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A new report from Finnish economic think tank LABORE warns that Prime Minister Petteri Orpo’s government’s recent welfare cuts disproportionately harm low-income women working part-time in service sectors.
The analysis, released Thursday, focuses on the government’s reductions to unemployment benefits, general housing allowance, and social assistance, all of which are expected to significantly erode financial stability for workers in sectors represented by the Service Union United (PAM), such as retail, hospitality, and cleaning services.
Using Finland’s SISU microsimulation model, along with income registry data and Kela statistics, LABORE found that the reforms are set to cut available income for around a quarter of service sector workers. Part-time workers and those who previously received adjusted unemployment benefits are projected to be the hardest hit, especially women.
“Because women are more likely to work part-time and in low-paid roles in the service sector, they will bear the brunt of these policy changes,” said Milla Nyyssölä, LABORE’s lead researcher.
Before the reforms, approximately one in six service sector employees received housing allowance. Under the new policies, only one in ten will qualify. The level of housing support is also set to fall by about one-third. While the number of unemployment benefit recipients also drops, the decrease is smaller, and many will face lower levels of support.
The cuts are expected to drive more people to seek last-resort social assistance. According to LABORE’s modelling, the share of service workers requiring social assistance will rise from 2.8% to 4.1%.
For those relying on adjusted unemployment benefits, a system that previously allowed part-time workers to receive partial support, the changes are particularly stark. Not only will incomes fall more sharply for this group, but they also face the highest increase in social assistance need.
“The removal of income protections like the earnings disregard makes it much less worthwhile for unemployed people to take on part-time work,” the report notes, referencing previous research on employment incentives.
For full-time employees in the service sector, the impact of the changes is minor. The burden falls squarely on the most vulnerable: those with unstable hours and already precarious incomes.
The study suggests that the government’s welfare reform, part of a broader austerity agenda, will increase income inequality and gender disparities in the labour market. LABORE emphasizes the need for a more nuanced approach that takes into account the diversity of employment types and earnings levels across Finland’s working population.
HT
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Source: www.helsinkitimes.fi
