A block of flats was under construction in Espoo on 22 August 2023. Economists have echoed concerns about the wave of bankruptcies in the construction industry an interview with YLE. Measures to alleviate the situation are needed without delay, said one. (Heikki Saukkomaa – Lehtikuva)


“THE WORST is yet to come for construction,” Jukka Appelqvist, the chief economist at Finland Chamber of Commerce, stated to YLE on Tuesday.

News of bankruptcies in the construction industry have been hard to avoid in recent months, with the number of bankruptcies soaring by 38 per cent year-on-year between January and August, according to information provided to the public broadcasting company by Asiakastieto.

The casualties have included a number of large companies, such as Visura and Jukkatalo.

Appelqvist told YLE that it is difficult for the government to alleviate the struggles of the industry given the urgent nature of the situation. Should there be a willingness to take action, he explained, the measured would be required immediately.

Prime Minister Petteri Orpo (NCP) stated to Kauppalehti on Tuesday that the government will decide on measures to support the industry at its budget session. Preparatory work on the measures is being carried out by a task force comprised of officials from the Ministry of Finance and Ministry of the Environment.

“The situation is very difficult,” he conceded. “Construction is about to come to a complete standstill, which threatens housing supply in the future. There’s a need for new residential units,” he commented to the business-oriented newspaper.

As one possible measure, the prime minister has floated the idea of launching infrastructure projects ahead of schedule.

Lasse Corin, the chief economist at Aktia, similarly described the situation in the construction industry as bleak in an interview with YLE on Tuesday. “Building permits have fallen by a third while bankruptcies by construction companies have increased by roughly a third,” he summarised.

The spring and summer are typically a busy season for construction firms, yet the number of employees who have been laid off – temporarily or permanently – has increased from the previous year. The big question currently is how long the crisis in construction will continue, analysed Appelqvist.

“The end of the year and start of next year will be a very cold winter in terms of the economic situation. It’ll be really tough,” he said.

The Confederation of Finnish Construction Industries (RT) has estimated that the industry employs about 250,000 people. Timo Vikström, the board chairperson at RT, stated to Helsingin Sanomat on Saturday that he expects the ranks of the unemployed in the industry to grow by 20–30,000 in 2023–2024.

“When unemployment increases, it also has an impact on other parts of the economy,” Corin reminded YLE on Tuesday.

The construction industry is indeed not the only cause for concern for economists.

“The big question now is how contagious the deteriorating situation will be for the service sectors. The situation in industry and construction is already very difficult,” said Appelqvist.

Aleksi Teivainen – HT