June 26, 2020
Analysis based on the Incomes Register by the GSE situation room finds that the sum of wages and employment both declined by over 8% in May compared to May of last year.
The Incomes Register, which started operating in the beginning of 2019, makes it possible to track the development of Finnish incomes with a relatively short lag. Even by international standards, the picture it allows us to draw is exceptionally up to date.
Development labor earnings
The next figure presents the development labor earnings by month in Finland for the years 2019 and 2020. The information updates with some lag, but the numbers for May are likely already very close to the final wage sum for May. In May, the drop in the wage sum between 2019 and 2020 was 625 million euros (8.2 percent), while in April there was a 370 million-euro (around 5 percent) decrease.
The Incomes Register also enables the analysis of the wage sum for example by industry. The next two figures, as well as the employment figures later in the report, describe the developments in two industries that differ in how the corona virus crisis has affected them.
The next figure shows that, in manufacturing, May’s wage sum was around 110 million euros (9 percent) lower than last year.
In food and accommodation services, an industry heavily burdened by the crisis, the decline has been steeper than in manufacturing in relative terms. The wage sum in the industry in May was slightly over 70 million euros. This is 85 million euros less than same time last year, which translates to a 53 percent drop.
Development of employment according to the Incomes Register
It is challenging to tract the development of employment since, for instance, there are more lags and deficiencies in the reports of beginning employment spells to the ministry of economic affairs and employment than the reports of beginning unemployment or furlough spells.
One way to estimate the development of employment is to analyse, using the Incomes Register, how many employees have been paid, and how much, in a given time period. In the next figures, a person has been defined as employed if they have earned at least 1000 euros per month in a given wage payment period.
The next figure describes the development of the number of employed people for 2019 and 2020 using the aforementioned definition. It shows that the number of the employed started to decline halfway through March and dropped sharply in the beginning of April. In April, there were slightly over 1.8 million people earning over 1000 euros a month, while a year ago there were slightly less than two million. In May, employment improved a bit compared to April, but the percentual difference relative to last year stayed roughly the same.
The next figure shows the percentual difference in the number of employed between this year and last, i.e. the relative difference of the red and blue lines in the previous figure. The figure shows that, before the start of the coronavirus crisis, employment was around 1 percent lower than last year. Since the beginning of April, the number crashed, after which it has remained on a level over 8% lower than in 2019.
Manufacturing saw a similar relative drop in the number of employed in the beginning of April as the whole economy. However, since then the situation has improved more than the labor market average, as the number of employees in May was around 6 percent lower than in 2019.
In food and accommodation services the number of employed declined sharply in the beginning of the coronavirus crisis. Unlike in manufacturing, the situation has not improved since, with the number of employees being 50 percent lower than last year in both April and May.
- 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