New toimeentulotuen reform raises concerns over capacity and costs

Finnish employment officials are raising alarms over a recent reform to the country’s last-resort income support, which has redirected a growing number of claimants into labour-market services that may be ill-equipped to assist them.

The change, which took effect on 1 March, requires people seeking basic income support to register as unemployed job-seekers and apply for unemployment benefits unless they are formally assessed as fully or partially unable to work. The government says the move is designed to prevent long-term reliance on welfare and underline that toimeentulotuki is a benefit of last resort.

“We are now seeing clients who have no realistic prospect of employment and no remaining work capacity,” said Mari Rautiainen, director of the Oulu regional employment agency. “It feels completely irrational.”

Rautiainen estimates the reform will add 800–1,000 new cases in Oulu alone. In the Turku district, covering 23 municipalities, officials expect roughly 2,000 new clients, with 1,400 in Turku itself. A typical caseworker’s target caseload is about 150 clients, and the new arrivals are expected to require above-average support.

Jukka Varonen, director of the Turku employment agency, said early experience suggests many of the new claimants lack the prerequisites for entering the labour market. In some instances, staff have questioned whether clients are legally competent to enter contracts.

“They need something entirely different from what we can provide,” Varonen said. “We are not equipped to handle these cases.”

Both directors argue the reform may shift costs from the state to municipalities without delivering the promised savings. Rautiainen said Oulu will need to hire ten additional staff to meet the new demand.

Minna van Gerven, professor of social policy, acknowledged the reform’s goals but noted that many claimants have complex, long-term issues—including doctor-certified disabilities—that prevent them from working. “They may cycle between sick leave, the exhaustion of sickness benefits, and a return to income support, ending up in our employment services,” she said.

The 2025 overhaul of labour services transferred responsibility for employment measures from central government to municipalities, which had previously managed local business development. Rautiainen called the original idea sound but warned it is now at risk of failing because the new clients fall outside employment services’ mandate and funding.