Finnish labor market faces dual challenges: Employment levels steady, but long-term unemployment rises

While Finland's employment figures appear robust at first glance, a closer examination reveals underlying concerns, particularly in the realm of long-term unemployment, according to Jukka Appelqvist, Chief Economist at the Central Chamber of Commerce

By: helsinkitimes.fi

Aug 20 2024
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Finnish labor market faces dua

While Finland's employment figures appear robust at first glance, a closer examination reveals underlying concerns, particularly in the realm of long-term unemployment, according to Jukka Appelqvist, Chief Economist at the Central Chamber of Commerce.

Data released by Statistics Finland shows that both employment and unemployment numbers have risen compared to last July.

The number of employed individuals in July was 2.68 million, up by 54,000 from a year earlier. Meanwhile, the unemployed population reached 229,000, an increase of 34,000 compared to the same period last year.

Despite these increases, the employment rate for the core working age group (20-64 years old) remained stable at 76.8%, with the broader 15-74 age group showing a trend rate of 72.4%. Appelqvist highlighted that the steady employment rate amidst a slow economic recovery is a positive outcome, especially after a prolonged period of economic weakness. However, he cautioned against viewing these numbers as indicative of a broader improvement in the labor market.

"Employment is currently treading water, which in itself is a reasonably good achievement in the aftermath of a long period of economic weakness," Appelqvist noted. "However, it’s concerning that unemployment continues to rise."

The unemployment rate in July saw an increase to 8.3%, up from a low of 6.4% in the spring of 2022. This upward trend in unemployment is mirrored by a significant drop in the number of new job vacancies reported to Employment and Economic Development Offices (TE Offices). In July, only 25,100 new job openings were reported, a staggering 25,000 fewer than a year ago. Overall, there were 48,200 open positions in July, down by 53,500 from the previous year.

"The sharp decline in job vacancies is alarming," said Appelqvist. "The recent statistics from TE Offices have been shockingly weak. When we see so many poor figures in succession, it’s clear that this isn’t just a coincidence. The low level of job openings signals weak demand for labor, suggesting that a real positive turnaround in the job market is still distant."

One of the most troubling aspects of the current labor market situation is the rise in long-term unemployment. As of July, there were 98,600 individuals classified as long-term unemployed, an increase of 6,400 from the previous year.

"Long-term unemployment has been climbing throughout the year," Appelqvist remarked. "The labor market is increasingly divided into winners and losers. While the overall employment situation has held up reasonably well given the circumstances, unemployment is creeping up, and a growing number of job seekers are finding it harder to re-enter the workforce."

As Finland moves into the fall, all eyes will be on upcoming economic indicators to determine whether the labor market will continue to struggle or if the worst is behind us.