June 5, 2020
The Helsinki GSE Situation room uses data from the Incomes register to track the impact of covid-19 on the Finnish labor market. This register contains detailed information on labor earnings in Finland since January 1st 2019 and it updates quickly relative to other sources of income data.
However, one needs to be careful in interpreting very recent data from the Incomes register, due to the variability in the lags with which individual employers deliver their payment information. The following figure demonstrates the lag with which income paid during a particular month first appears in the data. The horizontal axis shows the “upload date” (the date on which information about the payment arrived at Statistics Finland) and the vertical axis shows the cumulative sum of wage payments.
The figures shows, for example, that a significant fraction of April payments only appeared in May, while a small amount of May payments were uploaded in late April. At the moment (4th of June) the latest Incomes register information available to the Situation room has arrived at Statistics Finland on June 1st. Total earnings for April seem to have more or less converged by now, whereas May total is clearly still incomplete.
The next figure shows the sum of labor earnings by month, for both this year and the last. April is the first month to show a year-on-year drop, which amounts to about 370 million euros or about 5% less than in 2019. The information for May is still very incomplete due to the reporting lags described above.
By far the largest shares of wages are paid at the end and midway through each month, making it sensible to analyze total labor earnings also at the level of half-months. The next figure shows labor earnings by half-month (e.g., 1(1) corresponds to the first half of January). The figure for the first half of May is slightly higher in 2020 than in 2019. On the other hand, the March numbers show that the distribution of earnings within the month can vary significantly between the years, even when the monthly total is almost the same. Reliable figures for total May earnings will likely be available before the end of June.
Total labor earnings include vacation pay, which could give a too optimistic picture during a time with an unusual amount of lay-offs, because the laid off receive all accrued vacation pay as part of their final paycheck. Also, some workers may have taken their yearly vacation earlier than usual because of the Covid-19 situation, which would also translate to temporarily high vacation pay, but at the cost of unusually low vacation pay during the coming summer vacation period. The following figure reveals that the share of vacation pay out of total earnings has indeed increased during the pandemic by more than could be expected from last year (which we interpret as capturing ordinary seasonal variation).
However, removing vacation pay from the earnings does not change the big picture. The following figure shows total labor earnings by half-month with and without vacation pay. The surprisingly high totals for first half of May holds true either way. (Recall that 2nd half of May is still far from complete).
April labor earnings by industry
The next figure shows total labor earnings for April by industry, using the coarse “letter code” classification. Labor earnings declined year/on/year in almost all industries compared to last year. In euro terms the decrease was deepest in manufacturing, food and accommodation services, and trade.
Labor earnings in the hotels and restaurants sector was higher than last year from January to March. The first clear drop took place in the first half of April. Total labor earnings in April were 51 million euros (32 percent) lower than a year earlier.
Labor earnings in the manufacturing sector was roughly unchanged from last year until the corona epidemic. There is a clear decline only in the second half of April. (Again, recall that the total for the second half of May 2020 is still very incomplete!). The decrease has been relatively less steep and started later than in food and accommodation services.
April labor earnings by municipality
The decline in labor earnings between April 2019 and April 2020 varies widely between the 20 most populous municipalities in Finland. The steepest decline, over 7%, has occurred in Kouvola, Vaasa and Helsinki. In contrast, the decline has been only 0.5% in Jyväskylä.
- Additional information about the Helsinki GSE Situation Room consisting of researchers from Helsinki GSE, University of Turku, 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