Finland's employment services have an accountability problem

Humppila, a small municipality in southern Finland, just saw its unemployment fines triple to 300,000 euros. Helsinki is paying over 120 million. In Outokumpu, the cost reaches 205 euros per resident. Across the country, municipalities are buckling under fines imposed by a system that was supposed to incentivize them to get people employed.

Humppila's municipal director Minna Ylikannö called the situation "ruthless" and said the penalties risk driving municipalities to ruin. The municipality has already frozen infrastructure repairs, delayed school renovations, and eliminated two managerial positions. The fine alone equals roughly four teacher salaries.

She put it plainly: municipalities are obliged to boost employment, but they cannot control job creation or economic trends.

I understand the frustration, but I disagree with the premise. There are jobs. They are just not where anyone is looking.

What happened#

To understand the current situation, you need to understand what changed in January 2025.

Finland transferred responsibility for public employment services from state-run TE Offices to municipalities through the TE2024 reform. Around 4,400 state employees moved to municipal payrolls. The country was divided into 45 employment areas, each responsible for organizing services locally.

On paper, it makes sense. Municipalities are closer to local labour markets, employers, and jobseekers. They run education and business services already. Combining everything under one roof should make it easier to get people into work.

To create a financial incentive, the reform introduced a compensation mechanism. When a resident stays unemployed for more than 100 days, the municipality starts paying a share of the costs. For long-term unemployment (over one year), the payments increase significantly. Municipalities compensate Kela, Finland's social insurance institution, for the benefits paid.

The theory is that if municipalities pay when people stay unemployed, they will invest in getting them employed faster.

The reality: 80% of municipal fines come from long-term unemployed people, according to the Association of Finnish Municipalities. These are people who have been circulating in the system for years, going through the same programs, the same approach, and getting the same outcome.

Work Minister Matias Marttinen has acknowledged that "there are signs the funding model does not function perfectly, especially regarding long-term unemployment." The Ministry of Economic Affairs and Employment plans to evaluate the system during 2026.

The hidden job market that nobody talks about#

The vast majority of hiring in Finland does not happen through job boards. It happens through networks, referrals, direct contacts, and conversations that never become a public listing. Everyone in recruitment knows this, everyone in HR knows this, and the municipalities running employment services know this too.

According to the YTK Unemployment Fund, 68% of respondents found their last job through the hidden job market. The most common routes were personal networks (29%), intra-organizational search (9%), open applications (6%), and work placements (5%).

Estimates vary, but Work in Finland reports that up to 75% of job vacancies in Finland are not advertised publicly.

And yet the entire public employment system is still built around a model where people are told to send hundreds of applications to listed positions, often AI-generated, to listings that receive hundreds of identical applications that nobody reads. This is what passes for "activation" in Finland's employment system.

What actually works#

At Herizon, we help roughly 40 immigrants find employment per month, mostly into positions that were never publicly listed. Our model is not complicated.

First, we help people identify and articulate their skills in a way that makes sense to Finnish employers. Not a generic CV rewrite, but real skill mapping that translates experience into local hiring language.

Second, we close skill gaps fast. Not six-month courses, but targeted interventions tied to what companies are actually hiring for right now.

Third, we teach people how hiring actually works in Finland. The hidden job market, LinkedIn, networking, direct outreach, company visits, and how to get referred by someone who already has access. None of this is taught in public employment services.

Fourth, we connect people directly to companies where their skills match a real need, and we track every outcome including time to hire, industry, salary band, and retention.

This is the bare minimum of what employment services should be doing, and the public sector is not doing even this.

Nobody is accountable for results#

Finland's public employment system has been producing the same results for years. Municipalities run activation programs, organize courses, file reports, and measure participation. The funding keeps flowing regardless of whether anyone actually gets a job.

If you ran a business like this, spending millions annually with zero measurable results, you would be out of business. In the public sector, you get more funding and a new steering group meeting where nobody turns on their camera.

Part of the problem is structural. Public sector employment in Finland comes with strong protections that make it very difficult to terminate someone's position, even when performance is poor. Dismissals require extensive documentation and process, and in practice they rarely happen. This means that even when programs consistently fail to produce results, the people running them face no real professional consequences. The incentive to change is simply not there.

Nobody is measured by employment outcomes, nobody loses their position when programs fail to deliver, and nobody is asked the most basic question. Did anyone actually get a job?

And so nothing changes. The courses continue, the activation metrics get reported, the fines grow, and municipalities complain that there are no jobs while companies in every city are looking for people and cannot find them through the channels the public system insists on using.

The context makes it worse#

Finland currently has the highest unemployment rate in the EU at 10.0%, more than four percentage points above the EU average. The European Commission attributes this to "lower labour demand caused by weak economic activity, combined with higher labour force participation."

Starting March 2026, a new sanctions system introduces stricter penalties for jobseekers. A first failure to fulfill obligations results in a seven-day suspension from benefits. Repeated failures lead to a six-week duty to work.

So the approach is to fine the municipalities for not creating jobs, and fine the jobseekers for not finding them. Meanwhile, nobody is fixing the system that connects the two.

The gap is small and solvable#

What frustrates me most is how much of this problem is solvable. We are doing the bare minimum at Herizon, teaching people how recruitment actually works in Finland, and even that produces 40 employment outcomes per month. The public sector is not doing even this much.

Every single employment outcome does not just help one person. It helps the company that needed someone, it helps the municipality that collects tax revenue, and it helps the economy that needs growth. Companies have labour shortages and people are unemployed. The gap between these two realities is not that wide, and it could be closed if someone bothered to try.

But as long as the system measures activity instead of outcomes, and as long as failure has no consequences, nothing will change.

The fines will keep growing, the reports will keep getting filed, and the people who could be employed will keep sitting at home sending applications that nobody reads.

What needs to change#

Stop measuring activation. Start measuring employment.

Make employment services accountable for outcomes. If a program does not produce results, stop funding it. If a model works, scale it. Any private sector organization already does this.

And most importantly, stop pretending that there are no jobs. They are in the hidden market, in growing companies, in networks that unemployed people have no access to. The job of employment services is to build that access, not to run another course.

Finland has the highest unemployment rate in the EU right now. The current approach is not working. Maybe it is time to try something that does.