A worker at a construction site in Kalasatama, Helsinki, on 25 March 2024. Elina Pylkkänen from the Ministry of Economic Affairs and Employment told YLE on Wednesday that some segments of the economy, such as the construction sector, appear to have spiralled from a recession into a depression. (Vesa Moilanen – Lehtikuva)
- Next Article ADHD medication use triples in Finland
OFFICIALS at the Ministry of Economic Affairs and Employment have examined the latest employment statistics with considerable alarm, according to YLE.
The ministry reported earlier this week that the number of unemployed job seekers stood at 325,800 at the end of January, representing an increase of roughly 35,000 from the previous year and 4,000 from the previous month. The number of job seekers who have been unemployed for more than a year – also known as the long-term unemployed – increased by over 20,000 year-on-year to 112,300.
“Unemployment has worsened by 60,000–70,000 in two years. That’s a very alarming number,” Elina Pylkkänen, a permanent state undersecretary at the Ministry of Economic Affairs and Employment, said to YLE on Wednesday.
The decline, she highlighted, has spread from the construction industry to all segments of the economy, sparing no region, no sector, no education level or no occupational group from its impacts.
A similarly disconcerting picture emerges from the latest labour force survey carried out by Statistics Finland. Excluding random and seasonal variation, the employment rate fell 1.1 percentage points year-on-year to 71.8 per cent while the unemployment rate rose 1.1 points to 8.9 per cent. The number of 15–74-year-olds who were unemployed rose by 38,000 year-on-year to 269,000, according to the survey.
Pylkkänen interpreted the data as an indication that economic output has been stagnant – if not decreased – since late 2022, leaving the economy on course to long-term recession and possible depression.
The official definition of recession is that the gross domestic product declines for two consecutive quarters. A depression, in turn, refers to a prolonged dramatic recession where the gross domestic product contracts by several per cent.
The Finnish gross domestic product contracted by 1.2 per cent year-on-year in 2023 and, according to preliminary data, by 0.3 per cent year-on-year in 2024. The contraction registered last year is modest enough to not suggest an economy-wide depression, said Pylkkänen.
“Included in the definition of depression is that you have to have a lot of unused production capacity, meaning labour, machinery and equipment that aren’t on and in use,” she said. “I think we can talk about a depression in some sectors, such as the construction sector, and about a concrete and high-pressure everyday experience for the unemployed.”
Economic forecasters have already detected signs of recovery. The International Monetary Fund (IMF) in January predicted that the Finnish economy would expand by 1.5 per cent year-on-year in 2025.
There is indeed cause for some optimism, acknowledged Pylkkänen. The purchasing power of households has improved, the rise in consumer prices has abated and the decline in interest rates has continued, making it easier for businesses to implement their investment plans. It will take some time before the bleak employment statistics start improving, however.
“Employment follows growth at a six-month delay. The economy will start growing first, and that means that new jobs will start popping up gradually.”
Other economists welcomed the latest employment statistics as a sign of a fragile recovery in the labour market.
“The number of long-term unemployed, over 110,000, is edging closer to the worst levels we saw during the coronavirus pandemic. A lasting turn for the better in the labour market will require economic growth. That, in turn, will require that the uncertainty in companies and households subsides, which isn’t a guarantee in the current uncertain global situation,” remarked Henna Busk, a senior economist at Pellervo Economic Research (PTT).
“The situation is still fragile, and you mustn’t draw too firm conclusions from a single figure,” said Jukka Appelqvist, the chief economist at Finland Chamber of Commerce. “[B]ut it’s looking like the worst is starting to be behind us and employment is starting to recover.”
Aleksi Teivainen – HT
- Next Article ADHD medication use triples in Finland
Source: www.helsinkitimes.fi
