Finland is told its welfare state can’t cope with virus fallout

One of the world’s best-funded welfare states is starting to crack as the fallout of the coronavirus triggers mass unemployment.

Finland’s system of jobless benefits can’t cope with the sudden surge in demand, the country’s biggest unemployment fund, YTK, said.

There are more than 300,000 Finns who suddenly find themselves without work, either through temporary layoffs or outright job cuts. A large chunk of them may have to wait until next year to get their first benefit payment, YTK said.

Money’s not the problem, Managing Director Sanna Alamaki said in letters to members sent through April 1. It’s “that the benefit applications can’t be processed and, consequently, money can’t be paid out quickly enough,” she said.

YTK is expecting “a flood” of more than 100,000 applications through April. That’s double the number it would process during an average year. Even if it triples staff, people would still face a three-month wait for their jobless benefit, YTK said. That exceeds the legal limit of 30 days.

Finns, along with their Nordic neighbors, rely on a generous welfare system to ensure that those who drop off payrolls still get some form of monthly support. When that safety net starts to crack, it risks upending the social model that underpins the high levels of trust in government typical to the Nordics.

The fund, which represents 20 percent of wage earners in Finland, called on the government to help, and asked that it provide subsidies to companies laying off workers so that they still get paid through the payroll.

In a letter to members, the fund said more than 270,000 members are at risk of losing their jobs. That compares with the 187,000 people who were unemployed in February, according to official statistics.