Business cycle to be favourable, with weaker outlook: EK

The business cycle continued to be favourable around the turn of the year, according to January Business Tendency Survey released by the Confederation of Finnish Industries’ (EK) on Thursday.

However, there are considerable differences between the sectors, said the EK in a press release referring to the survey.

“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,” said Sami Pakarinen, Director of the EK.

“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,” said Pakarinen.

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,” said Jyri Häkämies, Director of the EK.

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,” Häkämies added.