Labour market forecast: Structural problems restrict employment growth
Better employment growth could be achieved in Finland with the current economic growth rate, despite the economic slowdown. Factors restricting employment growth in Finland include structural unemployment, labour market mismatch, and the limited supply of labour. These were the conclusions of short-term labour market forecast of the Ministry of Economic Affairs and Employment, which was published on 8 November 2019.
Employment growth deceleration is exceeding previous estimates. In the industrial and the construction sector, employment is no longer growing. The number of lay-offs is growing in the industrial sector. Service sectors are growing, accounting for the current employment growth.
Working-age population will continue to decline: the number of the oldest people of working age, i.e. those aged 65–74, will take a downward turn in a few years. The employment rate has risen faster than the number of employed people because the working-age population aged 15–64 has shrunk. Although participation rates are rising and demand for labour continues to grow slightly, labour supply will only increase marginally. Working age population will begin to diminish in 2021.
The favourable employment trend seen in the past two years has brought a significant amount of labour force back to the labour market. As a result, disguised unemployment has shrunk by a third to 116,000 people. Disguised unemployment refers to people who would like to accept a job and could start within two weeks, but have not looked for work.
The number of registered unemployed jobseekers is no longer decreasing; it is estimated to stabilise at approximately 240,000 within the next few years. Similarly, the number of the long-term unemployed will stabilise at about 63,000 people.
The decrease in unemployment is likely to come to halt in 2020. Based on the most recent cyclical figures, the employment rate is estimated to rise to 72.5% this year, to 73% next year and to 73.4% in 2021.
The short-term labour market forecast of the Ministry of Economic Affairs and Employment is based on a 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. The planned labour policy changes are not accounted for in the forecast. The forecast is published twice a year, providing the Ministry’s expert opinion on the near-term developments.
Inquiries:
Johanna Alatalo, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 8084
Erno Mähönen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 50 460 0066 (unemployed jobseekers)
Liisa Larja, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 50 400 7352 (demand for labour, supply of labour)