Technology industry growth has stalled, but demand for skills remains strong
According to the recent order book and personnel survey by Technology Industries of Finland, judging from order trends in early 2023, the turnover of technology industry companies is expected to grow at a slower pace or stop growing altogether this year. Turnover in Finland in 2022 exceeded EUR 100 billion for the first time, totalling EUR 106 billion. Output growth has now stalled in the entire manufacturing sector in Finland, and production volumes are shrinking.
“Economic development during the 2022/2023 winter has proved better than what was expected late last year. Growth has stalled as anticipated, but we have not yet seen a clear downward trend in output. Having said that, production volume development seems sluggish in our main sectors. Companies are preparing because geopolitical risks bring considerable uncertainty to both the global economic and industry outlook,” says Petteri Rautaporras, Director, Chief Economist at Technology Industries of Finland.
The monetary value of new orders received by technology industry companies in the January-March period was 13 per cent lower than in the previous quarter, but 12 per cent higher year-on-year. High producer prices have contributed to the increase in the value of order intake.
In mechanical engineering, which is the largest technology industry sector, the value of new orders fell by 11 per cent in the January-March period from the preceding quarter. Year-on-year, the value of new orders decreased by 6 per cent.
The balance figure for technology industry tender requests in April was -13, down from -12 in January. The figure has now seen seven consecutive quarters of decline.
“Demand has continued to weaken, but the rate of decline remains moderate,” Rautaporras points out.
Recruitment of new personnel remains strong
The number of personnel employed by technology industry companies in Finland at the end of March was approximately 1 per cent higher than at the end of December. At the end of March, the industry had approximately 340,000 employees. According to the personnel survey, the number of employees affected by lay-off procedures at the end of March was approximately 8,000, which is slightly below the average.
“Promisingly, recruitment of new employees remained at a good level in the January-March period. In total, recruitments came to 13,400. Companies have both increased their personnel and hired new employees due to retirements and employee turnover. The fact that companies’ recruitment activity remains strong despite the stagnant economic situation signals that skilled workers are in very high demand.
According to an extensive study on the need for skills in Finland, technology industries will need 130,000 new experts within 10 years, 60 per cent of which hold a university degree and 40 per cent are skilled workers. According to Jaakko Hirvola, the CEO of Technology Industries of Finland, the skills shortage that is hampering the operations of businesses should be taken seriously in the recently opened coalition talks.
“The fact that companies are willing to recruit new employees despite the challenging economic situation shows that they have growth ambitions and faith in the future. We must definitely not make the skills shortage worse by making it sound like Finland is planning to reduce or restrict education and work-related immigration,“ he says.
According to the Confederation of Finnish Industries’ digital monitoring service for green transition investments, the value of currently planned projects in Finland exceeds EUR 15 billion.
“Finnish companies are very interested in green exports. To support their billion-euro investments and a massive increase in export revenue, it is more important than ever that the new government places emphasis on increasing the availability of skilled workers, stepping up the level of knowledge, research and innovation, as well as introducing changes in the labour market. Finland needs at least 44,000 new skilled workers each year. We must also improve our employment rate and make Finland the new leader in innovation and investment instead of lagging behind competitors. This must be ensured during this government’s term,” Hirvola states.
Jaakko Hirvola, CEO, phone +358 40 063 3751, Twitter: @JaakkoHirvola
Petteri Rautaporras, Director, Chief Economist, phone +358 50 304 2220, Twitter: @PRautaporras
Economic outlook - Technology Industries 2/2023