Working life, quality and change 2021
The quality of working life remained stable despite the coronavirus pandemic; employment rate dropped and working hours decreased

5.1.2022 14.33 | Published in English on 24.3.2022 at 15.22
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In 2020, the employment rate dropped, and the number of lay-offs rose to a record high due to the coronavirus pandemic and the resulting restrictions. Employment recovered rapidly from the crisis, but the number of working hours remained low, which manifested itself as an increase in underemployment. Labour productivity has continued to develop poorly. The quality of working life remained stable when examining employees on average, but the workload of, for example, young people, people living alone and workers in the care sector has increased. There are significant differences in the quality of working life between different employee groups, which, if the pandemic continues, may increase further.

The decreasing impact of the coronavirus pandemic on employment was only temporary, but the number of working hours remained lower

Employment rate in Finland. (Source: Statistics Finland)

As the population ages and the number of children is historically low, a high employment rate is a prerequisite for financing the welfare society in the long term. A high employment rate ensures tax revenue used to finance public services. A high employment rate prevents inequality from growing. When a large share of the population is earning an income, it is possible to maintain low income differences without needing to introduce major income transfers. As a result, a high employment rate supports both economic and social sustainability of society. Employment rate refers to the share of employed people in the working-age population (aged between 15 and 64).

Finland’s current situation

The employment rate started to decline temporarily as the coronavirus pandemic spread to Finland in March 2020. However, employment recovered rapidly, and already in autumn 2021, the employment rate reached the pre-pandemic level. In 2019, before the coronavirus pandemic, Finland’s employment rate was at its highest point in the 2000s: 71.6 per cent. In 2020, the employment rate was one percentage point lower, or 70.7 per cent.

Most of the reduction in work during the coronavirus crisis was channelled into lay-offs. Consequently, the number of lay-offs rose to a record high in 2020, as a large number of staff were laid off especially in the service sector. Most of the lay-offs ended by the end of 2021.

Although the employment rate has recovered from the drop caused by the coronavirus pandemic, the number of hours worked did not yet return to earlier levels in 2021. The rapid recovery of the employment rate is partly explained by the increase in part-time work.

Finland's employment rate still lags behind the other Nordic countries by a few percentage points. This difference is explained by the higher share of full-time work in Finland compared to other Nordic countries. Measured by the full-time equivalent that takes account of the hours worked, the Finnish employment rate is higher than in Denmark and Norway, but still slightly lower than in Sweden. In European comparison, Finland's employment rate is above the average.

Prime Minister Marin’s Government has set the target for 75 per cent employment by 2025. Opportunities for Finland (2019), an official view of the ministries’ permanent secretaries, proposes a long-term employment rate target of 80 per cent.

Finland’s recent development

Although the employment rate in 2019 was the highest it had been for decades, it was still lower than in the late 1980s before the 1990s depression. In 2019, women’s employment was the highest in Finland’s history. In addition, the age structure was clearly more favourable in the 1990s. In 2020, the employment rate dropped temporarily by one percentage point due to the coronavirus pandemic.

With the exception of Norway, employment rates had been increasing in all Nordic countries before the coronavirus pandemic. The employment gap between Finland and other Nordic countries has narrowed slightly in recent years. The new method of compiling statistics in the Labour Force Survey has also led to smaller differences in the employment rate between the Nordic countries.

Other observations related to the indicator

The data collection and definitions of the Labour Force Survey were renewed at the beginning of 2021 in all EU countries and, for example, in Norway. As a result, the time series on the employment rate in Finland is about one percentage point lower than before. The decrease is mainly explained by a more accurate data collection method. Furthermore, the change has increased the comparability of data with other Nordic countries.

The coronavirus pandemic caused an exponential growth in the number of lay-offs. In terms of the employment rate, lay-offs are a difficult phenomenon, as the employment rate does not fully take lay-offs into account. People laid off for less than three months are shown in the Labour Force Survey as being employed.

According to an established set of indicators, the employment rate is measured until the age of 64. The employment of people older than this is not visible in the employment rate. As the age when people retire rises, it may also make sense to examine the employment of older people in the future.

(Source: Statistics Finland)

The development of labour productivity is poor

Labour productivity. (Source: OECD Statistics)

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.

Finland’s current situation

Labour productivity in Finland was 11.9 per cent higher than the average in EU member states and 1.3 per cent higher than the average in the eurozone.

Finland’s labour productivity lags well behind other Nordic countries, but also Germany and France.

Finland’s recent development

Finland’s labour productivity has declined significantly in relation to competitor countries since 2007. A structural change in industry underlies the development. Labour productivity in Finland decreased in relation to the average of EU member states from 2007 to 2015, after which productivity improved over the next two years. However, in the period 2017–2020, labour productivity has declined again in relation to competitors.

After the financial crisis, productivity growth has been modest throughout the EU. However, productivity in Finland has increased more slowly than on average during that period.

Between 2007 and 2015, Finland's industrial productivity declined particularly much compared to competitor countries. In 2015–2020, on the other hand, Finland's productivity in relation to competitor countries has grown particularly modestly in the service sector and construction. In terms of total factor productivity, the productivity of the information and communication sector has increased most since 2017, but the same applies to competitor countries.

Other observations related to the indicator

According to the report of the Finnish Productivity Board (Publications of the Ministry of Finance 2019: 21), main causes for the decrease in Finland's measured productivity after the financial crisis included the shock faced by the electronics industry and decline in the competitiveness of the Finnish national economy.

The coronavirus pandemic turned underemployment into a dramatic rise

The share of underemployed people of working-age population and employed persons at risk of poverty. (Source: Statistics Finland, Income distribution statistics and Labour force survey)

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 money income (excluding current transfers) are less than 60 per cent of median level of the equivalent income of all households. The principal objective of the indicator is to describe the development of the quality of employment. Underemployment and the low-income rate of employed persons reflect the quality of employment, indicating the social sustainability of Finnish working life.

Finland’s current situation

The share of underemployed persons of the employed was around 7.3 per cent in 2020 and the share of low-income earners of those in employment was 3.2 per cent in 2019. The at-risk-of-poverty rate of employees is 2.0 per cent and that of entrepreneurs 10.8 per cent. The share of underemployed people increased among both men and women since 2019. The number of underemployed men increased more than that of underemployed women, but it is still more common for women to be underemployment than for men. In 2020, 56 per cent of the underemployed were women.

In international comparisons, depending on the indicator used (both Eurostat and the OECD), the share of low-income earners in Finland is one of the lowest in the world alongside the other Nordic countries. In Eurostat’s statistics (EU-SILC) on the risk of poverty among employed people, Finland ranked among the best in the EU both in 2019 and 2020. According to Eurostat, in 2020, the share of low-income earners (household income less than 60% of median incomes) of those in employment was 3.1 per cent, which was 0.2 percentage points higher than in 2019.

In the OECD comparison, in Finland the number of those working part-time involuntarily is higher than average. In Finland, there is less part-time work than average in OECD countries, but a large share of it, about a quarter, is involuntary, i.e., done due to a lack of full-time work.

Finland’s recent development

The number of both full-time and part-time employees' working hours dropped significantly in spring 2020 due to the coronavirus pandemic, which became visible as a strong increase in underemployment in 2020. Because of the restrictions imposed and loss of customers, the number of jobs decreased especially in the service sector, which for the full-time employees manifested itself as part-time lay-offs and for part-time employees as reductions in the number of hours offered.

The share of part-time work as such did not increase in 2020, but the drop in working hours has increased underemployment. However, the share of part-time work started to grow in 2021, which may mean that the level of underemployment will remain high, albeit for a different reason than in 2020.

The low-income rate of employed people has clearly decreased over the past ten years. Low-income rates have dropped among both wage earners and entrepreneurs. However, no indicator data on the situation during the coronavirus pandemic is yet available.

Other observations related to the indicator

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. In 2020, fixed-term employees accounted for 14.9 per cent of wage and salary earners, which is less than in the previous year. However, part of the reason for the drop is the coronavirus pandemic, during which many fixed-term employment contracts were not renewed. In the long term, the share of fixed-term contracts has remained unchanged. Approximately 60 per cent of employees with fixed-term employment contracts are women.

Mental strain experienced by employees has stopped increasing

Emotional and physical strain of work, %. (Source: Ministry of Economic Affairs and Employment)

Mental and physical strain experienced by employees are indicative of how stressful the work is. Prolonged stress reduces well-being at work and impairs work ability. Factors helping people control harmful stress include, in addition to personal psychological and physical resources, experiences of meaningfulness and learning provided by work and opportunities to influence work. 

Finland’s current situation

In 2020, 37 per cent of employees felt that their work was physically strenuous. Men and women feel the same way. 60 per cent of employees find work mentally stressful. Women find their work mentally stressful more often than men.

Finland’s recent development

The physical strain of work has remained stable in recent years. While in the early 2000s women were more likely to experience physical strain than men, the gender gap has disappeared in the 2020s. The mental strain of work has been increasing in the long term, but the trend turned in 2020. 

Other observations related to the indicator

The mental strain of work was on the rise before the COVID-19 pandemic, but in 2020, the growth ended. However, according to a study conducted by the Finnish Institute of Occupational Health, the wellbeing at work of young adults and those living alone has deteriorated during the pandemic. In the social and health care sector, the pandemic has been particularly strenuous on young people, employees and certain professional groups: radiographers, nurses, laboratory technicians and laboratory assistants, as well as practical nurses and auxiliary nurses. These changes are not reflected in the results of the entire wage and salary earner population.

Employee autonomy has remained unchanged

Work-related autonomy. (Source: Ministry of Economic Affairs and Employment)

Employee autonomy, i.e., the opportunities to influence one's work, helps people balance the complexity of work according to their own resources. Opportunities to influence are described with a sum of variables, which include data on the opportunities to 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.

Finland’s current situation

The possibilities to influence one's own work remained almost unchanged from the previous year. Senior officials have significantly better chances of exerting influence compared to junior officials and employees. Men are able to influence their work considerably more than women.

In European scale, the level of employee autonomy is fairly high. 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.

Finland’s recent development

The opportunities to influence one's work tasks, pace of work and division of labour measured by the Working Life Barometer have remained practically unchanged throughout the 2000s. 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.

Other observations related to the indicator

The indicator has been calculated on the basis of three questions measuring employee autonomy. If opportunities to exert influence are examined in a broader sense, focusing on, for example, working hours or the timing of work and places of work, the employee autonomy has clearly increased in this respect over the recent years. According to Statistics Finland's Quality of work life survey 2018, 44 per cent of employees can significantly affect their working hours. The Working Life Barometer 2020, on the other hand, indicates that 36 per cent can affect their place of work.

Increasing number of employees feel that work allows them to learn new things all the time

Responses to the statement: I have a workplace where I can constantly learn new things. (Source: Ministry of Economic Affairs and Employment)

As professions and work tasks change, technology develops and digital tools are introduced, working life requires more and more skills and competence. Learning and studying new things are part of the everyday work.

Most employees constantly learn new things in their work. The indicator describes in general terms the opportunities for learning new things at the workplace. However, the opportunity to learn does not describe how competence is developed at work and how many people who are in working life actively learn and study. For example, participation in training offered by the employer, independent study and on-the-job learning under guidance complement the image of what competence development entails.

Finland’s current situation

In 2020, up to 85 per cent of employees felt that they could constantly learn new things in their workplace. 38 per cent believed that the description applied to their own workplace very well. There is no difference between how men and women feel. Senior officials are clearly more satisfied with the learning opportunities offered by their workplace compared to junior officials or employees.

Approximately half (51%) of employees participated in training offered by the employer. The average number of working days spent on training was 4.5. 27 per cent of employees studied under guidance in their work.

Independent competence development at work is more common than participation in training. In 2020, 61 per cent of employees said they had studied independently in the last 12 months, and 61 per cent had studied using online materials. Compared to the previous year, the number of employees studying using online materials grew clearly, by up to nine percentage points.

A high level of competence 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, competence development accumulates in Finland, even by international standards, to a great extent to those whose competence, skills and development opportunities are already good due to their education, labour market position and work tasks. In addition, developing personal competence declines with age.

From the perspective of the sustainability of working life, the accumulation of learning is worrying as it has been predicted that in the future there will be a greater need for higher competence in the labour market. The Government's reform of continuous learning aims at enabling competence development at different stages of people’s lives and careers.

Finland’s recent development

There has been a rising trend in people learning new things at work since the monitoring began, and in 2020, more people felt that they could learn new things at work than during the entire time of monitoring before that. On the other hand, participation in training paid for by the employer has remained almost unchanged since 2005, at slightly over 50 per cent of employees. However, it is now slightly more common to participate in training than it was in the early 2000s. In terms of working days spent on training, the trend has been declining since the beginning of the 2000s. Studying using online materials has clearly increased in recent years.

(Source: Ministry of Economic Affairs and Employment.)

The pay gap between men and women narrowing slowly

Gender pay equality. (Source: Statistics Finland)

Segregation between professions is strong in the labour market, and this is strongly reflected in the pay differences between men and women. Women and men work in different sectors and in different positions, and in female-dominated sectors the pay is lower than in male-dominated sectors. Men's earnings develop at a steeper rate than women's. The development of women's earnings is slowed down, for example, by the longer family leaves they have compared to men. 

The pay gap between women and men is calculated from the average monthly earnings of full-time employees working regular working hours (Statistics Finland’s index of wage and salary earnings). The index of wage and salary earnings does not include overtime work or most part-time work. It measures the pay gap divided by legal gender.

Finland’s current situation and recent development

The gender pay gap in Finland is big. According to the Statistics Finland index of wage and salary earnings, women’s monthly earnings are on average 84 per cent of men’s monthly earnings.

According to Eurostat, the pay gap between women and men in Finland is the eighth highest in the EU, which is clearly higher than the EU average. In Sweden, women’s salary was on average 88 per cent of men’s salary in 2018, i.e., four percentage points higher than in Finland.

The aim of the Government and central labour market organisations' Equal Pay Programme 2020–2023 is to reduce the average pay gap between women and men and to implement the principle of equal pay under the Act on Equality between Women and Men. In accordance with the Act, people must receive equal pay for the same work or work of equal value regardless of gender.

The pay gap between women and men has continued to narrow consistently but slowly in the 2000s. In the early 2000s, women's monthly earnings were on average 80 per cent of men's earnings.

Finnish companies fulfilling their human rights responsibility according to international average

In 2020, the Status of Human Rights Performance of Finnish Companies (SIHTI) project examined how Finnish companies are fulfilling their human rights responsibility, I.e., how they have implemented the expectations set in the UN Guiding Principles on Business and Human Rights (UNGPs). These expectations focus on companies’ policy commitments, processes, practices and reacting to adverse human rights impacts.

The study included 78 Finnish companies, selected from the list of 500 companies with the largest revenue in Finland published by Talouselämä in 2019. Of the companies, 29 were suitable for being assesses using the sector-specific method developed by Corporate Human Rights Benchmark, while 49 other largest companies on the TE500 list were assessed using the key UNGP indicators.

The implementation of corporate human rights responsibility was assessed in the report on the basis of publicly available information. In addition, representatives of a total of 20 companies were interviewed on the theme of communication related to the company’s human rights performance.

Finland’s current situation

The majority of Finnish companies are committed to respecting human rights and the International Labour Organisation's (ILO) Fundamental Principles and Rights at Work. The companies did not perform as well in putting these rights and principles into practice. Only one quarter of companies systematically and publicly assess the impacts of their business activities on the realisation of human rights. Many of the companies have a channel for reporting human rights concerns and abuses, but there is a need to develop channels that are open to outsiders and accessible to vulnerable groups in particular. In general, companies do not have a clear vision of how to correct the situation. The results are in line with the international average.

In the comparison between sectors, the forest sector performed best. The overall results of the extractive and agricultural products sectors were at an equal level. The results of the apparel and accessories sector and the ICT sector were weaker than those of others. State-owned companies did not perform any better than other companies.

Other observations related to the indicator

The study included only large companies, as the sector-specific method has only been developed for certain sectors and large corporations in particular. In Finland, there are not that many large companies, which leaves a high number of Finnish companies outside the study. Assessment based on UNGP indicators could be applied to all sectors and companies of different sizes. However, less information is available on smaller companies, as they report on corporate responsibility issues considerably less often than large companies.

Conclusion

The indicator used for measuring the corporate responsibility of Finnish companies is an annually changing analysis of the theme made on the basis of the information available each year. This year, the text is based on the SIHTI project.