Working life, quality and change 2019
Finland’s employment rate continues to grow, but the labour productivity is declining – experiences of overloading from work remain unchanged

6.3.2020 15.22
Finland’s employment rate continues to grow, but the labour productivity is declining – experiences of overloading from work remain unchanged

Employment has experienced very strong growth in Finland starting from 2016. Compared to the beginning of the 2000s, the share of underemployed workers of all employed people has increased considerably, whereas the share of low-income earners has shrunk. Physical and mental strain of work remains the same.

The sustainability of working life and work can be examined from the viewpoints of the environment and the economy as well as from a social and a human perspective. The economic, social and environmental impacts of business play an important role in the implementation of the sustainable development goals. The efforts towards sustainability are visible, for example, as efficient use of resources and as investments and innovations in the circular economy and renewable and clean energy. In the global economy, Finnish companies are responsible for the sustainability of their activities also outside Finland. For example, this means that in addition to providing employment and investing locally, companies respect human rights, prevent child labour and forced labour, and make responsible acquisitions.

Participation in working life and securing an income are essential from the human and social points of view. The objectives are a high employment rate, productive work and sufficient income. For working life to be sustainable, working must not risk the workers' health. The opportunity to develop one's skills and participate in the organisation of work increases wellbeing, motivates and enhances the creation of new products and services.

Increase in employment rate improves the sustainability of the welfare state

An increase in the employment rate is a fundamental requirement for the continued financing of welfare services as the population ages. Prime Minister Antti Rinne’s Government aimed for an employment rate of 75% by the end of 2023.  The Ministry of Economic Affairs and Employment has set a longer-term objective of 78% by 2030 for the employment rate. These targets are high, as an increasing share of the population will be over the age of 64 in the future. Although the employment of people over the age of 64 has improved over the past 20 years, the aging of the population will significantly increase pressure on public sector expenditure. The employment rate depicts the share of the working age population (ages 15–64) that is employed.

In 2018, the employment rate rose to 71.7 per cent. The difference in the employment rates of men and women was 2.1 percentage points, with men having an employment rate of 72.7 per cent and women an employment rate of 70.6 per cent. The difference is narrowed considerably from what is was at the beginning of the 2000s. Even so, the difference in employment rates between men and women is larger than the employment rate of men was at its lowest in 2009 and 2014. The growth of the gender employment gap is due to the recovery of men’s employment after the recession. In 2018, the employment rate for women was at its highest since 1990.

Finland’s employment rate is reasonable compared to other EU Member States and in the middle of the pack among OECD countries, but compared to the other Nordic countries, Finland has a low employment rate According to the OECD’s statistics, Finland’s employment rate was 5.5 percentage points smaller than Sweden’s in 2018. At the same time, it should be noted that especially in Sweden part-time work is considerably more common than in Finland.

Employment has experienced very strong growth in Finland starting from 2016, which has considerably improved the economic sustainability of the welfare model. However, employment must still grow substantially to reach a sustainable level due to the aging of the population and the low birth rate. In 2018, Finland’s employment rate was 71.7%. Finland’s employment rate was at its highest prior to the recession in the 1990s when it was approximately 75 per cent. 

Labour productivity growth slowing down

Although the employment rate grew at a fast pace in 2017–2018, labour productivity in Finland has once again taken a slight downward turn compared to other economies after the two-year-long upward trend. Labour productivity in Finland declined in relation to the EU Member States and the euro area between 2007 and 2015, but improved between 2015 and 2017 by three percentage points compared to the EU and euro area. Productivity fell moderately in 2017–2018. Labour productivity is measured here by calculating the gross domestic product (GDP) per working hour, which is aligned with the corresponding average for the EU and the euro area. The development of labour productivity together with the employment rate demonstrates the economic sustainability of the Finnish welfare model.

In 2018, Finnish labour was an average of three per cent more productive that in the euro area and 14 per cent more productive than in the EU. Labour productivity was at its highest in Finland in 2007 prior to the financial crisis. At that time, the difference to the euro area was nine per cent and the difference to the EU area was 22 per cent.

The growth in labour productivity combined with conservative salary increases between 2015 and 2017 improved the Finnish economy’s relative competitiveness during the years in question. During that time, unit labour costs fell in Finland by 7.2 percentage points in relation to Sweden and 8.1 percentage points in relation to Germany. This drop also continued from 2017 to 2018 although in a more restrained manner due to Finland’s more conservative salary increases than in the reference countries.

Share of low-income earners in the labour force has decreased but underemployment has increased

Underemployment refers to the share of employed persons who work part-time and want to work more hours. The low-income rate of employed persons refers in this context to the share of entrepreneurs and wage earners in whose household’s disposable cash income (excluding sales profits) are less than 60 per cent of median level of the equivalent income of all households. The principal objective of the indicator is to described the development of the quality of employment.

Compared to the beginning of the 2000s, the share of underemployed workers of all employed people has increased considerably, whereas the share of low-income earners has shrunk.  The most dramatic change took place between 2012 and 2016. According to the most recent data, the low-income rate of employed persons was 3.1 per cent and their underemployment rate was 5.5 per cent.

The reason for the recent growth of underemployment is the trend-like increase in part-time work. Some of this increase is those persons who have not found full-time work. Even so, underemployment has not increased nearly as much as part-time work in its entirety. In an international comparison using the OECD’s involuntary part-time workers, the rate of underemployment in Finland is average. Finland has a comparatively small amount of part-time work, but a large share of it is involuntary, meaning the workers have been unable to find full-time employment. In 2018, the clear majority of underemployed workers were women (64 per cent). This share has only grown in recent years, as the number of underemployed women has grown and that of underemployed men has decreased. Men’s underemployment was at its peak when the financial crisis broke in 2009, but has declined after this. Contrary to this, the growth of underemployment among women is trend-like.

The low-income rate of employed persons took a downturn in 2014. The share of low-income earners decreased first among wage earners, but in 2016 it also shrunk among entrepreneurs. Even so, low incomes are many times more common among entrepreneurs than wage earners: in 2017, 1.7 per cent of wage earners had low incomes whereas 11.9 percent of entrepreneurs had low incomes. In international comparisons, depending on the indicator used (both Eurostat and the OECD), the share of low-income persons in Finland is one of lowest in the world alongside the other Nordic countries.

In addition to the low-income and underemployment of the employed, the quality of employment is also described by the development of the number of fixed-term positions and other atypical forms of employment. Between 2015 and 2018, the share of fixed-term employment among wage earners grew from 15.4 per cent to 16.5 percent. In large part, this growth is due to an increase in part-time, fixed term employment, which is also visible in underemployment stats. Even though, the number of fixed-term positions has group over the past few years, their share is not historically-speaking especially high: in 1998, 17.5% of wage earners had fixed-term positions. Approximately 60 per cent of employees with fixed-term employment contracts are women.

Physical and mental strain of work remains the same

Work-related physical strain and mental stress have remained surprisingly stable in studies conducted on how employees perceive their situation. Slightly over one third of employees find their work physically strenuous and about 60 per cent find it mentally stressful. When wage earners feel that work is strenuous, this is telling of their well-being at work and predicts how sustainable the basis of their careers is. With regard to individuals this is first and foremost a matter of well-being, but also of the opportunities to participate and keep up with working life.

According to the most recent date, the mental stress of work seems to have increased a bit, but overall these changes have been small over the 17-year monitoring period. More or less the same amount of men and women find their work physically strenuous, while a slightly larger share of women than men reported that their work was stressful.

The vision of Prime Minister Antti Rinne’s Government Programme is to increase well-being at work in Finland to the best in the world by 2030. The objective of the Ministry of Social Affairs and Health’s Policy for the work environment and wellbeing at work until 2030 is longer working careers and for people to continue working for longer than they do at present. In order to attain this objective, it is important that the stressfulness and physical strain of work does not exceed workers’ level of tolerance. With regard to the monitoring indicators, favourable development would be for there to be a drop in the number of respondents who agree that their work is physically strenuous or mentally stressful.    

Opportunity to influence one's own work has not become significantly more widespread in the 2000s

A lack of opportunities to have an influence contributes to work-related stress. Opportunities to influence are described with a sum of variables, which include data on the opportunities participate in defining one's work tasks, pace of work and the division of work. The larger the sum of the variable on a scale from one to ten, the better the opportunities to influence. During the 21st century, the opportunities to participate in defining one's work tasks, pace of work and the division of work have remained the same. However, on the basis of the most recent data from 2018, it would seem that opportunities to influence have improved slightly from the previous year.

According to Statistics Finland's Quality of work life survey, the opportunities to participate in defining one's work tasks and the division of work increased between 1984 and 1997, but the trends have since then stabilised. The opportunities to influence the rate of work have not increased even in the long term. Men are able to influence their work considerably more than women.

Despite the stilted development of the past few years, opportunities to influence are still at quite a high level by European standards. For example, according to the 2015 European Working Conditions Survey, Finland places as Europe’s leader in opportunities to influence decisions that concern one’s own work as well as the order in which work tasks are completed. The opportunity to have an influence on work methods is also more common in Finland than in the EU Member States on average. 

A growing number of people have the opportunity to learn during their working lives, but skills development tends to be concentrated to certain individuals

The trend in skills development is towards many ways of learning. According to Statistics Finland's Continuing Vocational Training Survey, studying alongside work, self-directed study and studying remotely and online have become more common. According to the 2018 Working Life Barometer, 59 per cent of wage earners had studied independently at their workplace during the year, 55% had studied using online materials and 26% under the supervision of another person. Pursuing studies alongside one’s work is just as common for men and women.

It is possible for a growing number of both men and women to learn in their workplace. In 2018, 84 per cent of employees felt that they could constantly learn new things in their workplace. 37 per cent believed that the description applied to their own workplace very well. The indicator described in general terms the opportunities for learning new things at the workplace. However, the opportunity to learn does not describe how skills are developed at work and how many people who are in working life actively learn and study.

However, there is no evident sign of the need for skills development related to the changes in working life and technology in the adult population’s participation in organised education and training, as participation has decreased over the past few years. According to Statistics Finland's Adult Education Survey, in 2017, 48 per cent of the workforce participated in education or training related to work or their occupation. According to the Working Life Barometer, in 2018, 57 per cent of wage earners took part in training for which they were paid a wage. The training lasted an average of 4.8 working days. Women took part in training slightly more often than men. Participation in training during paid working hours has increased compared to the beginning of the 2000s, but the trend has evened out over the past few years.

A high level of skills and opportunities for learning offered by working life is a cornerstone of Finnish working life, and Finland places at the top of many international studies (e.g. Programme for the International Assessment of Adult Competencies (PIAAC) and the European Working Conditions Survey). However, even by international standards, skills development in Finland tends to be concentrated to a great extent to those whose skills and development opportunities are already good due to their education, labour market position and work tasks. From the perspective of the sustainability of working life, the concentration of learning is worrying, as it has been predicted that in the future, there will be a greater need for higher skill levels in the labour market.

Gender pay gap has narrowed slowly 

Fair pay is one of the prerequisites of a productive and high-quality working life. In 2018, the monthly salary of a woman, calculated on the basis of full-time employees' regular earnings was 85 per cent of a man's monthly salary. Women earned on average EUR 3,112 and men EUR 3,681 per month. The indicator illustrates the pay gap between men and women in full-time employment. In 2018, the wage gap was 15 per cent.

In just over 20 years the wage gap has narrowed slowly. In 1995, the monthly salary for women was 80 per cent of that for men. A significant part of the difference in salaries is explained by the fact that men and women mainly work in different fields, occupations and positions. There are also more men in supervisory and managerial positions than women.

The rise in women's educational level has not had the expected effect on women's position in the labour markets and narrowed the average pay gap between the sexes. Women and men apply to different fields of education, but even men and women who have graduated from the same field of education often work in different sectors and in different positions. Furthermore, women do the majority of care work in families in the different stages of life and are therefore absent from working life more frequently than men. The uneven division of care responsibilities and absences from working life affect women's career development and contribute to pay differences.

The Ministry of Social Affairs and Health’s Equal Pay Programme 2016–2019 aimed for the narrowing down of the average gender pay gap. The programme’s objective was to ensure that the pay gap reduced at least to 12 per cent by 2025. Recent development indicates that there is still much to do to ensure that the objective is achieved.

International, and EU law as well as national legislation all obligate Finland and Finnish employers to adhere to equal pay. Two of the most important international provisions are the UN Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW) and the International Labour Organization’s Equal Remuneration Convention (No. 100). In the EU, equal pay is legislated in the European Union’s Treaties and directive on non-discrimination and equality in working life. At the national level, the Finnish Constitution and the Act on Equality between Women and Men contain provisions on equal pay.

Prime Minister Antti Rinne’s Government wants to establish Finland as a leader in equality, and pay equality is being sought with a more effective equal pay programme than previously. According to Eurostat’s data for 2016, the gender wage gap was larger in Finland than on average in the EU Member States (Finland 17%, EU Member States 16%). The wage gap was larger than in Finland in seven EU Member States.  With regard to the labour market, in a comparison of the Nordic countries, which resemble one another a great deal, Finland ranks last and the wage gap is smallest in Sweden (13%).

Responsible practices of large enterprises in issues concerning global working life increasing

In the global market, the sustainability of working life also involves business over national borders. Companies provide employment and invest in the local environment. Corporate social responsibility is also evident, for example, in how human rights are respected or child labour and forced labour are prevented in the countries where the human rights situation is poor and in how responsibility is ensured throughout the supply chain. However, there are no reliable or comprehensive indicators on the topic, and, due to this, trends are described here at a general level with the guidance of two different studies.

According to a survey carried out by corporate responsibility organisation FIBS, responsible practices have become more common in large companies between 2015 and 2018. A growing number of large and medium-sized companies that take corporate social responsibility criteria into account as part of their acquisition and purchase decisions, take into account the prevention of child labour and forced labour in their production chains and report that they compile human rights-related risk analyses and comply with a due diligence process.  Due diligence means a continuous process that companies use to identify, assess and deal with their harmful impacts on human rights according to the UN Guiding Principles on Business and Human Rights (2011). In 2018, a total of 185 companies responded to the survey.

The PWC Corporate Social Responsibility Barometer and the its results on measures related to human rights as well as compliance with responsibility requirements for supply chains also provide information on global responsibility. The barometer is based on reporting by the companies themselves. In 2017, the barometer assessed 594 companies. This included the 500 companies in Finland with the largest turnover. Of the companies, 165 published comprehensive reports on corporate social responsibility, and the reporting by these companies was analysed in more detail. Compared to 2013, more companies now include descriptions in their reporting of the human rights-related measures they have implemented in their own activities and in the management of their supply chains.

In international indices that measure responsibility, Finnish companies have ranked well, especially taking into account Finland's small size. For example, the Global 100 Most Sustainable Corporations in the World index includes seven Finnish companies and of the 136 companies that have the best climate change mitigation reporting four are Finnish.

Indicators of sustainable working life and changes implemented to indicators

The description focuses on the sustainability of working life from an economic, social and human perspective. The indicators describing a resource-wise economy and carbon neutral society also indicate the sustainability of working life from an environmental point of view. The illustration of the quality and changes of working life will also have a strong link to indicators measuring the development of education and skills, as the education level and skills of the entire population create the foundation for the skills and continuous learning of those who are in the labour market.  

The gender perspective is taken into account in the description whenever possible. Other divisions would also be important as the sustainability of working life looks different to people of different ages and people in different labour market positions. 

The manner in which information is presented has been changed in accordance with received feedback. The largest change has been in the manner in which the global responsibility of enterprises is described. The theme is considered very important, but its accurate measurement is difficult and there is at this time no suitable indicator available. For this reason, descriptions include information on responsibility trends at a general level guided by two different studies, but accurate figures have not been given.  Descriptions on employment and labour productivity are now described separately. Opportunities to have an influence and opportunities to learn new things were separated from one another. These themes differ in content and deserve their own interpretation texts.