Acts on the transfer of TE services to municipalities have been approved

On 23 March 2023, the President of the Republic approved a legislative package on the reorganisation of public employment and business services. The responsibility for organising such services will be transferred from the central government to municipalities on 1 January 2025. The reform aims to create a service structure that promotes the rapid employment of jobseekers by utilising all opportunities offered by municipal services.

Transferring the responsibility for employment, municipal education and business services to one organiser promotes the objective of faster employment. 

“It is great that TE services will now be closer to municipal residents and businesses, because municipalities have the best knowledge about the area. Municipalities and regions are well-placed to offer their customers tailored services that meet the needs of local labour markets, which will improve the vitality of regions”, says Minister of Employment Tuula Haatainen.

The staff of TE administration will be transferred to municipalities as transfer of business where they will retain their current terms of employment. 

Municipalities or employment areas in charge of organising services – A new funding model at the core of the reform

Services will be transferred to municipalities or employment areas consisting of several municipalities that have an employment base of at least 20,000 persons. The municipalities that form an employment area must border each other and be functional in terms of the labour market and employment. 

These conditions will help ensure that the organisation of services will not become too fragmented. The objective is to safeguard the sufficiency of resources and equal availability of services. 

Municipalities must agree on the formation of cooperation areas and notify the Ministry of Eco-nomic Affairs and Employment thereof by the end of October 2023. On certain grounds specified by law, the Government may grant the responsibility for organising services to an area with an employment base of fewer than 20,000 persons. Such an exemption can only be granted if it does not endanger the availability of services in the area.

A funding model that encourages municipalities to organise effective services is at the core of the reform. In a new funding model for unemployment benefits, municipalities will participate in the funding of the basic amount of earnings-related and basic unemployment allowances, in addition to labour market subsidy. A jobseeker who finds work in the open labour market will benefit the municipality in the form of lower expenditure on unemployment benefits. It is estimated that, following the reform, 7,000–10,000 more people would be in employment by the end of 2029.

Despite the transfer of the responsibility for organising services, the central government has the ultimate responsibility for the labour force. The central government is responsible for the employment services system and its functioning at the national level.

Implementation prepared in regions

Municipalities will be responsible for the preparation of employment areas with the help of a national implementation programme. A broad-based network of all key operators and stakeholders involved in the reform as well as personnel representatives are currently preparing the implementation programme. 

The objective is a controlled transition, which means that all key functions and services will be ready when the responsibility for organising services is transferred to municipalities and employment areas on 1 January 2025.

Inquiries:

Jan Hjelt, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 048 940
Unna Heimberg, Financial Specialist, Ministry of Finance, tel. +358 295 530 280 (funding)
Tanja Ståhlberg, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 025 (national support and steering of implementation)