Globally, Helsinki is at a good level in achieving SDG 1 (No poverty). Helsinki’s challenges have to do with relative poverty caused by high living standards and costs, perceived income adequacy and increasing poverty of families with children. In national comparison, Helsinki has better prospects than most other Finnish municipalities and cities to maintain growth and positive employment trends. Even though the changes in the population structure affect Helsinki as well, population forecasts suggest that migration will remain favourable to Helsinki, and the diverse business and premise structure will increase employment opportunities and tax revenues.
In addition to the development of the national economy and the related tax revenues, a key issue concerns expenditure in the municipal sector. Pressure is created by the ageing of the population, which affects public finances in two ways: the growth of the elderly population creates pressure on health, care and pension expenditures, and the shrinking of the working-age population weakens the growth potential of the economy, which is directly reflected in the development of the tax base. Measures to improve employment and increase the efficiency of health and social service production may improve the sustainability of public finances. Increased work-related migration will, under certain conditions, have a faster impact on long-term sustainability than the birth rate. Permanently higher net immigration would strengthen public finances if the average employment and wage levels of immigrants did not differ significantly from the native population.
In 2022, after recovering from the COVID-19 pandemic, the employment rate in Helsinki rose to a record high of 76.0%. The employment rate was 1.9 percentage points higher than in 2021. The number of hours worked fell dramatically in 2020 as a result of the pandemic, but recovered in 2021 and has continued to grow in 2022. Hours worked by Helsinki residents increased by 3.3% from the previous year. The increase in employment and the number of hours worked had a positive impact on the City’s tax revenue.
Since the COVID-19 pandemic, part-time work has increased relatively more than full-time work. The number of part-time contracts as a share of all employment increased moderately. In 2022, part-time employment accounted for 19% of all employment in Helsinki.
The unemployment rate in Helsinki was 10.4% in December 2022. At the end of 2022, Helsinki had 36,600 unemployed jobseekers, which was 2,800 (7%) less than the year before. The pandemic caused a significant peak in unemployment in 2020. At its highest, the unemployment rate in Helsinki was 18.6% (May 2020). Even though the employment situation improved considerably in 2021 and 2022, there were still 4,900 more unemployed people at the end of 2022 than in 2019 before the start of the pandemic. At the end of 2022, the number of job vacancies declined after a strong increase.
As a result of the pandemic, youth and long-term unemployment increased sharply. During 2022, unemployment has decreased in both groups, but remains higher than before the pandemic. Long-term unemployment may lead to health and wellbeing challenges if prolonged. Employment becomes more difficult when unemployment is prolonged. Foreign-language speakers account for 32% of all unemployed people.
The training requirements of the workforce needed for job openings by 2035 are expected to be significantly higher than those of the employed at the end of the last decade. As skills requirements increase, it is essential to improve the level of education and training of those already in employment. Supply and demand do not properly match in the labour market, and Helsinki suffers from labour shortages, especially in the high-tech and digitalisation sectors. Helsinki must attract experts from abroad.
Helsinki is participating in the local government pilot on employment launched at the beginning of 2021. In the pilot, the City of Helsinki is responsible for employment services for the following customer groups: unemployed people who do not qualify for earnings-related allowance, people aged under 30, foreign-language speakers and immigrants. The local government pilot paves the way for the TE services reform 2024, which will transfer the responsibility for organising employment and economic development services (TE services) from the state to municipalities from 2025 onwards. The City of Helsinki is preparing for this change with the aim of creating an effective model of employment in Helsinki that takes into account the needs of local residents and employers.
During 2022, the key indicators of the local government pilot on employment regarding the smooth running of services have developed positively. At the end of January 2023, more than half of the customers had a valid employment plan, compared to around 39% one year earlier. The number of customers in services supporting employment has increased. The City has also developed digital solutions and performance-based procurement for employment services. As an employer, the City itself also actively uses employment support instruments, such as work try-outs, pay subsidies and apprenticeships.
- The employment rate has risen since the pandemic, and unemployment has declined steadily.
- The local government pilot on employment supports the City’s preparation for the TE services reform 2024.
- The use of the employment clause has been developed.
Areas for development:
- The long-term unemployment rate is higher than during the pandemic. Effective measures should be found to reduce long-term unemployment.
- The employment of foreign-language speakers requires support.