OECD - Investing in Youth: Finland

Finland's education system ranks consistently among the best in the OECD, but inefficiencies in employment and social policies are hampering a smooth transition into the labour market for a considerable share of the youth population. The youth employment rate is slightly above the OECD average but markedly below those in other Nordic countries, while youth unemployment is only slowly recovering from a series of economic shocks that affected Finland in the past decade. With a strong demand for high-skilled workers and persistent shortages in high-skilled jobs, low-skilled youth encounter particular difficulties in the Finnish labour market. Those who failed to complete upper secondary education account for nearly half of all youth who are not in employment, education or training (the so-called NEETs).

Despite the outstanding performance of the education system, there is room to raise completion rates in upper secondary education, especially among vocational students. A recent reform of the vocational upper secondary education system introduced many promising changes, but some additional adjustments could boost the pay-offs of these reforms. It is essential to better engage employers and to support them with the tasks of offering workplace learning. To ease the transition from upper secondary to tertiary education and provide the labour market with the necessary skilled workforce, Finland would also need to reform the highly selective admission procedures for tertiary education and expand its capacity.

Finland has one of the most generous benefit system for young people among OECD countries. The wide range of benefits and services help young people face economic and labour market challenges, but they also create considerable disincentives to seek work and leave benefit. The benefit system is complex and disjoint, with no direct connection between different types of payments and the limited connection between benefits and employment services hinders the implementation of a stronger activation regime.

The coming years will therefore be critical for Finland and the government must make every effort to streamline the benefit system and strengthen activation for young jobseekers. The planned but currently halted administrative and regional government reform (the so-called SOTE reform) is not making these challenges easier as it would reinforce the disconnection between benefits (a national matter) and employment and other services (a regional matter).