Sunday 6/20/21
COMPETITIVENESS

Increasing labour costs in the public and private sectors in Finland

In the local government sector, the cost of an hour worked increased by 3.7% in January to March when compared with the respective period of the year before.
Cleaning workers trying to disinfect the Metro in Helsinki. Photo: Foreigner.fi.
Cleaning workers in the Helsinki Metro. Photo: Foreigner.fi/file photo.

Labour costs continue to rise in Finland, both in the private and public sectors. These are increases that in the medium term will have effects on the competitiveness of national industries.

According to the latest data published by Statistics Finland, in the first quarter of 2021 (January to March) the cost per hour worked rose in the main industries (manufacturing, construction and business services activities), but also at the levels of central and local government.

Private sector labour costs increased by 3.2% in January to March when compared with the respective period of the year before.

In the private sector, labour costs without one-off pay items, such as performance-based bonuses, increased by 2.7% in the first quarter compared to the corresponding quarter one year ago. Over the same period, the index of wage and salary earnings for the private sector went up by 2%.

In the central government sector, the cost of an hour worked increased by 2.1% over the same period. The year-on-year change in labour costs without one-off pay items was a 2.3% increase. Seasonally adjusted labour costs went up by 2%. Over the same quarter, the index of wage and salary earnings in the central government sector went up by 1.5%.

In the local government sector, the cost of an hour worked increased by 3.7% in January to March when compared with the respective period of the year before. The year-on-year change in labour costs without one-off pay items was a 3.8% increase. Seasonally adjusted labour costs went up by 3.4 per cent. Over the same period, the index of wage and salary earnings in the local government sector went up by 1.6%.

By industry

Screenshot 2021-06-09 at 08-36-11 Statistics Finland - Labour Cost Index

Source: Statistics Finland.

The cost per an hour worked went up by 4.1% in manufacturing industries compared with the corresponding period last year. In business service activities, the costs went up by 3.1% and in construction 2.6 per cent.

In manufacturing industries, the cost per an hour worked went up by 5.8% in the metal industry, 5.3% in the food industry, 3.4% in the chemical industry and 0.5% in the forest industry.

Among service industries, the biggest rise in costs, 6.8%, was in wholesale and retail trade and the smallest, 0.8%, in financial and insurance activities.

The seasonally adjusted cost of an hour worked went up by 3% in manufacturing industries. In business service activities, costs went up by 2.4% and in construction 2.7%.

The causes

According to Statistics Finland, the rise in costs in the private sector was mainly due to the fact that the number of hours worked decreased more than the wages and salaries subject to preliminary withholding tax.

In the central government sector, the rise in costs was mainly due to the growth in wages and salaries subject to preliminary withholding tax. Also in the local government sector, the wages and salaries subject to preliminary withholding tax have grown, in addition, the cost of an hour worked is increased by a decrease in the number of hours worked.

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