June 4, 2020
This week’s report from the Helsinki GSE situation room describes the development of the wage sum in the entire country and some of the largest cities according to data from the Incomes Register, as well as the change in firms’ turnover by industry, county and size class.
The Incomes Register, which started operating in the beginning of 2019, makes it possible to track the development of Finnish incomes with a relatively short lag. Even by international standards, the picture it allows us to draw is exceptionally up-to-date.
In the turnover analysis, we have included only firms for which the turnover computed from the VAT-register is close enough to that computed from the business cycle data of Statistics Finland for 2019, and for which the turnover is positive.
The development of the wage sum in Finland and its largest cities
- Thanks to the Incomes Register, the wage sum is now reliably known up to the first half of May. The next figure shows the development of the wage sum on a half-month level this year and last. Analysing the wage sum on this level is meaningful because the vast majority of wages are paid at the end or halfway through each month. Comparison to the corresponding period in 2019 reveals that the wage sum in the first half of May (period 5(1)) was almost at the same level as last year. The wage sum for the second half of May is not yet known, as a large share of the income declarations concerning it have not yet arrived, Before making strong conclusions about the wage sum of May, it’s good to keep in mind that the within-month division of the wage sum can differ between years: the wage sum for the whole of March this year was on the same level as last, but how it was divided between the two halves of March was very different. Meanwhile, the total wage sum of April was 5% smaller this year than last.
- The previous figure excludes vacation pay from the wage sum. Including vacation pay could give a too optimistic picture in a time period with an unusual amount of lay-offs, because the laid off receive their accrued vacation payments as part of their last payment. Also, some workers may have taken their yearly vacations earlier than usual because of the Covid-19 situation, which would translate to unusually high vacation pay during the crises at the cost of unusually low vacation pay during the summer vacation period. Unfortunately, we do not have direct information on hours worked or vacations taken. The following figure shows that the share of vacation pay of wage sum has increased during the pandemic by more than would be expected from regular seasonal variation.
- Below, we show the change in April’s wage sum from 2019 to 2020 in the 20 largest cities of Finland. The wage sum declined the most, over 8 percent, in Kouvola, and more than 7 percent in Vaasa and Helsinki. The smallest decline, meanwhile, occurred in Jyväskylä.
The change in turnover by industry, county, and size class
- According to the VAT-declarations of March 2020, the total industry turnover declined the most since March 2019 in food and accommodation services – around 40% as opposed to a few percent increase during the start of the year (note that this only includes firms for which the VAT-data and the business cycle data from Statistics Finland agrees closely enough when it comes to 2019 turnover). Other kinds of services have also experienced large relative decreases. The decline is also the largest in euro terms for food and accommodation services. Meanwhile, the total industry turnover has increased in several industries from March 2019 to March 2020.
- Looking at counties, the largest relative drops in turnover from March 2019 to March 2020 happened in Lapland (Lappi) and Åland (Ahvenanmaa). In terms of euros, the decline was the greatest in Uusimaa.
- Looking at the total turnover by size class, the change was negative for the smallest firms (those employing 1-5 people). There is also a slight decline for firms with 6-10 employees. Meanwhile, turnover increased for firms with 11-250 employees when compared to March 2019. For the largest firms, there is still great uncertainty when it comes to the reporting of turnovers, so one should take the changes reported below with a grain of salt.
- A more rigorous examination of the firm- and month-level data for 2019 and 2020 by means of regression analysis shows that the industries that suffered most in March 2020 were food and accommodation services, for which the commensurable decline is almost 40%, and recreation, for which the decline was 30%, and other services, for which the coronavirus crisis caused a decline slightly below 20%. Although it seems likely that most of this effect is due to the coronavirus crisis, there may be other causes as well. A sign of this is for example the fact that the estimate for the effects of the coronavirus crisis is positive for some industries. Of the large industries, these include for example trade and manufacturing.
- Additional information about the Helsinki GSE Situation Room consisting of researchers from Helsinki GSE, VATT Institute of Economic Research and Statistics Finland: https://www.helsinkigse.fi/research-group/covid-19/
- Additional information about the report: Otto Toivanen, otto.toivanen [at] aalto.fi
- Suggested citation in media: Cite Helsinki GSE Situation Room as the source with a link to www.helsinkigse.fi website.
- Suggested citation in academic publications:please contact otto.toivanen [at] aalto.fi