Intelligence and AI are key to improving labour market matching

Finland’s labour market is in an unprecedented situation. The number of new vacancies reported to the public employment service is at a record high, but at the same time there are many more jobseekers than in the years preceding the coronavirus epidemic. The economy is growing and there is demand for labour.

Finland’s economy is swiftly recovering from the GDP slump experienced last year. However, the coronavirus year changed the labour market balance. Now that businesses can continue their activities and there is again demand for labour after lay-offs and dismissals, it is difficult to find workforce for sectors most affected by the restrictions.

It is paradoxical that while companies and the public sector are struggling with shortage of labour, there is also a record number of skilled jobseekers, including those already employed. According to a study by the Finland Chamber of Commerce, approximately 75% of employers reported challenges in finding skilled labour for jobs.

At the same time, there are some 259,000 unemployed jobseekers and more than 200,000 employed jobseekers at the TE Offices. The number of unemployed jobseekers is now 15 % and the number of employed jobseekers 26 % higher than in 2019. The growing number of employed jobseekers seems to indicate a willingness to change occupations – or at least jobs.

A concrete labour market mismatch

What is surprising about the current labour market situation is that both jobseekers and job vacancies are in the same sector. That, if any, is a concrete labour market mismatch.

According to the Employment Service Statistics of the Ministry of Economic Affairs and Employment, services, sales, care, construction, mechanical engineering and transport are the sectors with the highest numbers of jobseekers and open vacancies. It is an acute question for economic growth how to match unemployed jobseekers with vacancies in these same sectors.

There are no easy solutions to this problem. While we can use the employment information from the TE Offices to examine the number of jobseekers in different sectors and occupational groups, we need to complement this information with more thorough understanding of the jobseekers’ situation.

Surveys and interviews of jobseekers are needed to improve matching, because they provide more in-depth information on the underlying factors that drive people to change jobs or occupations. Complementary information provides a more accurate picture of the situation and thereby helps the public employment and economic development services to solve problems together with employers and private employment agencies.

Digital solutions into use quickly

It is not possible for TE Offices to interview at a short notice a hundred thousand jobseekers who, by virtue of their occupation, could be hired for the open vacancies. That is why we need other means to collect information that is essential for the labour market.

In order to implement effective labour policies, information must be collected from thousands of jobseekers. Interviews with a few hundred jobseekers alone are not sufficient to provide generalisations about their situations and the necessary measures.

This means there is a great need for digital solutions and, with the introduction of the new digital service platform for TE services, a step towards this will be taken next year. In the future, however, even more advanced solutions will be needed to enable more detailed data collection from jobseekers and to update the data on the number and specific descriptions of open vacancies in real time. Digital platforms and artificial intelligence could propose to us in a cost-effective way where to target our efforts.

Notes: The writer is Under-Secretary of State. Source: Ministry of Economic Affairs and Employment.