A stock photo showing young people during a job aptitude interview. Employment has long been the bright spot in the otherwise uninspired Finnish economy, despite quietly being in gradual decline for already a year. (Timo Aalto – Str / Lehtikuva)

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EMPLOYMENT, long the sole bright spot of an otherwise anaemic Finnish economy, has been on a downward trajectory for quite some time.

Statistics Finland in June revealed that the trend of the employment rate among 20–64-year-olds has been on a gradual decline for already a year, even though the employment situation has remained strong relative to the rest of the economy since late last year.

“Employment is continuing to wane slightly from its peak, but it remains at a relatively good level. The trend will nonetheless point downward rather than upward for the next six months,” Juhana Brotherus, the chief economist at the Federation of Finnish Enterprises, commented to Helsingin Sanomat on Sunday.

One indicator supporting his prediction is the latest quarterly recruitment outlook from the Confederation of Finnish Industries (EK). While the outlook suggests that the low point in the construction industry has already been witnessed, the outlook was negative for all major industrial sectors.

“If we look at industrial confidence barometers, everything points to the employment situation deteriorating further, still led by the construction industry,” said Janne Ronkanen, an economist at S Bank.

Another bad sign for employment was received in April: the sum of wages and salaries fell for the first time since the recession set off by the coronavirus pandemic.

Statistics Finland on Friday published data indicating that the decline accelerated in May. The sum of wages and salaries fell by 2.3 per cent year-on-year in the private sector and by 13.3 per cent in the construction sector. In the public sector, however, the sum increased by 4.5 per cent from the previous year, suggesting that public-sector employers have yet to make widespread staff cuts.

Helsingin Sanomat on Sunday reminded that the employment situation typically mirrors the economic situation at a slight delay. On the one hand, companies are keen on postponing staff cuts for as long as possible during downswings; on the other, they are keen on increasing overtime hours during upswings before raising their headcount.

The Finnish economy emerged from its recession in the first quarter of the year by expanding by 0.2 per cent. The gross domestic product contracted for two successive quarters last autumn, but economic growth has been muted since late 2022.

“Even though we saw modest economic growth in the first quarter, the recession has yet to loosen its grip. Because the economy has yet to start properly growing, I’m not expecting the labour markets to strengthen either,” Ronkanen said to Helsingin Sanomat.

He gauged that the labour market should start improving next year as long as economic growth picks up, as expected, late this year and early next year.

Aleksi Teivainen – HT

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