A survey directed to the member companies of Service Sector Employers Palta, Finnish Commerce Federation and Finance Finland and published on Friday 28 February reveals that lack of skilled labour is the most significant obstacle for growth despite the service sector experiencing strong growth. Recruiting suitable employees is difficult for over half of growing companies and for roughly 40 per cent of all service sector companies.
Over one in three (34%) of respondents in the service sector estimated labour recruitment to be difficult. Up to 43 per cent of growing companies in the commerce sector gave the same answer. Jobseekers’ skills not matching with the company’s needs (70%), not enough applicants (35%) and applicants not being otherwise fitting for the company (28%) were listed as the most significant reasons for recruitment difficulties.
The need for foreign born labour is considerable in the commerce sector. Up to half of respondents in the commerce sector employ foreign born labour. In addition, 37 per cent of commerce sector companies that responded estimated that the share of foreign born labour would increase in the future as did over half (51%) of growing companies. The need for foreign born labour is especially strong in retail trade.
“According to the survey, up to 99 per cent of companies believe that the share of foreign born labour will either stay the same or increase in the future,” says Bate Ismail economist for the Finnish Commerce Federation.
Language training key for employment of foreign born labour
However, in the commerce sector, hiring employees that come from abroad often comes with issues related to skills in Finnish or Swedish. Up to 70 per cent of survey respondents mentions the lack of language skills as an obstacle to hiring.
“People coming from abroad should be offered language training in Finnish or Swedish as soon as possible, in order for them to achieve even passable language skills and be able to participate in working life and the society in general,” says Mari Kiviniemi, Managing Director of Finnish Commerce Federation.
“A good solution for employing foreign born labour would be to offer training compensation also when a training agreement made with the jobseeker is not based on an employment relationship. This lowers the threshold of offering learning opportunities to individuals with less language skills,” Kiviniemi continues.
According to an OECD report released in the autumn of 2018 Finland should offer all immigrants more support for finding work. The report paid special attention to the low employment rate of immigrant women, and offered as a solutions language training in addition to changes to the home care allowance.
Salary subsidies to increase jobs for people with partial work ability
The most common use of salary subsidies is employing someone with partial work ability and the diverse commerce sector is capable of offering a range of work also for those with partial work ability. Up to half of the commerce sector companies that responded to the survey could hire an employee with partial work ability. With a salary subsidy, one in five of all commerce sector respondents and one in four of retail businesses would do so.
Where salary subsidies are seen as an insignificant means of employment in other parts of the service sector, its importance is emphasised in commerce. This is also important for reaching the employment targets set by the government.
“Additional investments in continuous learning and capacity building are of course key, but salary subsidies are also an important piece of the puzzle. It would be especially important to make the salary subsidy system more efficient by targeting it better for those most in need,” says Mari Kiviniemi.
Removing companies’ obligation to offer work to part-time employees in situations where salary subsidies are used to employ a person who is hard to employ is one solution that is common to the whole service sector. The prerequisites for getting the subsidy must be changed from per-employer to per-location.
Mari Kiviniemi, Managing Director, Finnish Commerce Federation, tel. +358 (0)50 511 3189, mari.kiviniemi(at)kauppa.fi
Bate Ismail, Economist, Finnish Commerce Federation, tel. +358 (0)40 526 0942, bate.ismail(at)kauppa.fi