Reconciliation of fiscal policy and employment policy

An overall picture should be drawn of employment measures and their impact on general government finances and households’ income and expenditure. It would provide more diverse and comprehensive information for the selection and preparation of future measures. No comprehensive assessment of the employment measures as a whole and of their mutual impacts has been made during Prime Minister Juha Sipilä’s Government term.

The National Audit Office recommends that the Ministry of Finance, in cooperation with the Ministry of Economic Affairs and Employment and the Ministry of Social Affairs and Health, should produce a summary of employment measures on a regular basis. It could, for example, summarize the costs of the measures taken and their impacts on employment and on individuals’ or households’ income and expenditure.

The audit was targeted at the preparation of both employment policy measures from the perspective of sustainable general government finances and employment-related fiscal policy measures by Sipilä’s Government. The purpose was to ensure that the employment policy and fiscal policy objectives form a consistent entity and that available information is utilized comprehensively when objectives are set and measures are selected.

During Sipilä’s Government term, increasing the employment rate was a key means of balancing general government finances. The aim of the Government Programme was to increase the employment rate to 72 per cent. The employment rate as such does not reveal anything about the general government fiscal position. When the impacts of employment on general government finances are assessed, a significant role is played by the quality of employment, such as the earnings derived from work.

The impacts of employment measures on general government finances are indirect, and they depend on many factors, often occurring with a delay. It should therefore be assessed what kinds of objectives related to balancing general government finances can be linked with employment policy.

Information should be compiled on the impacts of employment measures to be utilized in the preparation of new measures. When planning measures, ministries should therefore enable well-functioning experimental designs and high-quality ex-post assessments.