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History of the YTK Unemployment Fund

We have been doing this for several decades now.

A lot has happened, and there is a lot more to come.

The history of the YTK Unemployment Fund is a story of success and bold reforms.

YTK Työttömyyskassan historia on tarina menestyksestä ja rohkeasta uudistamisesta!

History of the YTK Unemployment Fund

If you would like to know more about the people and stories behind YTK Unemployment Fund, please click on the button to download our commemorative book, which was published in 2021.

The book tells the story of how something wonderful can be built in 30 years!

Origins of YTK

Finland’s largest and still rapidly growing unemployment fund was established on 21 August 1991. The first members joined at the beginning of 1992. The most proactive of the founders, entrepreneur Juho Paloheimo from Loimaa, was elected as the Director. 

Until 2001, only private-sector employees were able to join the fund. The original name of the fund was a mouthful: Unemployment Fund for Private-sector Office Staff and Workers. As the membership policy evolved, the fund’s name was shortened first to Private-sector Unemployment Fund in 1997 and then to General Unemployment Fund YTK in 2005. The fund was also briefly called Unemployment Fund YTK.

The current name, YTK Unemployment Fund, was adopted in the autumn of 2022.

Since the fund was founded and is still headquartered in Loimaa, it is also sometimes affectionately referred to as the Loimaa Fund.  

Mergers and changes in membership policy

Around the time when the fund was being set up, the Ministry of Social Affairs and Health had decreed that the membership of unemployment funds had to be not only clearly defined but also in some way exclusive. In practice, however, the memberships of unemployment funds overlapped in various ways, and even the Ministry began to question its interpretation of the law. 

Opening YTK to public-sector employees was considered during the very first years of the fund’s existence. A number of enquiries to this end were also received from the public sector. The issue became more urgent when the Unemployment Fund of Agrologists expressed a wish to merge with YTK in 1995. The agrologists ultimately ended up joining forces with forestry employees. A merger with YTK was deemed impossible because some of the members of the Unemployment Fund of Agrologists were public-sector workers. 

YTK’s first actual merger took place in 1995, when the Unemployment Fund for Senior-level Cooperative Officers was amalgamated into YTK. The merger increased YTK’s membership by approximately 1,200. The most significant driver  for the merger was a legislative change that entered into force in 1995 (1318/1994). According to the new version of the Unemployment Funds Act, each unemployment fund had to have a membership of at least 6,000.  The limit was raised again towards the end of the decade – to 8,000. 

There were also several other small funds that needed to amalgamate and would have liked to merge with YTK. In his annual report for that year, Juho Paloheimo wrote about ‘one particularly surprising merger proposition’: the Shop Managers’ Unemployment Fund, which was affiliated with the Central Organisation of Finnish Trade Unions (SAK) – Finland’s strongest bastion of trade unionists – wanted to discuss amalgamation with YTK. The same annual report tells us that the Unemployment Fund for Salaried Employees in the Car and Machinery Trade was also interested in joining forces with YTK. 

The directors of the Shop Managers’ Unemployment Fund insisted in their merger proposal that YTK open a branch on the premises of their union in Lahti. As YTK’s Managing Director explained in the annual report, the union was wealthy enough to offer to pay all of its members’ membership fees in one go and collect the contributions from its members later. 

The condition that a branch be opened in Lahti was too much for YTK, however, and the talks were abandoned. YTK’s next merger was with the Unemployment Fund for Sports Officials at the beginning of 1997. 

YTK’s management saw great value in the mergers. The Unemployment Fund for Sports Officials was even smaller than the Unemployment Fund for Senior-level Cooperative Officers. However, its members were well-connected and highly influential people. The addition of these new members gave YTK more credibility and boosted its image. The merger was excellent publicity for YTK.  

Legal troubles

It did not take long for YTK to amass enough resources to also start thinking about accepting membership applications from public-sector employees. The rules were changed in 2001. The earlier interpretation of the law, according to which membership had to be in some way exclusive, was declared too cautious by the Supreme Administrative Court. More than thirty other unemployment funds appealed against the Insurance Supervisory Authority’s decision to authorise YTK’s expansion to the public sector in 2001. 

The Supreme Administrative Court ruled in 2002 that the Insurance Supervisory Authority’s interpretation of the law was correct. There was nothing in the law saying that each sector should only be served by one unemployment fund, and it did not make sense to divide the market in that way. The shift in the Ministry of Social Affairs and Health’s position has also been said to have been influenced by recent changes in the European Union’s competition law, which Finland, too, was monitoring closely. Having multiple service providers to choose from was vital for competition, and the provision of unemployment security in the public sector was no exception. This was especially natural in a system based on voluntary earnings-related unemployment security and not statutory insurance. 

Moreover, many unemployment funds had already had more or less overlapping memberships for decades. The most likely explanation for the trade unions’ insistence that unemployment funds had to have clearly defined and limited memberships was their wish to channel membership fees to themselves. Trade unions had grown used to having control over their members. This had been possible while revenue from insurance contributions – in the form of membership fees – was enough to cover members’ unemployment benefits without risk. However, the government’s decision back in the 1990s to raise the minimum number of members that unemployment funds had to have was made precisely to reduce risks. This led to fund mergers and further integration of different kinds of members.  The genuinely universal unemployment fund that YTK is today was born in 2005 with two more changes: the name of the fund was changed to General Unemployment Fund YTK, and the last remaining membership restriction was lifted when church and parish employees also joined the fund.

Local and uncomplicated

YTK has, ever since its beginning, been often referred to as the Loimaa Fund, as it was founded in Loimaa. It was the first large unemployment fund that was independent of trade unions. The fund’s first national press conference was held in Tampere, on the premises of the Tampere-based trade union Pirkanmaan Yrittäjät on 6 November 1991. A quick visit to Helsinki was also needed to register the fund with the Ministry of Social Affairs and Health on 18 September 1991. The total number of unemployment funds had already surpassed 70. The fund set up offices on the premises of Director Juho Paloheimo’s business, T.E.D.-Tuote Ky, on Teollisuuskatu in Loimaa. 

Despite being Finland’s largest unemployment fund with a nationwide membership, having a local and uncomplicated ethos has always been at the heart of YTK. With the rapid growth of the fund, the staff took to the streets to find locals to join the administrative team. The fund also quickly established relationships with local educational institutions, especially the then Loimaa Vocational College and Adult Education Centre. 

The economy in Loimaa is dominated by agriculture and small and medium-sized mechanical engineering businesses, and YTK has played an important role in providing alternative employment for women in particular. The fund has long been one of the biggest and most important employers in Loimaa. At the height of the coronavirus pandemic in 2021, the fund employed almost three hundred people. The pandemic had led to an increase in unemployment, and YTK’s staff grew by nearly 150 between 2020 and 2021. Now that the restrictive measures that were introduced to control the spread of the virus have eased, many of the furloughed workers in particular have returned to work, which has reduced YTK’s workload. The number of staff has also consequently decreased.  YTK’s local and uncomplicated approach also means that people all over the country still affectionately call it the Loimaa Fund. Being local has become an asset and made YTK stand out in a positive way.

Steady growth

YTK grew rapidly. The rate and speed of growth took even the founders by surprise. In just over a decade, YTK had become Finland’s largest unemployment fund. What made this even more extraordinary was the fact that YTK was not affiliated with any trade unions or other associations. YTK came from outside the prevailing unemployment security system and customary practices. 

The minimum number of members that an unemployment fund had to have to qualify for full state aid and full employer contributions was three thousand. Membership recruitment began as soon as the fund had been established, and the threshold of three thousand members was reached before the end of January in the fund’s first year in existence (on 21 January 1992). The founders’ contacts with the business world played a big role in the campaign, and it was especially unionised employees of small and medium-sized businesses that joined the fund in the early days. 

By 2002, YTK had more than two hundred thousand members and was officially the largest unemployment fund in Finland. The milestone of half a million members was reached in April 2021. The fund’s membership has grown every year since it opened its doors. YTK has held its position as Finland’s largest unemployment fund for years. The media reported in the autumn of 2023 that YTK’s membership had also surpassed the number of employed members of Finland’s largest trade union confederation.

Societal demand

A universal unemployment fund unaffiliated with any particular profession had great appeal and high societal demand, as it served all people regardless of their needs and motives. Small funds, such as the Unemployment Fund for Sports Officials, did not have the necessary resources and were unable to satisfy the government’s increasingly strict criteria for financial guarantees. A broad-based fund such as YTK was stronger than small funds focusing on specific professions. 

The severe recession of the early 1990s was also significant in this respect. Unemployment increased rapidly and to unprecedented levels. Thousands of office workers and managers also found themselves out of work, and thousands more lived under the constant threat of looming unemployment. 

Young people were especially hard hit by the recession. The number of unemployed people under the age of 25 years soon grew to 77,800, which was 70 per cent (32,000) more than during the previous year. Many were also laid off. Only just over half of those who lost their jobs were members of an unemployment fund. 

Tens of thousands of small businesses were also struggling. The owners and their families risked losing everything if the business went under. The unemployment security system had not been designed with self-employed people in mind. The majority of Finnish businesses – approximately two-thirds or around 200,000 – were run by sole traders.  

Juho Paloheimo wrote in his first Director’s review that the Southwest Finland trade union Varsinais-Suomen Yrittäjät had specifically asked him to look into the possibility of providing earnings-related unemployment security for non-unionised employees of small businesses. 

In this climate of mass unemployment, YTK flourished. In 1992, a total of 18,000 people applied to join the fund, bringing YTK’s membership to 17,071 by the end of the year. This immediately made YTK a medium-sized unemployment fund. 

The following year – in 1993 – the number of members doubled to nearly 36,000. YTK was among the fifteen largest of Finland’s 70 unemployment funds. 

There were also some political motives and objectives that drove the fund’s growth. Trade unions traditionally enjoy high levels of trust in Finland despite left-wing parties only ever having won the majority of votes in one general election (in 1966). The Parliament of Finland has also had a left-wing majority on two other occasions: during the hard times of World War I in 1916 and amidst mass unemployment and a national debt crisis in 1958. 

An unemployment fund that was not loyal to any particular political party and had no affiliations with trade unions clearly felt like a natural choice to many. Some representatives of trade unions went as far as to claim that YTK was a conspiracy of employers and capitalists as well as a crusade against trade unions. Fuel was added to the fire by the fact that Iiro Viinanen (National Coalition Party), who was Finland’s Minister of Finance through the recession and a highly controversial figure politically, was known to support independent unemployment funds. Even today, the view that YTK is detrimental to the trade union movement is kept alive by the perceived correlation between YTK’s constantly growing membership and the decline in the number of unionised employees. 

There were also designs for other independent unemployment funds in the early 1990s. Their viability was investigated by a group of nationwide employers, but the plans were ultimately abandoned. The employers’ unions concluded that independent unemployment funds would lower morale in the workplace and unnecessarily politicise the issue of unemployment security. It has been speculated that some key employers decided against the move in order to maintain industrial peace. 

YTK’s ethos

YTK’s first Director – Juho Paloheimo – was known for his fiery public persona and strong opinions. Although his public statements were generally only ever about the benefits of freedom of choice and natural competition, his style of running YTK almost like a family business created a risk that his personal opinions could begin to colour YTK’s image. 

The rapid expansion of YTK’s membership nevertheless demonstrated that politics did not determine the fund’s direction. YTK’s Board of Directors has always emphasised professional conduct and neutrality, especially after the decision that led to Paloheimo’s dismissal (in 2005). Veli-Matti Aittoniemi, who replaced Paloheimo as Managing Director, became the personification of YTK’s professional management style and political neutrality. He even gave an interview on these issues to the Finnish Social Democrats’ party newspaper Uutispäivä Demari (on 8 September 2005). In his interview, some of Aittoniemi’s statements about the earlier rhetoric bordered on regretful and even apologetic. 

YTK has always used the latest technology to make its services as user-friendly and cost-effective as possible. The resulting administrative efficiency has allowed YTK to remain one of the most affordable unemployment funds. The fund has invested heavily in the standard of its customer service over the past decade, which has translated to high customer satisfaction scores. Thanks to its growing membership and lack of restrictions on who can join the fund, YTK has come to represent a more and more comprehensive cross-section of Finnish wage earners every year. Since the cost of an unemployment fund’s membership is heavily dependent on what it pays out in benefits – which essentially depends on the level of unemployment and earnings among the members – YTK’s membership fee is a good benchmark of what the risk of unemployment is for the average Finnish worker. 


Sources: Director’s review of the period from 17 August 1991 to 1992 and reviews and annual reports from the years 1993 to 2000 and 2001 to 2005. YTK archives (‘YTKa’), Loimaa; YTKa: Report by the Board of Directors on the conditions for a merger (4 October 1996 / YTKa); Veli-Matti Aittoniemi, Deputy Managing Director of the Finnish Hospitality Association MaRa: telephone interview on 27 October 2021 (Marko Nenonen); Juha Häkkinen: The Loimaa Fund – a new player in the field of unemployment security and the public debate around it. Unprinted master’s thesis. University of Helsinki, 2013; Business Advisor Paula Avellán (Loimaa Town Council): telephone consultation on 26 October 2021; Membership statistics: YTK; Loimaa Town Council ( Legislation: