Finland plans separate social security system for newly-arrived immigrants

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Prime Minister Petteri Orpo‘s (NCP) right-wing coalition has emphasised the importance of integrating immigrants into Finnish society in its programme for government, with a particular focus on raising employment rates among foreigners.

With this objective in mind, the government has drafted plans to introduce a separate social security system for newcomers arriving into the country aimed at incentivising them to find work as soon as possible.

The benefits and social security on offer to newly-arrived immigrants would be different from those provided to people who have lived in Finland for a longer period of time. A similar policy has been rolled out in Denmark, where a person must live in the country for at least eight years to be entitled to the full range of social security benefits.

This may be the case in Finland too, if the government’s plans come to fruition.

Two-tier system would particularly impact refugees

The government’s plans would particularly affect the status of people who come to Finland for reasons other than work, for example as an asylum seeker.

Under the proposals, immigrants would only become entitled to receive child home care allowance after several years of living in Finland. This is similar to the policy in Norway.

Child home care allowance is paid to people who have a child under 3 years of age who does not attend municipal early childhood education.

The government also wants to replace unemployment and income support for immigrants with a so-called ‘integration support’ package.

“The government will implement the replacement of social assistance and labour market support with integration support for immigrants, which will include an incentive and an obligation to integrate,” the programme for government outlines.

There are also plans to tie the level of social benefits to language skills, meaning people with a weaker command of Finnish or Swedish would not be entitled to full unemployment support.

In practical terms, this would lead to immigrants receiving lower unemployment payments.

However, the government’s proposals are currently being reviewed and considered by a variety of different ministries, and the language proposal has been criticised as unconstitutional — meaning that the scale of the reform and the effects they will have are still unclear.

In June 2022, a business advisory service called NewCo organised an event for women of an immigrant background at Helsinki City Hall.

In June 2022, a business advisory service called NewCo organised an event for women of an immigrant background at Helsinki City Hall. Image: Vesa Marttinen / Yle

Lessons from Denmark

Denmark made cuts to the social security benefits paid out to immigrants in 2002 and again in 2015, although a left-wing government reversed the cuts in 2012.

In both 2002 and 2015, the cuts were sizeable, equating to roughly 40-50 percent of the previous level. The intention was to give newly-arrived immigrants a strong incentive to work.

Studies of the Danish policy suggest there was an initial surge in the employment rate, but the effect was only temporary.

“It [the policy] doesn’t help refugees to achieve better employment when you look at it after, say, 10 years,” research professor Jacob Nielsen Arendt told Yle.

Jacob Nielsen Arendt is head of Labour Market Research at the ROCKWOOL Foundation Research Unit in Copenhagen.

Jacob Nielsen Arendt is head of Labour Market Research at the ROCKWOOL Foundation Research Unit in Copenhagen. Image: Rockwool Foundation

Increase in crime

The Danish studies also found that making cuts to social security benefits received by immigrants had a number of undesirable, and unforeseen, consequences.

The increase in crimes committed by immigrants was “alarming”, Nielsen Arendt noted.

“Many immigrants started shoplifting just to survive,” he said, adding that this trend was especially evident among young men from low-income immigrant families.

Policies did “more harm than good”

Danish researchers further found that as a result of the cuts to social benefits, many immigrant women were forced out of the labour market and became increasingly dependent on their spouses’ income.

The studies also observed a significant increase in the use of healthcare services by immigrant women, suggesting they were living more stressful and difficult lives.

In addition, the need to work led to many immigrants dropping out of Danish language courses. This in turn reduced their chances of getting better jobs in the future.

Many of the studies concluded that the negative consequences of the cuts — such as the increase in crime, social exclusion, and impacts on health — were long-lasting and affected a large proportion of immigrants. The cuts were therefore seen to have brought more harm to Danish society than benefits.

Yle News’ weekly podcast All Points North recently asked if jobseekers should get lower benefits if they don’t know Finnish. Listen to the episode via this embedded player, on Yle Areena via Apple or Spotify or wherever you get your podcasts.

Finnish researcher wary of negative effects

Finland is unlikely to cut social security benefits for immigrants to quite the same extent as Denmark has done, but Aalto University economics professor Matti Sarvimäki still warns that making such cuts will have negative effects.

Sarvimäki told Yle that these consequences include an increase in poverty levels as well as a drop-off in the number of people participating in integration courses.

“One effect of the Danish cuts was to reduce incentives to participate in integration training, with a drop in participation, especially for women. This may partly explain why the initially positive employment effect was short-lived,” Sarvimäki said.

He added that the mandatory integration plan, introduced by Finland in the 1990s, has achieved good results.

“Immigrants for whom the integration plan became compulsory fare much better than those who arrived a little earlier and for whom it was not compulsory,” he noted, adding that the effects are also seen by subsequent generations.

Children of people who took part in the integration plan policy tend to do better in school, stay in school longer and fare better in the labour market, Sarvimäki said.

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