Finnish tech sector opposes government’s immigration reforms

   July 16, 2024  Posted in ComputerWeekly


Finland’s technology sector has raised strong opposition to new labour market-based anti-immigration legislation that threatens to derail plans by business and industry to enhance the country’s international reputation and appeal in the hiring of foreign IT talent. 

Prime minister Antti Orpo’s conservative far-right government is proposing legislative measures that carry the risk of discouraging IT talent to move to Finland. In addition, the proposed reforms will make it more difficult for citizens of non-European Union (EU) states to find new jobs in Finland should their existing employment contracts not be renewed.

The proposed legislation is contained in the Finnish government’s immigration controls-led Labour Market Reform Plan (LMRP). The LMRP includes stricter work visa requirements in addition to language tests in Finnish or Swedish.

On a fundamental level, the proposed legislation would make it significantly more difficult for IT specialists holding work-based residence permits to remain in
Finland
 beyond expiration of work contracts, or in the event that their employment is terminated.

IT organisations and tech startup groups argue that the LMRP, as currently framed, will put Finnish companies at a competitive disadvantage in recruiting skills and talent from outside
Finland
 .

The proposed legislation, which the government wants to implement in 2025, would require foreign IT specialists holding work visa residence permits (WVRP) six months to leave Finland if they are unemployed and cannot find a new job, said Youssef Zad, chief economist of the Finnish Startup Community (FSC), a platform serving over 240 early stage tech businesses in Finland.

“Six months is a relatively short timeframe,” said Zad. “If specialist workers feel they may not be able to find a job fast enough, and within the specified six-month period after facing unemployment, they might go where job opportunities are more readily available.”

Employment termination

Enterprises and organisations in the public and private sectors will, under the proposed immigration and labour market reform legislation, be required to inform the Finnish Immigration Service (Migri) at the point when a WVRP holder’s employment has been terminated.

“The proposed stricter laws will cause problems for many startup companies,” said Zad. “The new laws emerge amid fears that immigration to
Finland
 is based on exploiting social benefits. Foreign specialists are not interested in social benefits offered in
Finland . They are only interested in finding new work in a timely manner.”

Stricter controls

The introduction and enforcement of stricter immigration and labour market laws will make it more difficult for Finnish companies to achieve growth targets and recruit much-needed research, development and innovation talent, said Laura Lindeman, a senior director in Business Finland and head of the state enterprise development organisation’s Work in Finland Unit (WiFU). “Our role is to promote
Finland and help attract startup entrepreneurs to move here,” she said.

A survey conducted by Statistics Finland in March identified the lack of skilled labour as a major obstacle to driving economic growth in
Finland . The skills shortage proved the chief barrier to filling 90,000 job positions in 2022-2023.

The Ministry of Labour and Employment estimates that
Finland
 will need to recruit a minimum of 100,000 new skilled workers over the period to 2035.

Because of the stricter work visa permit and immigration rules,

Finland
 is finding it increasingly difficult to recruit talent, especially from

Turkey
,

China
,

India
,

Brazil
 and
Vietnam
 , said Lindeman.

Moreover, foreign entrepreneurs and workers with work visa permits also find it problematic to access routine financial products and services, such as being able to open a standard bank account, she said.

“What entrepreneurs find particularly difficult about moving to
Finland are the long bank waiting times,” said Lindeman. “It can take up to a year to get a bank account and digital login codes clearance that opens up many other services in Finnish society. For banks, the reasoning is that they have to adhere to Know-Your-Customer obligations, and foreign customers require more investigative work. At the same time, banks also know that foreign customers are the industry of the future.”

Non-EU nationals

The Finnish government’s tightening of immigration laws will also impact non-EU nationals already living in
Finland , including asylum seekers. The Integration Act, which embodies a broad range of measures, is set to become law by year-end 2024 and enacted in January 2025.

The reforms set out in the Integration Act will transfer the main responsibility for assimilation of immigrants from the state to municipalities. The Act will enable local authorities to impose charges on immigrants for certain types of services, including healthcare. 

In March,
Finland ’s Ministry of the Interior (MoI) announced plans to tighten the conditions under which permanent residence permits can be issued. The MoI established an “advisory group” to draft and present proposals for consideration by the government’s Immigration Reform Legislative Programme (IRLP) in the second quarter of 2025.

The core aim of the IRLP is to integrate immigrants more quickly into Finnish society through language study, cultural appreciation and civil rights induction courses. Permanent residence permits will be restricted to immigrants that successfully complete the joined integration programmes. The reform would extend the period of domicile required for a permanent residence permit from the current four years to six.

From 2025, proficiency in Finnish or Swedish, demonstrated in a language test, will be a mandatory condition to obtain a permanent residency permit in
Finland . In addition, permanent residency permit seekers will need to provide documented evidence of identity and uninterrupted employment covering the two-year period prior to filing an application.

In
Finland , permanent residence permits are currently granted to qualifying applicants if they can prove domicile for four years and an annual income in excess of €40,000. Applicants that have a Master’s degree recognised in
Finland
 and an uninterrupted work history of two years can also meet the conditions to obtain a permanent residence permit.

Rise in unemployment

The weakened state of the Finnish economy, which has seen unemployment rise since 2023, had created a larger labour pool of IT skills against the backdrop of immigration-based labour market reforms, said Samuli Salonen, chief executive of Helsinki-based talent acquisition company TalentBee.

“Three years ago, it was very difficult to find talent for specialised or senior roles,” he said. “There were far fewer candidates available in the open market, especially in the tech industry, where everyone was constantly hiring. In the labour market of today, where the economy is not so strong, there are many applicants pursuing the same job.”

According to Ministry of Economic Affairs and Employment data, the number of unfilled vacancies in
Finland
 in April 2024 declined to 114,500. This is about 56,000 fewer than for the corresponding month in 2023. Unemployment rose to 275,300 in April, representing an increase of over 29,000 since April 2023.

Mindful of criticism from business and industry organisations, the government plans to convene a public hearing in August to present and explain the different measures in its immigration and labour reform plans.   

“The public hearing will be conducted in English and open to all,” said Jarmo Tiukkanen, a senior adviser to the Ministry of Economic Affairs and Employment on labour migration and integration policy. “It will describe and clarify the government’s proposals, and offer an overview of how the legislative reforms will operate in practice and impact on the economy. We want people to be able to ask questions in an open discussion forum.” 



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