Information package collates data on companies, labour market and services during the coronavirus epidemic
The Ministry of Economic Affairs and Employment has issued its second information package collating follow-up data on how the coronavirus epidemic affects companies and the labour market as well as the service capacity and operating environment in the Ministry’s administrative branch. The first information package was published on 17 April.
Industries in increasing difficulties, tourism in sharp fall
While so far the economic situation in Finnish industries and large export companies has not been significantly weakened by the coronavirus crisis, it is estimated that the effects will come later and with force. Companies’ order volumes have remained at reasonable levels despite the epidemic. However, signs of increasing difficulties began to emerge in late April.
The effects of restrictive measures in different countries are increasingly felt in procurement and supply chains, and demand, especially, is slowing down due to growing economic uncertainties and a downward international economic cycle. Identified risks in global value chains include customers’ insolvency issues and disruptions in production chains. When these risks are realised, the problems will spread from company to company.
A significant proportion of industrial SMEs are experiencing drastic falls in turnover, order volumes and investment prospects.
Expectations of production in the coming months have fallen below the lowest levels during the financial crisis and are getting closer to the levels during the 1990s economic depression. This is alarming, considering the great importance of industries for the Finnish economy as a whole. A strong decline in demand and production in export companies would have far-reaching effects on other Finnish companies and regional economies through subcontracting chains.
The service sector’s outlook will also be affected if the crisis is prolonged. In 2020, tourism and travel industry, for example, is expected to experience a 60–70% drop in total tourism demand, or the amount of money spent by tourists in Finland. According to estimates, demand will not reach the level of 2019 before 2022. A majority of tourism companies are facing acute cash-flow problems despite their own adjustment measures, loans and the additional funding granted by Business Finland and Centres for Economic Development, Transport and the Environment due to the epidemic.
Biggest coronavirus-related support receivers include commerce, software and gaming, tourism, food services and land transport
Business Finland and Centres for Economic Development, Transport and the Environment (ELY Centres) grant business development aid to reduce the harm caused by the coronavirus epidemic.
Business Finland had received a total of 24,771 applications for business development aid by 5 May. It has processed 44% of these applications, and of the processed applications it has approved 73% and rejected 27%. Around EUR 313 million in total have been granted to projects, and around EUR 187 million have already been paid. The average amount of funding is EUR 9,885 for pilot studies and EUR 35,135 for business development.
The sectors with more than one thousand positive funding decisions include commerce, tourism and other services. The largest amounts of support have been granted to commerce, software and gaming, tourism and food services.
The ELY Centres had received a total of 23,624 applications by 6 May. They have processed 8,822 applications, 24.7% of which have been rejected. The total amount of approved applications is EUR 78.5 million. The sectors receiving the most funding are food services, retail trade and land transport. The average amount of funding is EUR 6,280 for situational analysis and EUR 33,845 for development measures.
Backlogs in some services
Business Finland, ELY Centres, and Employment and Economic Development Offices (TE Offices) are all experiencing a surge of service demand due to aid applications, lay-offs and the access to unemployment security for the self-employed.
Both Business Finland and ELY Centres estimate their own service capacity to be normal, although it is clear that the processing of aid applications takes time and effort, resulting in some backlogs.
The processing of unemployment security statements for the self-employed is a new process in TE Offices. So far, the offices have processed 24,000 statements. It takes on average 14.8 days to issue a statement. By law, the maximum time limit for issuing a statement is 30 days.
The national helplines of the TE Services have received some 8,000 phone calls per day during the coronavirus epidemic. There has been great variations in the answering rate, ranging from 30% to 72% in recent weeks. There is a clear peak on Mondays, resulting in a lower answering rate.
The Talousapu financial assistance service for companies was congested at the end of March, but now the need for services has evened out.
Stabilising number of lay-offs and codetermination talks
The daily average of new lay-offs reported in early April was nearly 6,000. Since then the trend has been declining, and the daily average of new lay-offs is now down to 2,800. The number of people fully laid off totalled 167,000 on 5 May.
By 6 May, TE Offices had received codetermination notifications on lay-offs from 5,350 employers, covering around 476,000 employees. The figures include also already concluded codetermination talks. The number of new notifications has dropped in the past few weeks.
Accommodation and food services had the highest proportion of employees at risk of lay-off compared to the number of employees in the sector. There is a large number of codetermination talks ongoing in commerce (wholesale and retail trade), industry, real estate and landscaping services, health services, architectural and engineering services, and transportation and storage.
Up to now, the Ministry of Economic Affairs and Employment has published daily updated figures on lay-offs and codetermination talks. As the situation has stabilised, the figures will be published once a week from now on.
Inquiries:
Ville Autero, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7137
Tiina Tikka, Director of Development, Ministry of Economic Affairs and Employment, tel. +358 29 504 7962