Technology industry outlook: Quick recovery amid high uncertainty
This information is based on the order book and personnel survey as well as the corona pulse survey conducted by the Federation of Finnish Technology Industries in January.
According to recent data, the pace of recovery in the Finnish technology industry – and in manufacturing globally – has been faster than expected. However, as a sign of the prevailing uncertainty, only slightly less than 40 per cent of technology industry companies in Finland expect their turnover in 2021 to be higher than in 2020.
“Overall, the situation is similar to that of twelve months ago. According to preliminary data, the turnover of technology industry companies in Finland was approximately EUR 83 billion in 2020, up nearly 2 per cent year-on-year. Considering the difficulties faced in 2020, this is very welcome news,” says Petteri Rautaporras, Chief Economist at the Federation of Finnish Technology Industries.
Order books expand again
The order intake for the last quarter of 2020 was a pleasant surprise. The companies that took part in the Federation of Finnish Technology Industries’ survey of order books reported that the monetary value of new orders between October and December was as much as 60 per cent higher than in the preceding quarter and 21 per cent higher than in the corresponding period in 2019. Order intake improved for companies of all sizes in all technology industry sectors. This significant improvement is partly due to some very large orders received during the last quarter.
The number of requests for tender also picked up at the turn of the year. The balance figure for January was positive (+8), indicating a pick up in demand towards the end of 2020 and at the turn of the year.
At the end of December, the value of order books was 10 per cent higher than at the end of September and 4 per cent higher than in December 2019. Judging from order trends at the end of the year, the turnover of technology industry companies is expected to be at a similar level in early 2021 than in the corresponding period last year.
At the end of 2020, technology industries in Finland had 308,000 employees, which is some 7,000 less than during the peak in 2019. In total, 28,000 employees were affected by lay-off procedures at the end of December.
Keeping up with the competition, supporting growth
The CEO of the Federation of Finnish Technology Industries Jaakko Hirvola welcomes the long-awaited news about the pick-up in demand, but there are still good reasons to keep a cool head.
“The global economy is recovering, and we are about to face intense international competition. To be able to hold our own, the EU stimulus funds should be allocated boldly to effective initiatives that promote renewal and drive green transition, digitalisation and export activities. We need to draw on our strengths in the areas of digitalisation and sustainable development, and increase the level of RDI funding to the target set by the government without delay,” Hirvola points out.
“If we fail to invest in growth, there is a threat of falling behind again like we did during the financial crisis. Equally important is the ability of the government to support viable businesses that have been hard hit by the coronavirus pandemic. Despite the positive developments, the outlook is still clouded due to the pandemic. There are significant differences between individual companies, and a large number of companies face serious difficulties as a result of the large drop in turnover due to the pandemic,” Hirvola says.
Hirvola also points out that we do not yet know whether demand will keep growing, or whether we have seen only a temporary increase. Overall, the Finnish economy is not in great shape: the economy and employment were shrinking already before the pandemic. The number of those employed in December was down 74,000 year-on-year. There is much at stake in getting the spring 2021 budget session right.
We need decisions on local agreements
Over the years, many studies have indicated that the inflexibility of the labour market is the Achilles’ heel of Finland’s economy. In terms of flexibility, Finland is at the bottom in international comparison.
“Flexibility should be promoted also by legislative action. Increasing local agreement is central to our ability to return the economy and employment to a sustainable growth path. Too often local agreement is not possible simply because there is no union representative and the system does not allow the use of other personnel representatives. A tripartite group is discussing local agreement again – for the umpteenth time – but the ultimate decision-making power lies with the government,“ says Minna Helle, Executive Director, Industrial Relations at the Federation of Finnish Technology Industries.
The Federation of Finnish Technology Industries is also expecting feedback on the local wage negotiations that took place at the turn of the year from the member companies.
“This will help us consider the future steps of labour market policies. I am sure that there are still a lot to learn and room for improvement in the local negotiation culture. It is important to be open-minded and find solutions together, Helle says.
Jaakko Hirvola, CEO, phone +358 40 063 3751
Minna Helle, Director, Industrial Relations, phone +358 50 341 4884
Petteri Rautaporras, Chief Economist, phone +358 50 304 2220