of a recipient of labour market subsidy, which means that the compensation may reduce the amount of labour market subsidy available to an unemployed person who is living with their parents.

The change may affect the amount of labour market subsidy received by an unemployed person who lives with their parents and whose parent is an informal caregiver or a family caregiver in child welfare.

Commuting and relocation allowance no longer paid at an increased rate

Commuting and relocation allowance is a benefit available for work or training. This benefit will no longer be available at an increased rate as of 1 January 2025. The increased rate may still be available to those whose work or training began in 2024.

Commuting and relocation allowance is intended to compensate an unemployed person for the costs of accepting a job or a training opportunity that requires a long commute or a move closer to the workplace or school.

At present, the commuting and relocation allowance can be paid at an increased rate if the commute to work or training is more than 200 km. The increase is EUR 5.29 per day.

Commuting and relocation allowance is a relatively rarely used benefit. In 2023, Kela paid this benefit to a total of 656 persons. About 300 of them received the allowance at the increased rate.

Research has shown that this benefit has little impact on the regional mobility of the workforce.

Unemployment benefits no longer paid at increased rate for duration of employment-promoting services

Unemployment benefits will no longer be paid at an increased rate for the duration of employment-promoting services that begin on 1 January 2025 or later.

The increased rate can still be paid for employment-promoting services that began in 2024. However, recipients will be able to receive unemployment benefits at the increased rate for a maximum total of 200 days.

At present, unemployment benefits can be paid at a rate increased by a supplementary amount during participation in employment-promoting services. The supplementary amount payable with the labour market subsidy, the basic unemployment allowance and the earnings-related unemployment allowance is EUR 5.29 per day (EUR 111 per month on average).

In 2023, Kela paid unemployment benefits at an increased rate to a total of about 60,000 unemployed persons, out of whom about 10,000 received basic unemployment allowance and about 50,000 received labour market subsidy.

Out of all employment-promoting services, the increased rate is most commonly paid for labour market training. Recipients of labour market subsidy often receive the increased rate during participation in rehabilitative work activity. Many of the participants in rehabilitative work activity have been unemployed for a long time.

The changes will enter into force on 1 January 2025

The changes to labour market subsidy, to commuting and relocation allowance and to unemployment benefits during participation in employment-promoting services will enter into force on 1 January 2025.

Recipients of Kela benefits do not need to contact Kela about these changes.

Follow changes to social security benefits

Read more

Sosiaali- ja terveysministeriön tiedote 23.9.2024: Hallitus esittää työttömyysetuuksien aktiiviajan korotusosista luopumista ja muutoksia osittaiseen työmarkkinatukeen (in Finnish or Swedish)

HE 135/2024: Hallituksen esitys eduskunnalle työttömyysturvalain ja työttömyysetuuksien rahoituksesta annetun lain 4 ja 8 §:n muuttamiseksi (in Finnish or Swedish)

Kela: Labour market subsidy

Kela: Financial assistance during participation in employment promoting services

Kela: Commuting and relocation allowance

TE Services: Labour market training (in Finnish or Swedish)

Ministry of Social Affairs and Health (stm.fi): Rehabilitative work activity (in Finnish or Swedish)