Govt forecasts bleak labour market
17 Nov 2023, 02:03
The situation in Finland’s labour market is looking bleak, according to a forecast published by the Ministry of Economic Affairs and Employment on Thursday.
Many employees will be laid off, with the number of layoffs feared to rise to close to the highs experienced during the financial crisis of 2009.
In particular, the economic trend in manufacturing and construction will be unfavourable and be reflected in the demand for services.
“Despite the gloomy labour market, many employers are still suffering from a shortage of skilled labour. Now is the best possible time to train for sectors that are growing and need more workforce,” said Under-Secretary of State Elina Pylkkänen of the Ministry of Economic Affairs and Employment at the publication event for the Labour Market Forecast.
According to the Ministry's labour market forecast, the employment rate will begin to fall this autumn and unemployment will increase.
However, the downturn in the labour market will be short. The employment rate will start to grow already during 2025 as the general economic situation improves. While the employment rate will decrease slightly, it is positive that the number of employed persons will grow throughout the outlook period due to immigration.
The number of lay-offs will increase considerably this autumn. According to the forecast, the number of people fully laid off will rise to nearly 40,000 in the early part of the year. The number of lay-offs will increase particularly in the construction sector, but also in industry and logistics.
Compared with the forecast of last spring, immigration will grow significantly. Net immigration of working-age people could reach 47,000 this year. The forecast includes an updated outlook on immigration for the coming years, which shows as an increase in the amount of labour force.
The labour force participation rate of working-age population is expected to increase further despite population growth driven by immigration. In 2025, the labour force participation rate is expected to rise to 69.3 per cent.
The employment rate will fall in 2024 compared to this year, but will increase again in 2025. The employment rate of those aged between 20 and 64 years will remain unchanged this year but will decrease by 0.1 percentage points next year.
In 2025, the employment rate will rise to 78.7 per cent – an increase of 0.7 percentage points from 2024. The employment rate of those between 15 and 64 years will be 73.7 per cent this year, 73.5 per cent next year and 74.1 per cent in 2025.
The unemployment rate will rise by 0.5 percentage points this year and will be 7.3 per cent on an annual basis. The unemployment rate will rise to 7.4 per cent next year but drop to 7.0 per cent in 2025.
The number of unemployed jobseekers in employment services (including those fully laid off) will continue to grow and rise to 267,000 people this year, up by 17,000 from last year. However, the number of unemployed jobseekers will start to decline next year, according to the forecast.
The number of people unemployed in the long term has begun to increase again. There will be 90,000 of long-term unemployed persons this year and 93,000 in the following years. On the other hand, estimates show that the number of unemployed jobseekers under 25 years of age will begin to fall next year, with their number expected to drop to a considerably lower level of 24,000 persons 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. The forecast is published twice a year.