Labour market forecast: Ageing and part-time employees will keep employment growth afloat
The lacklustre state of the economy will be reflected in the labour market over the next few months. As recently as in early 2023, the labour market showed a positive trend and employment grew due to part-time work. During the latter part of the year, however, employment will start to fall before returning to a positive track in 2024. These are the conclusions of the short-term Labour Market Forecast published by the Ministry of Economic Affairs and Employment on 11 May 2023.
“Employment that stays at a good level helps avert an economic downturn. Growing employment among people with foreign background and the oldest members of the workforce is a long-awaited improvement in the Finnish labour market,” said Under-Secretary of State Elina Pylkkänen from the Ministry of Economic Affairs and Employment.
According to the forecast, employment will increase by about 5,000 people in 2023, mainly driven by the growth in the employment of older people. There will be a temporary decline in employment in late 2023 and early 2024. Employment will increase by only about 1,000 people in 2024, but return to stronger growth of around 18,000 people in 2025.
Based on the forecast, the proportion of part-time work will not increase in the next few years unlike it did after the coronavirus crisis. This will slow down employment growth in the future.
Strong net immigration has increased the supply of labour in recent years. Of those Ukrainians receiving temporary protection in Finland, only 3,000 have applied for a municipality of residence, which means that they are not included in the labour force. The number of Ukrainian refugees of working age is estimated to be about 30,000 (in total around 40,000) in Finland.
The workforce will continue to grow, but at a slower rate than before. In the largest group of working-age people (those between 25 and 54 years), the labour force participation rate will not increase during the forecast period. Among the young members of the workforce it will not grow significantly either. Meanwhile, the participation of the oldest age groups (those between 55–64 years and over 64) in the labour force continues to rise.
Employment growth was strong at the beginning of this year, but on an annual basis, the employment rate of those aged 20–64 is expected to fall by 0.1 percentage points to 78.0 per cent in 2023 and to grow by 0.1 percentage points in 2024. In 2025, the employment rate is expected to rise to 78.7 per cent. This year, the employment rate of those between 15 and 64 years of age will hover around 73.6 per cent and increase to 73.7 per cent and 74.2 per cent in 2023 and 2024, respectively.
The unemployment rate will rise to 7.0 per cent in 2023 and further to 7.1 per cent in 2024. In 2025, the unemployment rate will fall to 6.8 per cent as the growth in employment recovers.
According to the forecast, the number of unemployed jobseekers in employment and economic development services (TE services) will no longer decrease, but will, in fact, begin to grow slightly in 2023. The registration of Ukrainian refugees as unemployed jobseekers will have some effect on the number of unemployed jobseekers in TE services.
The proportion of the long-term unemployed of all unemployed jobseekers will rise. The number of long-term unemployed has fallen during the economic upswing, but it will start to grow in 2024. According to the forecast, the number of long-term unemployed will total 88,000 in 2023, 91,000 in 2024 and 94,000 in 2025.
The short-term labour market forecast of the Ministry of Economic Affairs and Employment is based on a statistical 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. From the beginning of this year, Statistics Finland primarily reports the employment rate in the age group of 20–64 years, instead of the previously reported age group of 15–64 years. The forecast is published twice a year.
Key forecast results:
|Employment rate 20–64-year-olds||78,0 %||78,1 %||78,7 %|
|Employment rate 15–64-year-olds||73,6 %||73,7 %||74,2 %|
|Unemployment rate||7,0 %||7,1 %||6,8 %|
|Labour force participation rate||68,5 %||68,8 %||69,1 %|
|Unemployed jobseekers||257 000||257 000||255 000|
|Long-term unemployed||88 000||91 000||94 000|
|Young unemployed jobseekers||28 000||28 000||27 000|
Elina Pylkkänen, Under-Secretary of State, Ministry of Economic Affairs and Employment, tel. +358 295 047 474
Erno Mähönen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 262 (labour demand, employment)
Minna Ylikännö, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 102 (labour supply, population)
Liisa Larja, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 50 400 7352 (unemployed jobseekers)