Finnish government proposes new labor market changes amidst ongoing reforms

The Finnish government is already proposing new labor market changes before the previous adjustments have settled. In September, the Ministry of Economic Affairs and Employment established tripartite groups to facilitate the signing of fixed-term contracts and personal dismissals. These groups include key employer and employee organizations. The government believes these measures will lower barriers to employment, while employee organizations argue that they will increase job market insecurity.

Under the new proposals, it would soon be possible to establish a fixed-term contract of up to one year without a specific reason. Currently, every fixed-term contract requires an acceptable justification, such as a temporary replacement. According to Statistics Finland, approximately one in six employees held a fixed-term contract last year, with 80 percent of these contracts lasting less than a year, predominantly affecting women, especially those under 34 years old.

The government is also considering easing the reinstatement obligation for dismissals due to production or economic reasons in smaller businesses, where the requirement may no longer apply for employers with fewer than 50 employees. Additionally, the rules around the notification of layoffs are set to change, with the requirement becoming a week’s notice instead of the current two weeks.

Another working group is discussing the simplification of personal dismissals, where only a reasonable cause will suffice, rather than a serious justification as previously necessary. Both working groups are expected to present their findings by the end of the year, with proposed laws scheduled for parliamentary consideration in the spring.