May 18, 2020
The latest Helsinki GSE situation room report deals with the development of furloughs and layoffs on the levels of firms and individuals, the subsidy grants of Business Finland, the regional and industry-specific distribution of the effects of the coronavirus crisis, and the reflection of the crisis in the tax debts and associated payment arrangements of firms. The observation period currently reaches the first days of May.
The comparison period used in many figures is the year 2019, and in some January and February of 2020. The background information for the figures has been collected form the registries of Statistics Finland. We use the most recent information available there, which depending on the variable means data from 2017 or 2018.
New unemployment and furlough spells
- The next figure shows the number of beginning unemployment and furlough spells per day for the years 2019 and 2020. By comparing the figures, one observes moderate growth in the number of new unemployment spells from 2019 to 2020. The number of furloughs meanwhile continues to increase dramatically compared to 2019.
- The next figure shows the 31-day moving average of the daily new unemployment and furlough spells for 2019 and 2020. We see that the tallest spike in both unemployment spells and furloughs was reached between mid-March and mid-April, when on average 500 more people were left unemployed and nearly 5 000 more were furloughed per day than last year. The rate of furloughs continues to exceed 3 000 people daily between the beginning of April and beginning of March.
- The following figure describes the cumulative earnings of the newly unemployed and furloughed (based on their 2018 earnings) since the start of the year for 2019 and 2020. According to the figure, 500 million more euros of “income-at-risk” due to furloughs has accumulated after mid-March this year than in 2019.
- The “lost earnings” due to new unemployment spells (the blue curve) does not markedly differ from last year, though the curve has steepened since the start of April and exceeded last year’s level (the situation for this metric was better this year than last before the start of the crisis).
Developments of layoffs and furloughs in firms
- The next figures focus on the development of the number of firms that have furloughed or laid off workers. The first figure shows the firms that have furloughed since the 1st of March as a share of all firms within an industry, and for comparison (in blue) the share of firms that furloughed between the start of January and the end of February. The figure tells us, for example, that in certain industries (e.g. Horeca) the increase in firms that furlough happens mainly in March while for other industries (e.g. Communications) more growth has happened in April. The second figure shows analogous numbers for layoffs. For them, the period from March to May is also gloomier than January and February, but less so than for furloughs.
- The below figures focus on the growth in May in the share of firms that have furloughed or laid off employees compared to March and April. It shows that the industries with the highest growth rates for furloughing firms are not necessarily the same as the industries with the highest growth rates for firms that lay workers off. Also, understandably, the industries with the highest growth rates now are the ones where the numbers have been relatively low in March and April.
- The figures below repeat the analysis by county. Lapland (Lappi) and Uusimaa are distinguished in layoffs, but in all counties, there are more of both furloughs and layoffs in the period from March to May than from January to February.
- For furloughs, the growth has been the sharpest in Ostrobothnia (Pohjanmaa), and for layoffs, in North Karelia (Pohjois-Karjala) and Central Ostrobothnia (Keski-Pohjanmaa).
- The below figures analyse the shares of firms that have furloughed or laid off workers by firm size class (in terms of number of employees), showing that both shares are higher for larger firms.
- However, the growth in May has been clearly sharper for mid-sized firms for both furloughs and layoffs.
The development of subsidies granted by Business Finland
- Communications is the industry with the greatest share of firms receiving subsidies from Business Finland. However, the growth in May has been the largest in energy industries.
- When analysing the granted subsidies by county, Uusimaa is clearly distinguished in the shares and Central Ostrobothnia (Keski-Pohjanmaa) in the growth in May.
- Analysing by size class, relatively most subsidies have gone to mid-sized firms with 26-250 employees, but in May the growth has been highest for smaller firms of 6-25 employees.
Is the crisis visible in the tax debts and associated payment arrangements?
- The figure below shows the amount of tax debt held by firms in millions of euros. As can be seen from the figure, the debt varies within a month. However, it does seem that the debt has somewhat increased at the end of April – the previous high point (in January) is somewhere near 2.3 billion euros while the new record at the end of April is nearly 2.5. billion.
- The below figure shows the weekly number of firms with more than 1 000 euros of tax debt. The number of firms with tax debt has stayed quite stably between 45 000 and 50 000 firms. There appears to be no growth in the number of firms with tax debt since the start of the coronavirus crisis.
- On the other hand we do see a clear spike in the number of requests for a payment arrangement received by the tax administration in week 13 (23.3.-29.3.2020) compared to the previous weeks, with over 3 500 requests for payment arrangement arriving at the tax administration. Since then, however, the number of requests has decreased, and in week 19 (4.-10.5.2020), less than 500 were registered.
- 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