Labour market forecast: An economic downturn will slow down the labour market
After exceptionally positive development in 2018, the labour market is now expected to slow down. Both this year and the next, employment growth is predicted to halve compared to the previous year.
According to the short-term labour market forecast, in 2019 employment will grow by about 35,000 persons from the previous year, while in 2020 the growth is expected to slow down to just 15,000. Similarly, the fall in unemployment will level off.
Increase in employment and decrease in unemployment expected to continue next year
The employment rate is forecast to rise to 72.8 per cent this year, and to 73.4 per cent next year. However, labour market mismatch, structural unemployment and the change in the population age structure are already starting to limit employment growth. For this and the next year, employment growth relies entirely on the service sector.
This year and next year, the labour force will grow by 7,000 persons, showing a marked decrease from the previous year. Labour force participation rate will continue to grow to 66.6 per cent this year and to 66.7 per cent next year.
Since the size of labour force no longer significantly grows, the unemployed largely account for the increase in the number of employed people. The average unemployment rate is expected to fall to 6.3 per cent this year and to 6.0 per cent next year.
An end to the fall in youth unemployment
The dramatic fall in the number of registered unemployed (Employment Service Statistics) is slowing down, and the forecast has been revised accordingly. Youth unemployment appears to be most severely affected: the number of employed people aged under 25 is likely to total about 30,000; an increase of 10,000 from 2008, before the financial crisis.
Changes in the number unemployed jobseekers (Employment Service Statistics, Ministry of Economic Affairs and Employment) according to the labour market forecast
|In 2019||Change from 2018||In 2020||In 2021|
|Unemployed jobseekers||235,000||- 21,000||223,000||214,000|
|Long-term unemployed||63,000||- 13,000||58,000||54,000|
|Unemployed aged under 25||30,000||- 2,000||29,000||29,000|
While the total number of long-term unemployed will continue to decrease in the next few years, the number of new long-term unemployed will not. Consequently, the fall in the number of long-term unemployed will slow down and come to a halt.
The short-term labour market forecast of the Ministry of Economic Affairs and Employment is based on a 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.
Erno Mähönen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 50 460 0066 (demand for labour; unemployed jobseekers)
Liisa Larja, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 50 400 7352 (supply of labour)