Finnish companies estimated that the economic situation in the country has declined in all major sectors during autumn, according to a survey published by the Confederation of Finnish Industries (EK) on Wednesday.
The slowdown in the global economy has worsened the situation, especially in the manufacturing sector, the Business Tendency survey said.
"It is worrying that the economic outlook has declined rather rapidly during autumn. This has primarily affected the industrial sector. If you look at the economic development forecast, next year is projected to have the lowest growth of half a per cent. If you compare the barometer to other growth forecasts, we cannot rule out [the possibility] that growth will fall to zero," EK's chief economic policy advisor Sami Pakarinen said.
Business outlooks have been on the decline for a long time now. Production and sales expectations, however, are still at a relatively good level in other main sectors apart from manufacturing.
According to Pakarinen, cyclical deterioration is also reflected in employment over time. In manufacturing, the business cycle is already seeing a downturn and the number of employees is expected to decrease in the coming months.
"How this will affect possible co-determination negotiations remains to be seen. Each company makes its own decisions. The message is worrying in terms of employment growth in Finland," Pakarinen said.
Insufficient demand and labour shortage
The slowdown of Finland’s export market is reflected in barriers to increased production. Over 40 percent of the respondents felt insufficient demand was a major problem.
Demand in the service sectors has also declined further. While the availability of skilled labour has somewhat eased, recruitment problems are still perceived as widespread, according to respondents.
The worst labour shortage is in construction, but the situation is estimated to improve as activity slows down and demand for labour declines.
"The Finnish economy is facing something new. Both exports and investment are declining at the same time. Growth forecasts will be further downgraded. This is also bad news for public finances. The deficit is growing and the debt ratio is rising rapidly," Pakarinen observed.
According to Pakarinen, government could alleviate the situation by trying to balance public finances. "The deficit should be brought under control. More employment measures are also needed."
EK director general Jyri Häkämies also emphasised that the situation requires more measures to support employment.
"An industry-wide round of salary negotiations would be the best solution in this situation. This would allow us to advance local agreements and improve the ability of different sectors and companies to adapt to the challenging situation," Häkämies said.
The Business Tendency Survey, which has been carried out since 1966, is published by EK four times a year. In October 2019, 1,169 companies employing over 250,000 people in Finland responded to the survey.