April 30, 2020
As the COVID-19 crisis progresses it becomes important to follow how the impact of the crisis on the economy develops. In this Helsinki GSE report we analyze how the crisis has hit
- (small firm) entrepreneurs
- Public sector workers
- Different manufacturing industries
- Firms in different industries in the last two weeks of the crisis, compared to the earlier stage of the crisis.
In addition to these we study how the subsidies granted by Business Finland have been allocated, and whether there has been a change in the last two weeks compared to the earlier stage of the crisis.
In this report we still partly utilize older data. For example, our knowledge of an individual being an entrepreneur stems from end of 2017. Regarding firm level information we, in a departure from two weeks ago, this time restrict attention to those firms that we have been able to link to the 2019 business cycle register. This choice leads us to exclude a large number of presumably small firms from our analysis. To facilitate comparisons we report the figures separately for the last two weeks (= April 13 – 26) and the earlier part of the crisis which mean March 9 – April 12.
Link to the webinar on April 30 in which the report was published (in Finnish).
- In the graph below we compare the number of employees and entrepreneurs who’ve become unemployed in 2019 to those in 2020 for the same period (beginning of January until late April).
- The number of entrepreneurs that have registered as unemployed in 2020 is tenfold compared to 2019. Their share of all unemployed by end of April is 23%.
- This development is likely driven by the decision of the Finnish government to allow entrepreneurs to register as unemployed without having to close their business. The entrepreneurs needed to register as unemployed by April 15 in order to be eligible for support starting March 16. The support is 724€/month.
- The public sector has started to furlough employees; something it did not resort to almost at all in 2019. In contrast, the number of public sector employees registering as unemployed has not changed much from 2019.
- The fraction of newly unemployed or furloughed employees is highest in Hotels and Logistics, Recreation, Support services, Logistics and Trade.
- The number of unemployed and furloughed individuals is highest in Trade, Manufacturing and Hotels and restaurants.
- The variation in the share and number of unemployed and furloughed workers varies greatly across different manufacturing sectors. In terms of share, Motor vehicles, Other manufacturing and Leather products record the highest numbers. In terms of headcounts, Machinery, Motor vehicles, and Metal products are leading.
- Turning to the share of firms that have furloughed workers we find that half of the hotel and restaurant industry’s firms have done so, but the growth after April 12 (the red part of the bar) has been modest. Manufacturing, where some 30% of firms have resorted to furloughing workers, has had a larger increase since April 12.
- In the graph below, we have the share of firms in an industry that furloughed workers between March 9 and April 12 on the x-axis, and the share of furloughing firms between April 13 and 26 on the y-axis. The size of each dot is relative to the industry’s 2019 turnover. Manufacturing and Support services stand out as industries where the share of furloughing firms has grown in relative terms.
- The allocation of subsidies by Business Finland has created a lively debate. The data of the Situation Room shows that the share of firms having received subsidies is highest in Communications, Recreation and Education. The lower graph suggests that of these, only Education has experienced a relatively large increase in this share since April 12.
- 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