Industrial redundancies notwithstanding, employment situation set to improve
Economists remain optimistic, but employment of young people may suffer if no new jobs are created
The improvement of the employment situation will slow down towards the end of the year. Nevertheless, the recently-announced large job reductions by Nordea Bank and the forestry giant UPM will not lead to a dramatic unemployment wave of any kind, Finland’s economists believe.
Most of the forecasters have in recent days lowered their estimates with regard to this and next year’s economic growth by about one percentage point, but theydo not believe the unemployment situation will worsen.
This year’s growth has been estimated at around three per cent and next year’s at around two per cent.
According to an old rule of thumb, economic growth of around three per cent is enough to keep the job situation as it is. If growth is slower than that, things on the employment front start to weaken.
Finland’s employment situation has improved steadily since the 1990s recession, save for during the financial crisis of 2008. That caused a slight blip in the otherwise upward employment trend.
The dent was smaller than feared, however, for companies resorted largely to one peculiarity of the Finnish labour market, namely temporary layoffs.
The Labour Institute for Economic Research (PT) predicts that the rate of employment - the portion of those with work of the entire labour force - will reach 68.5 per cent this year and 69 per cent next year.
Viewed from the opposite direction this translates to an unemployment rate of around eight per cent. Last year the unemployment rate was 8.4 per cent.
The attached table also confirms that this year, apart from the month of June, the number of those made redundant has been lower than a year ago.
The June peak was caused by Nokia, which announced that it was being forced to let go nearly 2,000 workers.
According to PT research director Reija Lilja, the early year’s positive development is reflected in the entire year’s growth figures.
PT predicts that the number of unemployed will increase next year by about a thousand individuals, but this will not affect the employment rate. “The weakest moment will take place at the beginning of next year, when the economy does not look like it will grow at all. But we do not expect a negative trend either. Towards the latter part of next year, positive growth figures can be expected again”, Lilja says.
Research Institute of the Finnish Economy (ETLA) research director Markku Kotilainen points out that ageing softens the unemployment figures: when the older age groups retire, the unemployment rate does not start to grow so easily.
“The unemployment rate will continue to decrease, but noticeably more slowly than until now. Towards the end of the year there may be some layoffs, especially in the export industries. Naturally, the flipside of the coin is that it will be harder for young people to find work if no new workforce is taken on”, Kotilainen says.
Previously in HS International Edition:
Nokia confirms plans to cut 1,400 jobs in Finland (22.6.2011)
Employees furious over Nordea Bank´s planned mass dismissals (30.8.2011)
Planned closure of paper mill raises concern in Myllykoski (1.9.2011)
Unemployment high, but not as bad as originally feared (24.2.2010)
Unemployment rate down on previous year in January (23.2.2011)
Statistics Finland: Unemployment rate 6.9% in July (23.8.)