The diminishing purchasing power of Finns and the stagnant economic growth in Russia will continue to hit commerce at the end of the year and next year. According to the Finnish Commerce Federation, there are no grounds for the growth of commerce. Employment in the area will also continue to fall. The Federation demands a change to the current economic policy so that commerce and services can continue to produce well-being in the future.

Employment in commerce, the largest sector of economic life, continues to fall. According to the Finnish Commerce Federation, the sector will lose, this year and next year, more than 9,000 employed people. Last year, commerce lost 4,000 employed people.

The decline in sales, which is the consequence of the weakening of purchasing power in households, is limiting the employment opportunities in commerce. Stagnant economic growth in Russia is also pushing the Finnish economy, employment and commerce down. According to the Federation, the volume of retail trade turnover will fall by one per cent this year and by 0.5 per cent next year. The number of people employed in retail trade will fall by three per cent this year and employment will not begin growing even next year.

Negative employment news and weakening purchasing power mean that households fear making large purchases. This is particularly visible in the motor trade. Due to the good beginning of the year, turnover in the motor trade will only fall by one per cent this year. Next year, the fall will continue. Employment in the motor trade will shrink by 4.5 per cent this year and by a further one per cent next year.

Only wholesale trade has positive prospects for next year, drawn by the export industry, but this year, the turnover for wholesale trade will fall by two per cent. Next year, the Federation of Finnish Commerce predicts slow growth of one per cent for the wholesale trade. This growth, however, is completely dependent on the development of export, as consumer services or construction will not create a push for growth.

Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation, points out that if economic growth in the euro area slows down and the risk of deflation is realised or the effects of the crisis in Ukraine are prolonged, employment and purchasing power will continue to fall. In this case, the situation for commerce could be even darker.

However, our own economic policy has at least as significant effects on the operating premises of companies operating in commerce.

“If the government will not make adequate decisions to balance the public economy, faith in Finnish decision-making concerning economic policy may waver. This may have negative effects on both the expenses of public debt and banks’ credit granting to companies,” warns Kurjenoja.

It should not be forgotten in the budget proceedings in August that the tightening of excise and energy taxes already agreed for next year continue cutting the purchasing power of consumers and increase the expenses in commerce.

Vitality of domestic market the key factor

“The next government must take the domestic market seriously. It has now been strangled half-dead with taxes. During this government’s term alone, taxes have been increased by more than EUR 5 billion. The mission of the public sector is to create operating premises for economic

life, the mission of companies is to develop business. This has not been understood during the term,” says Juhani Pekkala, Managing Director of the Finnish Commerce Federation.

The tax burden on commerce and services should also be reduced and the strict regulation relieved, as commerce and services operate in international competition. E-commerce knows no limits and travellers will come here if services have the right price.

“The next government platform must recognise that, in addition to export, the private domestic market has an essential influence on the success of the national economy. It creates growth, jobs and well-being. It is also the breeding ground for the achievers and globalisers of the future”, says Pekkala.

* The volume of turnover is the value of turnover cleared of price fluctuation. Therefore, it does not include, for example, inflation, but does include transitions between products with different prices.

For further information, please contact:

Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation, +358 (0)9 1728 5134, jaana.kurjenoja(at)kauppa.fi

Juhani Pekkala, Managing Director of Finnish Commerce Federation, +358 (0)9 1728 5111, +358 0400 419 560, juhani.pekkala(at)kauppa.fi

Summary of the results

The Finnish Commerce Federation represents commerce – the largest sector of economic life.Commerce employs around 300,000 persons in Finland.The Federation has around 7,000 member companies and represents both retail and wholesale commerce in industry politics and labour market lobbying. www.kauppa.fi