Service sector skill survey: Continuous learning more helpful for employment than salary subsidies

The service industry is growing and lack of skilled labour is the largest obstacle to growth. An extensive survey commissioned by Palta, Finnish Commerce Federation and Finance Finland reveals that recruiting suitable employees is difficult for over half of growing companies and for roughly 40 per cent of all service sector companies.

The survey looked into the reasons and area of difficulties that companies experience with recruitment, current and future skill requirements as well as the state of cooperation with educational institutions at different educational levels.

The most prominent reason for difficulties in recruitment is that the skills of job seekers do not match companies’ needs. Out of companies that encountered difficulties in recruitment, 60 per cent found it difficult to find suitable experts. The next largest reason is lack of applicants in general. Finding experts for enterprise and expert services as well as administrative and support services poses the most difficulties.

Salary subsidy does not solve lack of expertise, investment in continuous learning  

About 70 per cent of the companies that responded to the survey stated that they have little or no positions that could be filled with people that have only basic education. According to the skill survey, salary subsidy would help only six per cent of the companies to hire an uneducated person.

“Service sector companies also need highly skilled labour and lack of expertise cannot be fixed with salary subsidies. For this reason, it is not a solution for increased employment in the service sector, where most new jobs are created in,” says Tuomas Aarto, Director General of Palta.

The service sector has a key role in reaching the employment target set by the government. According to the federations that commissioned the survey, the solution to increasing the employment rate is investing in capacity building with a focus on working life and continuous learning. Last week, OECD also encouraged in its country review that Finland invest in continuous learning.

“Jobseekers regardless of educational level must be offered more opportunities for skill development to enable them finding work. Theis could be eased with a digital platform to offer suitable further training to each employee,” says Piia-Noora Kauppi, Managing Director of Finance Finland.

Amount of foreign born labour on the rise, lack of language skills a bottleneck 

About a third of the companies that replied to the survey estimated that the utilisation of foreign born labour will increase in the coming years. Of the respondents, 40 per cent report that their company already has foreign born employees. The largest obstacle to recruitment, by far, is a lack of language skills.

“Language training for immigrants must be improved so that they can quickly learn the basics of Finnish or Swedish. The lack of employee language skills causes costs because all occupational health and safety instructions and other materials have to be translated and orientation must be provided in the correct language,” says Mari Kiviniemi, Managing Director, Finnish Commerce Federation.

The Service sector skill survey was commissioned from Innolink by Palta, the Finnish Commerce Federation and Finance Finland in autumn 2019. Decision-makers from 1,028 Finnish companies replied to the survey.

The service sector’s solutions for increasing the employment rate  

The service sector has a key role in reaching the employment target set by the government. During the last term of government, 62,000 new jobs were created in the private service sector. Private services employ 1.3 million people in Finland, amounting to two thirds of the entire private sector. Currently, 72 per cent of open job positions are in the service sector.

Palta, the Finnish Commerce Federation and Finance Finland propose seven solutions for more efficient utilisation of the service sector’s employment potential.

1. The additional funding the government is planning to use for salary subsidies should rather be directed to capacity building and continuous learning. 
2. The efficiency of the salary subsidy system must be improved so that it targets those who stand to benefit of it the most. Companies’ obligation to offer work to part-time employees must be removed in situations where salary subsidies are used to employ a person who is hard to employ. The prerequisites for getting the subsidy must be changed from per-employer to per-location. ​
3. Continuous learning must be supported with a digital platform that proposes further training and open job positions based on information collected about the training and skills of each individual. ​
4. Financial incentives must be created for cooperation between companies and educational institutions. Funding must be directed to create more efficient incentives for increasing working life focused continuous learning in educational institutions.
5. Language training for immigrants must be increased so that they can quickly learn the basics of Finnish or Swedish. This way the service sector can continue to employ more people.
6. Training compensation must be enabled also when a training agreement made with a jobseeker is not based on a employment relationship. This lowers the threshold of offering learning opportunities to individuals with less language skills. ​
7. Working life focus and certain basic skills, such as self development, must continue to be taught at an earlier stage. Our educational system plays a key role in ensuring that everyone entering the job market has sufficient basic skills and competencies for continuous learning. ​

Further information on the survey:

Matti Paavonen, Business Director, Innolink
matti.paavonen@innolink.fi, tel. +358 (0)50 534 2506

Further information:

Tuomas Aarto, Director General, Service Sector Employers Palta, tel. +358 (0)40 152 0073, tuomas.aarto@palta.fi

Mari Kiviniemi, Managing Director, Finnish Commerce Federation, tel. +358 (0)50 511 3189, mari.kiviniemi@kauppa.fi.

Mari Kiviniemi, Managing Director, Finance Finland, tel. +358 (0)20 793 4210, piia-noora.kauppi@finanssiala.fi

Service Sector Employers Palta is a representative association for service sector businesses and organisations, the Finnish Commerce Federation represents the commerce sector and Finance Finland (FFI) represents banks, life and non-life insurers, employee pension companies, finance houses, fund management companies and securities dealers operating in Finland.