Situation room report 4.3.2021 – latest developments in the labor market, households and firms

March 4, 2021

The Helsinki GSE situation room continues to publish reports based on up-to-date data every other week. The reports follow the economy’s development from the labor market’s, households’ and firms’ perspectives.

In this report, we focus on the labor market and households. 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 2019.

Labor market

Labor market – wage sum

The figure below shows monthly earnings in 2019–2021 based on the Incomes Register. Since April 2020, the wage sum has mostly been lower than for the same month in the preceding year, apart from a few exceptions, with the greatest fall happening in May. Wages for January 2021 appear to be substantially below previous year’s levels as well, although slightly higher than for 2019.

When examining the earnings figures, please keep in mind that information is uploaded to the Incomes Register with varying degrees of lag, and the figures may be slightly updated later when new data becomes available. In practice, data older than one month, as for January 2021 in this report, can be considered almost final.

The following three figures represent, for each month, the portion of employed persons among those who started an employment, furlough or unemployment spell during the month indicated. For example, with the gray line in the first figure, we follow the group of persons who were furloughed in April 2020. For these figures, we define employment as receiving earnings of at least 1000€ per month.

In the first figure, we find that around 20% of those starting an unemployment spell in April 2020 were considered employed during April 2020; by May 2020, only 10% of the group was employed. The first and the second picture can be compared to determine whether the return to employment during the pandemic differs from other periods.

We note that the immediate drop in employment is more severe among those entering unemployment or furloughs in April 2020 than the similar group in 2019. However, for both years, by September , about 80% of those experiencing a new furlough in April had returned to employment. Finally, the third picture shows that experiencing a new furlough in September 2020 did not lead to similarly sharp immediate declines in employment rates as in April 2020.

The figure below compares the industry level earnings in January from 2019 to 2021. Earnings in hotels and restaurants, support services and logistics appear to be lower in January 2021 than in the previous years.

Next, we examine the change in earnings in January from 2019 to 2021 by age group. Earnings have fallen most markedly among those under the age of 30 and those 50 years or older.

Finally, we illustrate below the relative changes in earnings by profession, listing professions that experienced the largest reductions or increases in earnings in January 2021 from January 2019.

Labor market – furloughs and layoffs

The figure below shows the weekly new furlough and unemployment spells in 2019, 2020 and 2021. Amounts of new spells increased substantially in the beginning of the crisis, but new entries into unemployment or furloughs have in general declined afterwards. Amounts of new furlough spells, however, have continued to be significantly above the levels of the preceding year since March 2020.

Labor market – employment

We present below the weekly amounts of employed in 2019–2021. Here, a person is considered employed if they receive at least 1 000 euros of wage income over a month. According to this definition, we find that the number of employed has been significantly smaller in January than in previous years, although slightly higher than it was at the lowest point of 2020 in April.

Households

Households – housing allowance

We illustrate the cumulative number of applications for Kela’s housing allowance from turn of the year for years 2019 to 2021. We find that the numbers for 2021 clearly exceed the previous years’ levels starting from early February.

Households – unemployment benefits

For Kela’s unemployment benefits, we find that by end of February, the number of applications in 2021 has been between the levels of 2019 and 2020. We note that these figures do not include the earnings-related unemployment allowance paid by unemployment funds. Additionally, both application figures illustrate the numbers of new applications rather than all those collecting benefits of a given type.

In the below figure, we illustrate changes in application numbers by age and gender. We find that when compared to 2019, the amounts of new benefit applications in early 2021 have fallen most pronouncedly among men and those aged 50 or older.

Finally, we examine the amounts of applications by household type. It turns out that the numbers have fallen mostly among single person households. Amounts of furloughed applicants have, in turn, increased the most among single family households.

  • 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