The number of unemployed jobseekers is no longer decreasing
The Ministry of Economic Affairs and Employment has published the latest labour market forecast, warning that structural problems impede employment growth.
"The number of registered unemployed jobseekers is no longer decreasing" and "the decrease in unemployment is likely to come to halt in 2020."
Those are the most remarkable conclusions of the latest short-term labour market forecast published on 8 November by the Finnish Ministry of Economic Affairs and Employment. An assessment of the current situation that looks at the factors that are currently restricting job creation.
According to the Government´s document, better employment figures could be achieved in Finland with the current economic growth rate, despite the economic slowdown. However, in their evaluation the experts mention several factors that are restricting employment creation, such as structural unemployment, labor market mismatch and limited labor supply in certain fields of work.
In general terms, mismatches in the labor market occur for example, when the educational level of jobseekers does not correspond to the profiles sought by companies in the labor market or if there is a lack of geographical mobility.
Deceleration exceeding estimates
The Ministry of Economic Affairs and Employment acknowledged in a press release that "employment growth deceleration is exceeding previous estimates." More specifically, it explains that employment is no longer growing in the industrial and construction sector". In parallel, layoffs are increasing in the industry. In contrast, employment still grows in service sectors.
Another problem foreseen is that working age population will continue to decline. In fact, working age population will begin to diminish in 2021. The experts predict specifically a shrunk of the number of the oldest people of working age, which raised in recent years due to the economic boom.
The authors of the report consider that the favourable employment trend seen in the past two years has brought a significant amount of labour force back to the labour market. As a result, disguised unemployment has shrunk by a third to 116,000 people. Disguised unemployment refers to people who would like to accept a job and could start within two weeks, but have not actually looked for work.
From all that, the labour market forecast concludes that the number of registered unemployed jobseekers is no longer decreasing. Furthermore, it is estimated to stabilise at approximately 240,000 within the next few years. Similarly, the number of the long-term unemployed will stabilise at about 63,000 people.
The decrease in unemployment is likely to come to halt in 2020. Based on the most recent cyclical figures, the employment rate is estimated to rise to 72.5% this year, to 73% next year and to 73.4% in 2021.
The short-term labour market forecast of the Ministry of Economic Affairs and Employment is based on a time-series analysis that makes use of economic indicators, labour market statistics and policy information, as well as the Ministry of Finance’s GDP forecast and the demographic forecasts of Statistics Finland.
The planned labour policy changes are not accounted for in the forecast. The forecast is published twice a year.