Is unemployment insurance mandatory?

Unemployment insurance is an important part of the social security system in Finland, and its purpose is to secure a living during unemployment. But is unemployment insurance mandatory? The answer to this question depends on whether you look at the matter from the perspective of an employee or an entrepreneur.

Employees

Unemployment insurance is practically mandatory for wage earners. The employer is obliged to pay unemployment insurance premiums, which consist of both the employer’s and the employee’s contributions. The employer withholds the employee’s share directly from the salary and accounts it together with his own share to the Employment Fund. This system guarantees that all wage earners are automatically insured against unemployment.

Entrepreneurs

The situation is slightly different for entrepreneurs. Entrepreneurs are not automatically included in the unemployment insurance system, but they themselves have to join the entrepreneurs’ unemployment fund (YTK) in order to receive unemployment insurance. This is not mandatory, but recommended, because without belonging to the unemployment fund, the entrepreneur is not entitled to earnings-related unemployment allowance.

Unemployment funds

Unemployment funds are organizations that pay earnings-related unemployment benefits to their members. Wage earners can join the unemployment fund of their own field, and entrepreneurs can join the unemployment fund for entrepreneurs. Membership in the unemployment fund is not mandatory, but it is recommended, as it offers better security against unemployment compared to basic daily allowance or labor market support alone.

Summary

In summary, it can be stated that unemployment insurance is practically mandatory for wage earners, because the employer handles the insurance premiums. Unemployment insurance is not mandatory for entrepreneurs, but it is recommended to get it in order to receive earnings-related unemployment insurance. Membership in the unemployment fund is not mandatory, but it offers significant additional security in case of unemployment.

More information about unemployment insurance and unemployment funds can be found, for example, at Employment Fund and YTK‘s website.