Deteriorating economic conditions impacting job market, says central chamber of commerce chief economist

By admin On Aug 25, 2023

Customer at the Employment Service Center in Pasila’s TE Office in Helsinki. LEHTIKUVA

Employment has taken a sharp downturn, particularly among men working in industries sensitive to economic fluctuations. The weakening economic situation has begun to cast its shadow on the job market, resulting in 62,000 fewer employed individuals in July compared to the previous year. Although the strong state of the service sectors has thus far maintained high employment rates, it is inevitable that the economic decline will eventually affect the service industry’s employment—although the extent remains uncertain.

Furthermore, the slowdown in immigration threatens to dampen growth, warns the Chief Economist of the Central Chamber of Commerce.

The employment rate remained historically high in July. However, according to Jukka Appelqvist, the Chief Economist of the Central Chamber of Commerce, clear signs of a weakening economy are emerging. The economic downturn has particularly impacted the industrial and construction sectors this summer, with instances of bankruptcy reported. The repercussions of the weakening economy are now being felt in employment.

According to Statistics Finland, there were 2,626,000 employed individuals in July, marking a decrease of 62,000 compared to the previous year. The traditional employment rate trend for individuals aged 15 to 64 was 74.2 percent, while the employment trend for those aged 20 to 64 declined significantly to 77.8 percent.

“The figures from July reinforce concerns that the weakening economic situation is increasingly impacting the job market. Employment has experienced a substantial decline among men, who often work in sectors more susceptible to economic fluctuations,” Appelqvist assessed.

Slowdown in Immigration Threatens Growth

In July, there were 195,000 unemployed individuals, an increase of 5,000 compared to the previous year. While the increase in unemployment was modest over the year, the benchmark figure from the comparison year was already relatively weak.

The seasonally adjusted unemployment rate trend figure, which smooths out regular seasonal variations and monthly random fluctuations, was 7.2 percent. The lowest unemployment rate trend was 6.5 percent in the spring of 2022, indicating a gradual increase of 0.7 percentage points.

“Currently, forecasts for the second half of the year’s economic development are so weak that it is bound to affect the job market. The degree of impact remains uncertain. So far, the favorable situation in the service sectors has managed to keep employment rates high. However, two significant question marks for the future are the extent to which the weakening economy will affect employment in the service sectors in the coming months and winter, and how challenging the situation will become for economically sensitive industries in export and construction,” Appelqvist remarked.

In July, 50,100 new job vacancies were announced to the TE Offices, a decrease of 24,600 compared to the previous year. Overall, there were 101,800 job vacancies in July, a substantial decrease of 59,200 compared to the previous year’s July.

“The number of job vacancies has collapsed in July, indicating a sudden brake in labor demand. Going forward, the decline in available positions will increasingly impact actual recruitments. In recent years, robust immigration in Finland has boosted employment due to labor shortages and the demand for workers, resulting in an unusually high number of open job positions. Now, this growth engine is at risk of stalling as labor demand wanes and the number of open job positions shrinks,” Appelqvist concluded.

Source: www.helsinkitimes.fi