Blogs (Blog)

Bridging the gap between us and our Nordic neighbours

Elina Pylkkänen Published Date 9.11.2021 14.43 Blog Ministry of Economic Affairs and Employment

Elina Pylkkänen

Recent growth in each demand item contributing to GDP has prompted a dizzying upward spiral in the labour market. Each of the demand items – private consumption, public consumption, private and public investment, and exports – is rapidly recovering from last year’s plunge, driven by EU and national stimulus packages.

Even if economic growth did slow down after this year and the next, the vertical growth we have seen recently is giving our sluggish labour market a much-needed booster: disguised unemployment turns into jobseeking, people planning to change careers or employers are able to seize new opportunities, the rise of remote work drives the virtual (regional) mobility of labour, students have more opportunities for parttime work, and it is easier for old-age pensioners to participate in the labour market.


In terms of the labour market, Finland differs from the other Nordic countries in that the number of people in part-time employment is much smaller and the employment rate among the oldest age groups is roughly 10 percentage points lower. In addition, the Finnish public sector offers fewer jobs than in our neighbouring countries. These factors explain why the employment rate is lower in Finland even though the number of working hours is almost the same. Another explanation is our less active labour market service model.

But now, as our employment rate is growing briskly and as we are about to introduce the Nordic labour market service model, we are gradually closing the employment gap between us and our Nordic neighbours.


My biggest concern, however, is the lack of labour mobility between jobs, occupations and regions. My educated guess is that labour mobility is much higher in Denmark and Sweden. Labour mobility between sectors and between jobs can increase employee motivation, efficiency and productivity, although a transition can be costly if it is too quick. Learning a new job always takes from a few to several months, depending on the job.   

From the perspective of the national economy, productivity growth is of paramount importance as it ensures prosperity and positive development. Meanwhile for the sustainability of general government finances, employment growth is the key. In terms of our future, Finland sorely needs both.

The labour market forecast of the Ministry of Economic Affairs and Employment has been published on 9 November 2021. Have a look!

Under-Secretary of State Elina Pylkkänen, the Ministry of Economic Affairs and Employment

Elina Pylkkänen Ministry of Economic Affairs and Employment


Type your comment here.