Survey by Technology Industries Finland: Number of requests for tender plummets, exports expected to bottom out towards the end of the year
This information is based on the recent survey by Technology Industries Finland on companies’ order volumes, turnover, personnel and the effects of the coronavirus crisis in particular.
Thanks to the orders received in late 2019 and early 2020, there has been a slight delay before technology industries, which is the largest export sector in Finland, has felt the impact of the crisis. However, the situation is quickly weakening now. The balance figure that measures the level of tender requests dropped to its lowest level (-42) since the weakest quarter of the financial crisis. Two thirds of technology industry companies expect their situation to be bad or very bad three months from now.
Upwards of 70 per cent of member companies in the industry sector expect their turnover for the third quarter of 2020 to be weaker than twelve months earlier. As many as 25 per cent of companies expect their turnover to drop more than 20 per cent year-on-year. Figures for the service sector (consulting engineering and information technology) are some 10 percentage points smaller, signalling a slightly more positive outlook for these sectors.
“Considering the huge uncertainty, these figures are obviously given only as a guide. Nevertheless, companies expect their situation to weaken significantly over the coming months, and bottoming out is not likely to happen until later in the year, either in the autumn or towards the end of the year. Naturally, some companies are still doing quite well. Every company is forced to navigate a thick fog of uncertainty, and crises such as these are likely to widen the differences between individual companies even further,” says Petteri Rautaporras, Chief Economist at the Federation of Finnish Technology Industries.
Many technology industry companies have been forced to start lay-off procedures, and more negotiations can be expected over the coming months. It is currently estimated that almost one third of technology industry personnel will be affected by lay-offs at some stage.
Hirvola: Several billion euros of direct support required
According to the CEO of the Federation of Finnish Technology Industries, Jaakko Hirvola, this is a distress signal from the export sector. The economy is on a knife edge. Should the export sector in Finland take a nosedive, it would have terrible consequences in terms of employment and financing of the welfare state.
“All societal actors must have a clear understanding of the fact that the end of the summer will unfortunately not see the end of the financial crisis caused by the coronavirus. The Finnish government must plan and time its support measures with a view of the other heavy blow that is yet to come. Viable companies should receive direct support of EUR 3-5 billion, or possibly even more. This is about saving jobs,” Hirvola emphasises.
“After the acute crisis is over, we will not return to the situation as it was, but companies will have to recover their markets. Competence and competitiveness will be the key to achieving this. In the midst of digital disruption and financial crisis, Finland must provide the much-needed rise in the funding of research, development and innovation. Finland already lags far behind its competitors in this respect. We should add euros to the newly finished National Roadmap for Research, Development and Innovation (RDI), triple the funding of the main program of Business Finland, launch the national climate fund of the Finnish State Development Company Vake, engage in sustainable and innovative public procurement and so on.”
“Additional funding is required also in the field of education, as well as direct support for those facing lay-offs or unemployment because of the crisis. It would be unacceptable and socially shameful if continuous learning is reduced to an empty phrase in this situation,” Hirvola says.
Growing concern over competitiveness
Minna Helle, Director, Labour Market, at the Federation of Finnish Technology Industries is worried that Finland will again fall behind in terms of cost competitiveness because of the coronavirus crisis. It is important to monitor the solutions found in other countries, avoid the rise of costs and tackle that elephant in the room and fix the old structural problems in our labour market. This crisis and our ability to survive it also emphasise the need to increase agreement on a local level.
“As an urgent measure, the Finnish government should extend the temporary changes to the lay-off procedure and unemployment benefit until the end of the year according to the labour market organisations’ proposal. Companies are at dire straits, and these legislative changes make the situation easier for both employers and employees,” Helle points out.
“I would like to take this opportunity to thank the social partners in the industry for their understanding attitude in the midst of this crisis. Cooperation and responsible attitude will be called for time and again before we can overcome the situation. I would also like to extend my special thanks to the technology industry personnel who have bravely continued working during the epidemic,” Helle says.
Jaakko Hirvola, CEO, phone +358 40 063 3751
Minna Helle, Director, Labour Market, phone +358 40 341 4884
Petteri Rautaporras, Chief Economist, phone +358 40 304 2220