Rapid government involvement has alleviated unemployment
in areas of "abrupt structural change"

Helsinki (30.11.2011 - Juhani Artto) Since 2007 the governments have reacted to abrupt structural changes with a certain set of measures designed to mitigate the rise in unemployment. A new study* indicates that the method has had a positive impact. Unemployment has clearly risen after all the redundancies and closure of factories but gradually, as a result of the measures adopted, the development has begun to follow the direction of other parts of the country, the researchers conclude.

Since 2007 altogether 22 areas, as well as the maritime industry, have been entitled to receive assistance as "areas of abrupt structural change". In almost five years governments have directed EUR 220 million for this purpose.

In addition, the financing company Finnvera has provided loans and guarantees worth EUR 500 million, and another financing company Suomen Teollisuussijoitus has been a source of investment to companies in these badly hit areas. Both of these financing companies are owned by the Finnish State.

In key role planning and implementation of the measures a task force has been set up to deal with abrupt structural change, nominated by the Ministry of Employment and Economy. In the affected areas regional level task forces have the responsibility to prepare and coordinate whatever steps are deemed necessary to improve the situation. The central stakeholders, including recently made redundant employees, are represented in these regional task forces.

The "abrupt" cuts have focused primarily on traditional industry towns and regions. Hardest hit has been the forest industry. From 2005 to 2010 about ten pulp and paper factories were closed and a quarter of this industry's production capacity has been cut. Over 7,000 forest industry employees have been given notice.

Other industries where closures and lay-offs have caused an abrupt rise in unemployment have been the metal, electronic and engineering industries.

According to the study, 42 per cent of the employees who had been made redundant have found new employment in the open labour market, 19 per cent are either unemployed or awaiting retirement and 12 per cent have retired. About 6 per cent are in training programmes and 4 per cent are working in publicly supported jobs.

*Äkillisen rakennemuutoksen alueet 2007-2011 by Jukka Hytönen, Ilkka Mella and Anu Pousi; the English language abstract on page 4 of the 129-page pdf-file