The business cycle continues to be favourable, with a weaker outlook

According to the Confederation of Finnish Industries’ January Business Tendency Survey, the business cycle continued to be favourable around the turn of the year. However, there are considerable differences between the sectors.

“The good trend continues in manufacturing, while the availability of materials continues to be the greatest problem in terms of growth. On the other hand, the situation has worsened for services, particularly in sectors that have suffered the most from restrictions. In construction, the record level of housing production is showing signs of a decline. As a whole, the cycle is maturing, although the situation varies greatly between sectors,” says Sami Pakarinen, Director of the Confederation of Finnish Industries.

“Companies’ production and sales have continued to grow, but problems related to the availability of employees have intensified. In the Business Tendency Survey, 35 per cent of the respondents reported difficulties with the availability of employees. In construction, the proportion was as high as 52 per cent. To add to the challenges faced by companies, costs have increased at a rapidly increasing rate,” says Pakarinen.

Employment measures are needed for added momentum

Finland’s employment trend is being driven by an upturn in the global economy, which is related to recovery from the pandemic. Companies’ employment expectations continue to be quite positive. However, the situation is stabilising in the global economy, and the momentum created by the business cycle will dwindle at some point.

“We must now focus on employment measures to alleviate structural problems in the Finnish labour market. The Government will decide on employment measures of EUR 110 million in mid-February. The measures are necessary, although their scope is modest,” says Jyri Häkämies, Director of the Confederation of Finnish Industries.

The urgency of employment measures is also highlighted by the constantly growing challenges faced by companies regarding the availability of employees. The labour shortage will worsen in the coming years, because the group of working-age people is decreasing.

“Finland has a high unemployment rate while at the same time it is also experiencing its most severe shortage of competent labour of all time, which is hindering companies’ growth prospects. Our unemployment security model does not promote initiative. We must boldly shift towards a more active employment policy similar to that of Sweden,” says Häkämies.

EK Business Tendency Survey

The Business Tendency Survey is published four times a year by the Confederation of Finnish Industries (EK). The survey has been carried out regularly since 1966. It is part of the European Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, which is partially funded by the EU. The survey concerns activity in Finland. In January 2022, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the fourth quarter of 2021. A total of 1,198 companies employing about 250,000 people in Finland responded to the survey.