The growth of commerce is strengthening – a turnaround in employment is also at hand
The sales volume and turnover have increased since September last year in both the wholesale and retail sectors. The Finnish Commerce Federation predicts that sales in the retail sector will increase at an annual rate of more than two per cent this year and next year. However, growth will not be enough to bring back the approximately 8,000 jobs that disappeared from the sector last year alone.
According to preliminary data, the retail sector’s sales volume* increased by as much as 3.3 per cent at the beginning of the year, and the sector has now been growing for ten consecutive months. Although the Finnish Commerce Federation predicts that growth will be slower at the end of the year than at the beginning of the year, the growth rate of the whole year will be approximately 2.5 per cent. Of the large sectors of the retail sector, department store and hypermarket sales and interior decoration trade in particular have grown the fastest.
Households’ expectations of their own finances for the next year are already at the level of the long-term average, and their estimates of their own threat of unemployment have not weakened.
”The fears of unemployment are still high, which is understandable as the unemployment rate in Finland is the highest among the EU countries,” says Jaana Kurjenoja, Chief Economist at the Finnish Commerce Federation.
The growth of commerce will not bring back lost jobs
Although sales in both the retail trade and wholesale trade have increased since last September, employment in the retail sector continues to decline. Last year, 10,000 jobs were lost in the entire commerce sector, including 8,000 jobs in the retail sector. During the early part of the year, the entire commerce sector lost 5,000 employees, although the number of employees in the retail sector increased slightly.
”The growth in employment in the retail sector over the past year has been driven solely by the growth in the number of entrepreneurs and family members working at the company. The number of wage earners has still decreased,” says Kurjenoja.
While the number of wage earners in the retail sector decreased during the early part of the year, the number of working hours worked by wage earners increased slightly. In other words, a smaller amount of wage earners have received more working hours.
”In addition to consumers, companies are currently very cautious and may not want to hire more employees until they are more certain of continued growth of sales,” says Kurjenoja.
Although growth in the retail sector has now begun, there is no return to pre-pandemic employment figures. In the intense cost and price competition and under the pressure of international competition, companies are adapting and improving the efficiency of their operations in order to improve their productivity and competitiveness.
”The disappearing jobs are primarily non-managerial tasks and supporting operations that can be replaced by more efficient data use and automation, digitalisation and AI-based tools,” says Kurjenoja.
The employment rate will not increase without private services
Commerce is still by far the largest employer in the private sector. The commerce sector still employs nearly 270,000 people, even though the number of employees in the sector has been declining for four consecutive years. The current forecast growth in the coming years is not enough to bring back lost jobs, but the loss of new jobs can be slowed down and even prevented through political decisions.
“Now that retail and wholesale trade have finally started to grow, economic growth should not be weakened by tax solutions that cut the purchasing power of households or by cancelling decisions that reduce corporate taxation,” says Kari Luoto, Managing Director of the Finnish Commerce Federation.
According to Luoto, the government should also see the service sector’s potential for growth, innovation and exports better than before.
”More than half of Finland’s value added and employment comes from private services. Commerce and other private services play a key role if Finland’s employment rate is to be increased and jobs for people of all ages – including young people – are to be ensured,” says Luoto.
*Inflation-adjusted turnover.
For further information, please contact:
Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja(at)kauppa.fi
Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 (0) 400 688 708, kari.luoto(at)kauppa.fi