Technology industries of Finland hold up despite the continued deterioration of the global economic climate
“Global and euro area growth forecasts have been downgraded repeatedly, and were yet again revised down in July for Germany, which is an important export market for Finland. Finnish technology industry companies’ performance has been excellent, as they have managed to hold up so far and even achieve slight growth. However, their expectations are now showing signs of weakening,” says Petteri Rautaporras, Chief Economist at the Federation of Finnish Technology Industries.
According to the recent order book and personnel survey published by Technology Industries of Finland, the value of order books at the end of June was at the same level as in the previous quarter and 15 per cent higher than in June 2018.
The technology industry companies that took part in the survey reported that the monetary value of new orders between April and June was 4 per cent lower than in the first quarter of the year, but 10 per cent higher than in the corresponding period in 2018. The number of requests for tender fell somewhat during the summer.
Judging from order trends in recent months, the turnover of technology industry companies is expected to be higher in the autumn of 2019 than in the corresponding period last year.
At the end of June, the industry employed some 319,000 people, up 10,000 from the 2018 average. Personnel numbers grew slightly during the spring and early summer.
Budget workshop needs to focus on the acceleration of growth
According to the CEO of the Federation of Finnish Technology Industries Jaakko Hirvola, the global economy looks to be at a turning point. Should the trade policy tensions and political risks persist, the situation can deteriorate also in Finland and in the worst case this could happen very quickly. The wise thing to do is to be prepared and do what we can without delay.
“The government’s new employment target of 75 per cent is a tall order in the current economic situation. To achieve it, we need measures that accelerate growth, structural changes that promote employment and wise decisions on the labour market,” Hirvola points out.
Hirvola suggests that during the autumn budget workshop, the government should reassess the impact of its plans on not just employment but also economic growth. For example, the government programme contains only half of the level of public RDI funding required for the target of raising RDI investments to 4 per cent of GDP. This despite the fact that the parties’ election programmes contained a promise to put investments on this growth track. Finland cannot succeed without investments in company-led innovation.
“The government needs to take effective action to prevent planned investments being postponed or not realised due to delays in obtaining authorisations. The Confederation of Finnish Industries (EK) estimated in early 2019 that business investments with the total value of some EUR 2.7 billion were pending, waiting for processing by authorities to be completed. When realised, these investments would create approximately 9,000 jobs,” Hirvola points out.
Labour market agreements are key to achieving the employment target
The labour market negotiations that will start in the autumn are key to the future development of employment in Finland.
“The decisions made will largely determine which direction employment will take in the future. Responsible labour market agreements and industrial peace are necessary for favourable development, and also the quickest way to promote employment,” says Minna Helle, Director, Labour Market at the Federation of Finnish Technology Industries.
Helle points out that the slowdown of global economy means intensifying competition between companies. To be able to hire new employees, companies must be able to grow their market shares despite the economic slowdown. This requires stronger cost-competitiveness. Local agreements are also important, as a more challenging economic situation will make the differences between companies more pronounced.
“Finland’s cost-competitiveness has improved notably over the past few years, supporting the positive development of employment. This progress should not be undermined. According to the Bank of Finland, further improvement of cost-competitiveness is necessary to achieve a higher employment rate,” Helle emphasises.
“It takes courage to change old structures. Labour market federations can propose solutions in the working groups on employment set up by the Finnish government. Other ways to promote employment include measures such as renewal of unemployment benefits and increased opportunities for local agreement,” Helle concludes.
Jaakko Hirvola, CEO, phone +358 40 063 3751
Minna Helle, Director, Labour Market, phone +358 40 341 4884
Petteri Rautaporras, Senior Economist, phone +358 40 304 2220