Finland's labour markets, long-term growth outlook concerns for economists

Posted by On 11:03 PM

Finland's labour markets, long-term growth outlook concerns for economists

The Bank of Finland’s medium and long-term growth forecasts indicate that the Finnish economy will grow at an average annual clip of 1.5 per cent over the next two decades.
The Bank of Finland’s medium and long-term growth forecasts indicate that the Finnish economy will grow at an average annual clip of 1.5 per cent over the next two decades.

Petri Mäki-Fränti, a senior economist at the Bank of Finland, has expressed his concern about the sluggish long-term growth outlook for the Finnish economy.

The Bank of Finland has issued medium and long-term growth forecasts indicating that the national economy will expand by an average of 1.5 per cent per annum over the next two decades. “The growth will be noticeably slower than the average of three per cent witnessed during the two decades preceding the financial crisis,” highlights Mäki-Fränti.

He underscores that one should not expect economic growth and productivity improvements alone to balance the central government budget, reminding also that labour force growth will not be able to support economic growth as well in past decades.

“Labour input is estimated to decrease by almost 1.5 per cent between 2026 and 2040. The number of working-age people alone will contract by almost 30,000 between 2026 and 2040, according to demographic projections by Statistics Finland,” he says.

“In addition, the average working time per employed individual has been on a downward trend for a while, and the trend is not expected to change soon. Part-time employment, in particular, is expected to increase as the participation rate rises and new groups of people enter the labour market,” explains Mäki-Fränti.

Heidi Schauman, the chief economist at Aktia, has similarly expressed her concern about the labour markets.

Employers, she points out, are currently struggling to find employees with the necessary skills, whereas many job applicants are realising that their skills are not in particularly high demand.

“Our challenge is matching people with the willingness to work with people offering work. It is not an easy puzzle â€" to some extent surely impossible â€" in a large country such as this with major structural changes and where the skills needed are partly different than before,” she writes in her blog.

Aleksi Teivainen â€" HT
Photo: Roni Rekomaa â€" Lehtikuva
Source: Uusi Suomi

Source: Google News Finland | Netizen 24 Finland

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