Paltamo Full Employment Experiment in Finland: A Neo-chartalist Job Guarantee Pilot Program?

Abstract

Long-term unemployment became a severe social problem in Finland after the early 1990s’ depression. Even though Finland experienced a period of robust export-led growth in the late 1990s and early 2000s, Finnish economy never returned to low unemployment rates of the 1980s, and in peripheral areas unemployment rates of 15–20 percent were not unusual. In the late 1990s, a new debate started to emerge in the Northeastern Kainuu regional council on how to respond to high economic and social costs of peripheral long-term unemployment. This debate initially led to a new kind of full employment experiment that took place in the small municipality of Paltamo in 2009–2013.

In practice, the Paltamo municipality operated a public employment program that aimed at providing a suitable job for all unemployed jobseekers, improving the health, well-being and employability of the participants, and replacing various social and unemployment benefits with a single wage income. The experiment was made possible in the first place, because it had found political and financial support from the Finnish Ministry of Finance. It brought unprecedented visibility to the small municipality of Paltamo, and it started a national debate about alternatives in the Finnish employment and social policy.

The experiment was a real success in terms of decreasing the rate of unemployment in Paltamo, and it had a positive impact on the well-being and employability of the participants. A popular view about the experiment in Finland, however, is that it is too expensive to be implemented at the national level. The proponents of the Paltamo model have pointed out that current estimates on the costs of the experiment have not taken into consideration the long-term effects on well-being, employability and social inclusion.