Situation room report 27.08.2020 – latest developments in the labor market, households and firms

August 27, 2020

The Helsinki GSE situation room continues publishing reports based on up-to-date data during, and after, the summer vacation season. The reports, which are published every other week, follow the economy’s development from the labor market’s, households’ and firms’ perspectives.

Many figures use the spring and summer 2019 as a comparison period. The background information for the figures has been collected from the Statistics Finland’s registers. The latest available background information from Statistics Finland is from the end of 2018.

Labor market

Labor market – wage sum

The figure below shows the monthly sum of wages in 2019 and 2020 based on the Income Register. In May, the wage sum lagged circa 0.6 billion euros behind 2019’s levels, whereas in June this deficit had reduced to approximately 0.4 billion. In July, the wage sum has reverted back to the level of 2019 and even surpassed it slightly.

The figure below compares the industry wage sums in July in 2019 and 2020. All the major industries except public administration have either more or less equal or decreased wage sums in July compared to the previous year.

The following three figures show the total labor earnings in Finnish municipalities in 2019 and 2020. The first figure shows the total labor earnings in Finland’s 20 largest municipalities, while the second figure shows the percentage changes. In July, Lahti, Järvenpää and Vaasa had the largest drops in relative earnings.

The third figure shows the ten municipalities which have performed best and worst, among all municipalities. In July, the sum of earnings dropped most in Uusikaupunki(-19.8%). In the best ten performers among the municipalities, the wage sums of July 2020 exceeded those of July 2019.

The next two figures show labor earnings by age group in July. The figures show that labor earnings have increased in nearly all of the age groups presented. In the age groups of 50–54, 25–29 and under 25, the labor earnings have decreased. In both absolute and relative terms, the age group of under 25 years has suffered the largest decreases.

Labor market – furloughs and layoffs

The below figure shows the daily new furlough and unemployment spells in 2019 and 2020. June and July have seen considerably less new spells than the weeks following the establishment of restrictions to combat the coronavirus. Since then, a relatively large share of all spells have been furloughs compared to the previous year.

The next figure breaks down the sum of new unemployment and furlough spells in 2019 and 2020 by industry. The number of newly unemployed and furloughed has grown in all the industries. The largest growth has been experienced in the the manufacturing, trade, hotel and restaurant industry. Industries such as logistics have also experienced unemployment and furloughs. Of the major industries, the public administration sector has experienced the least growth.

Households

Households – housing allowance

The number of applications for Kela’s general housing allowance started to exceed the level of last year as the state of emergency came into effect in mid-March. By the end of April, around 50 000 more applications had arrived to Kela compared to the corresponding time-period in the previous year. Since May, the growth in the number of applications has been closer to last year.

The growth in the number of applications for housing allowance has increased most in Uusimaa, where there have been some 20 % more applications in 2020 compared to the corresponding period in 2019. Over 90 000 individuals from Uusimaa have applied for housing benefits in 2020. The second largest area of growth has been Etelä-Pohjanmaa. Only Pohjois-Karjala has experienced growth in benefit applications amounting to a maximum of 5 %.

Households – unemployment benefit

The number of applications for Kela’s unemployment benefits exceeds last year’s by more than 130 000 applications. The numbers started to grow sharply a week after the state of emergency came into effect. Since May, the growth of the amount of new applications has slowed down, but it has still remained slightly larger than last year.

The COVID-19 pandemic has taken its toll on the labor markets across the nation. Uusimaa, home to the capital, has experienced a roughly 130 % growth in the number of unemployment benefit applicants. Even in the regions with relatively low unemployment benefit application growth rates, the applications have increased by nearly 50 %.

The restrictions during the state of emergency and social distancing hit service industries the most. The characteristics of service industry employees are reflected in the sex and profession distributions of those applying for Kela’s unemployment security. The fact that most of the applicants belong to the younger age groups, follows from their lower rates of belonging to unemployment funds and fulfilling employment conditions.

Comparing unemployment benefit applications with last year’s figures show that the state of emergency has affected families more strongly than those living alone.

Of those furloughed during the state of emergency, nearly three quarters belong to single-family households. However, the number of furloughed living alone and in single-family households have increased equally much from last year.

Firms

Firms – share of firms with furloughs

The figures below show the share of all firms with at least one furlough. The share of employees in the firms that have been furloughed is not considered. The figures show numbers by industry, county and the size class of firms (in terms of employees).

Since the beginning of March, over 25 % of the hospitality and restaurant businesses operating in Finland have laid off workers. The largest shares occur in Lapland (Lappi) and Uusimaa. The figures also show the larger companies have been more likely to lay off workers.

In every industry, region or firm size class, the share has increased considerably in March-April and relatively little during May-July.

Firms – share of furloughed employees

The below figures show the share of employees that have been furloughed, in firms that have furloughed employees. Each point on each horizontal line describes the situation for a particular month with the month numbers marked inside the points. E.g., in the first figure, a point with number four inside it shows what share of employees was furloughed on average by firms of that particular industry in April, if any employees were furloughed – the numbers do not include firms with 0 percent of employees furloughed. The figures show the numbers by industry, county, and the size class of firms (in terms of employees).

From the first figure, we see that in March and April, in many industries the share of furloughed employees was high. For instance, in the hospitality industry, the share of furloughed employees, in firms that furloughed employees, was around half in March but in August, the share of furloughed employees was on average less than one fifth.

The last figure shows that the largest firms have furloughed the smallest share of their employees and the smallest firms the largest share of their employees. In very small businesses with less than 5 employees that had laid off workers, the share of furloughed was still relatively high in August compared to the other size groups.

Firms – Business Finland subsidies

The below figures show the share of firms that have received at least one subsidy from Business Finland up to a certain date. The figures show the numbers by industry, county and the size class of firms (in terms of employees). In July and August, less subsidies have been granted compared to previous months.

Firms – ELY subsidies

The graph below shows the shares of firms that have received subsidies from the regional ELY operators (Centre for economic development, transport and the environment). The data has been available since April, and thus the graphs do not have reference figures from earlier on in the year. This should also be taken into consideration when comparing these subsidy figures to those granted by Business Finland.

The industries with the largest shares of firms receiving subsidies are in the horeca business and logistics. Whereas in the Business Finland subsidies largest shares were present in the communications and manufacturing, those industries have smaller shares when looking at the ELY subsidy figures.

The figure below indicates the share of firms that have received ELY subsidies by county. The largest share is in Lapland (Lappi), whereas the Business Finland subsidies were concentrated more on firms in the capital region of Uusimaa.

The figure below shows that ELY-subsidies are not granted to large firms; hence, class 5 (the largest in the previous figures) is omitted from the graph.

The graph shows an almost inverted pattern compared to the Business Finland subsidies, which indicates that smaller firms are more likely to receive ELY-subsidies, while larger firms have been more likely to receive Business Finland subsidies.

Alla oleva kuva näyttää, että ELY-avustukset ovat suunnattuja pienemmille yrityksille, joissa on maksimissaan 250 työntekijää. Valtaosa tukea saaneista yrityksistä on kuitenkin tätä huomattavasti pienempiä.

The figure shows the ELY subsidies are directed to smaller businesses, whereas the figures presented before about the Business Finland subsidies indicated the smaller firms were less likely to get Business Finland benefits.

Firms – bankruptcy applications

The last figure shows the cumulative number of bankruptcy applications in a given year up to a certain date. The x-axis shows the date, and the y-axis the total number of bankruptcy applications left by that date since the start of the year. Years 2018 and 2019 are used for comparison with 2020.

Before the implemented measures against the coronavirus, there were more applications this year than in the previous two years. The rate of accumulation of applications has not increased from mid-March. Instead, since June, the cumulative number of applications has been lower than in previous years.

  • 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 mediaCite 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