News |

Economist: Finland's 100,000 layoffs may just be the beginning

The CEO of Finland's Chamber of Commerce said the country has not yet seen the peak of layoff announcements.

Nainen ja mies kauppakeskuksen rullaportaissa.
File photo of a shopping centre from 6 March 2020. Image: Henrietta Hassinen / Yle

Companies have announced temporary layoffs of a total of around 100,000 workers, according to figures from the ministry of employment, as the novel coronavirus crisis upends businesses across Finland.

If the public health emergency doesn’t improve or worsens, that figure could be much higher, according to the chief economist of the Federation of Finnish Enterprises, Mika Kuismanen.

"It is difficult to estimate, but if the corona-crisis escalates and prolongs it is not impossible that the numbers will double," Kuismanen said.

'Peak yet to come'

Normally, the number of employees who enter co-determination talks with employers is larger than the actual number of employees who are laid off.

However, in times when just about every aspect of life is affected by repercussions from the coronavirus outbreak, the number of workers called to redundancy talks may be much closer to the actual number of layoffs.

For the past two weeks businesses have increasingly and more frequently announced temporary layoffs and closures. Around 17,000 workers were laid off in February while 19,500 lost jobs in January, according to the ministry.

The CEO of Finland’s Chamber of Commerce, Juho Romakkaniemi, said that unfortunately, the peak of layoff announcements is yet to come.

He said that many companies have been trying to delay layoffs until the last minute, but that he expects a large number will be announced in coming weeks.

Survey: Half of firms said layoffs on the cards

The chamber said last week that one-quarter of 4,000 companies that responded to its survey had already started redundancy talks. More than half of those firms estimated that they would start temporary - or permanent - layoffs, while one-third of the companies said they were in danger of bankruptcy.

The epidemic has effectively emptied restaurants and hotels. And the service sector in general has felt the impact of the crisis, particularly tourism and recreation sectors.

"Just a couple weeks ago we had very healthy companies that are now heading into a cash crisis," said Tatu Rauhamäki, director of industrial policy at Service Sector Employers Palta, the representative group for service sector businesses.

Palta’s own survey of service sector firms found that ten percent of companies had already laid off workers due to the coronavirus crisis. Meanwhile about 60 percent of the companies said it was likely that they will eventually be forced to lay off or dismiss staff.

Five day negotiations

The complex legal procedures involved in laying off employees in Finland have been relaxed for a three month period due to the crisis, following an agreement reached between government and labour market organisations.

Redundancy and layoff negotiations typically take weeks to complete, but the durations of both kinds of talks have been shortened to five days of discussion.

Companies with fewer than 20 employees are not bound by such restrictions.

Romakkaniemi said the shortened negotiation time could help to slow down the flow of layoffs, noting that there is no longer a need for businesses to announce layoff plans far in advance. Firms can therefore more easily monitor cash flows and their ability to stay afloat day-by-day.

Meanwhile Palta’s Rauhamäki praised the government’s support to suffering businesses but also noted shortcomings.

He said if Finland wants to avoid layoffs, it would be important for the government to provide direct wage subsidies for laid-off workers as some Nordic countries have announced.

Latest in: News

Headlines

Our picks

Latest

Muualla Yle.fi:ssä