Friday 03.07.2020

Is Finland about to suffer an increase in unemployment?

The number of unemployed job seekers increased by 3,800 in November, when the great Christmas sales campaign is at its peak. Bankruptcies of companies are increasing, especially in the main construction sector and layoffs are also on the rise.
Is Finland about to suffer an increase in unemployment?

The latest figures on employment in Finland may be read as good or bad news, depending on how you look at it.

Today there are a few -very few- more people employed than a year ago. So far the positive. The worrying news is that in November the number of unemployed job seekers rose sharply and the month ended with 3,800 more than in October.

Is Finland about to suffer an increase in unemployment? In its latest economic forecast, the Ministry of Finance predicts a general slowdown in economic growth and admits that this will "weaken" employment and wages growth.

Despite those clouds, the Government insists unemployment will still fall to 6.5% in 2020. But some indicators suggest this will be complicated. For example, it is significant that the number of unemployed job seekers increased so much month-on-month precisely in November, when the great Christmas sales campaign is at its peak. What will happen in the periods when the activity declines?

In addition, the latest figures on bankruptcies of companies published by Statistics Finland show an increase, which is especially sharp (9.1%) in the construction sector. The number of employees in bankrupt companies totaled 11,827, which is 2.8% more than in the previous year.

Layoffs are also on the rise. At the end of November, the number of people laid off was 20,600 in the whole country; a year-on-year increase of 4,700. The number of people fully laid off totaled 14,600, representing an increase of 4,800 from November the year before.

Bankruptcies

Bankruptcies January-November. Source: Statistics Finland.

228,600 unemployed job seekers

According to the Employment Bulletin by the Ministry of Economic Affairs and Employment, a total of 228,600 unemployed job seekers were registered at the Employment and Economic Development Offices at the end of November. This is a small decrease of 800 from the previous year. However, the number of unemployed job seekers increased by 3,800 from the previous month.

Another problem is the increase in unfilled vacancies, which cannot be attributed only to the lack of labor. The number of new vacancies reported to Employment offices during November totaled 56,600, or 6,400 more than in November the previous year. In all, the number of unfilled vacancies in November amounted to 110,900, which was 14,400 more than a year ago.

How much more will the number of vacancies continue to increase?

It does not seem to be just a problem of lack of labour or trained personnel. This may be true for some sectors, such as social services, but in Finland it is increasingly common to read complaints from people -locals and foreigners- about the decline in the quality of employment, which makes many of those vacancies remain unfilled.

In other words, many vacancies are not filled because with these jobs the worker does not earn enough to live.

A more positive view

The Labour Force Survey issued by Statistics Finland depicts a different -more positive- situation. According to this survey, in November the number of people in employment was 10,000 more than on the previous year and the employment rate was 71.7%, which was 0.2 percentage points higher than in November the year before.

The survey by Statistics Finland shows that unemployment total was 160,000, which is 8,000 fewer than a year ago. And the unemployment rate was 5.9%, or 0.3 percentage points lower than the previous year.

There are fundamental differences between these two ways of measuring unemployment: The Employment Service figures of the Ministry of Economic Affairs are compiled on the basis of the information in the Employment offices’ customer register, while the Labour Force Survey of Statistics Finland is based on sampling.

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