Coronavirus crisis will destroy at least 70,000 jobs in Finland

Finland will lose 70,000 to 100,000 jobs between this year and next. The final amount will depend on whether a new wave of the coronavirus epidemic hits or spares the country, in addition to the evolution of the global economy.

This is one of the most striking conclusions of the latest labour market forecast released on 18 June by the Ministry of Economic Affairs and Employment, which analyzes the impact of the pandemic and the effects of the subsequent economic restrictions imposed by the government.

According to the forecast, the number of employed people "will fall by tens of thousands" and will not start growing again until 2021. Consequently, the study warns that the number of unemployed jobseekers "is projected to remain higher in the next few years than before the start of the crisis."

"There is also a risk that the effects of the crisis on the labour market could in part remain long-term," the Ministry of Economic Affairs and Employment says.

The government forecast reflects uncertainty about the economy in 2 different scenarios. There is a baseline forecast and also an alternative crisis forecast, where the risks of a second wave of the epidemic and the slow recovery of the key export markets have been realised.

Baseline and crisis scenario

According to the baseline forecast, the employment rate would be 72.8% in 2022, whereas according to the so-called risk scenario it would be 72%.

The unemployment rate is projected to rise to 7.6% in 2021 and to fall to 6.7% in 2022. In the risk scenario, the unemployment rate would stand at 7.1% in 2022.

The average number of unemployed jobseekers in the baseline forecast is 332,000 in 2020, 288,000 in 2021 and 269,000 in 2022. In any case, those are many more unemployed job seekers than in 2019 (240,000).

In the risk scenario, the number of unemployed jobseekers will start to grow again next autumn to an average of about 355,000 in 2020.

The increase in the unemployment rate is subdued by the fact that the supply of labour also shrinks and that hidden unemployment grows, the Ministry says.

In the baseline forecast, the number of employed people will decrease by a total of around 70,000 during this and the following year. In the crisis scenario, the drop would be almost 100,000 people. If this scenario occurs already in 2020, there would be 30,000 fewer employed people than before the crisis.

Strong drop in labour supply

The supply of labour is forecast to decline in 2020 due to an increase in hidden unemployment and a decline in population.

In April 2020, a large number of people, especially from younger and older age groups, left the labour market. In addition, restrictions during the coronavirus crisis have reduced immigration, which in recent years has contributed to the supply of labour.

The number of new vacancies has decreased by almost one-third since last year. Because of the weak labour market situation, some of those laid off or made redundant have not started to look for new work. This increases the risk of growing structural unemployment. According to the forecast, the supply of labour would start to grow in 2022.

First peak of the crisis behind

The Employment Service Statistics show that the number of unemployed jobseekers, including those laid off full-time, will start to decrease in June, following the peak of approximately 430,000 people in April-May.

In particular, the number of laid-off people will fall sharply during the summer. Only slightly more than 41,000 employees are projected to be laid-off full-time still in October.

“In light of the labour market forecast, it appears that the recovery of the labour market may be reasonable. However, there are a lot of open questions in the outlook, and recovery will take longer than the decline we have experienced,” Minister of Employment Tuula Haatainen says.

The short-term labour markert forecast of the Ministry of Economic Affairs and Employment is published twice a year.