Labour market to slow down next year

After the exceptionally positive developments in 2018, the labour market is now expected to slow down.

Both this year and the next, employment growth is predicted to halve compared to the previous year, according to the short-term labour market forecast released by the Ministry of Economic Affairs and Employment on Tuesday.

According to the forecast, in 2019 employment will grow by about 35,000 persons from the previous year, while in 2020 the growth is expected to slow down to just 15,000. Similarly, the fall in unemployment will level off.

The employment rate is forecast to rise to 72.8 per cent this year, and to 73.4 per cent next year. However, labour market mismatch, structural unemployment and the change in the population age structure are already starting to limit employment growth.

For this and the next year, employment growth relies entirely on the service sector.

This year and the next, the labour force will grow by 7,000 persons, showing a marked decrease from the previous year. Labour force participation rate will continue to grow to 66.6 per cent this year and to 66.7 per cent next year.

Since the size of labour force no longer significantly grows, the unemployed largely account for the increase in the number of employed people. The average unemployment rate is expected to fall to 6.3 per cent this year and to 6.0 per cent next year.

The short-term labour market forecast of the Ministry of Economic Affairs and Employment is based on a time-series analysis that makes use of economic indicators, labour market statistics and policy information, as well as the Ministry of Finance’s GDP forecast and the demographic forecasts of the Statistics Finland. The forecast is published twice a year.