Tag Archives: Statistics Finland

Finland uses more wood-based fuels than oil!

This Finnish press release by Statistics Finland shows that for the first time Finland has used more wood-based fuels as an energy source than it has used oil (in 2012). In addition, 32% of total energy consumption is from renewables. The use of fossil fuels declined by 8% and although the import of electricity grew by 8% the import of electricity from Russia declined by 59% from 2011. The share of imported electricity in total energy consumption is slightly more than 20%. Finally, nuclear energy accounts for 33% of total energy consumption, although the production shrunk by a percent from 2011.

Updated: Aiming for wage moderation in Finland: some thoughts

Currently, Finland has two highly charged political processes going on. The first is concerned with the government’s budget for next year and the second is the negotiation of a centralized incomes agreement, which is a framework collective agreement specifying certain limits to e.g. wage increases. Both of these discussions take place in the context of a worsening economic situation in Finland, which in itself is very much related to the Eurocrisis. The core discussion revolves around international competitiveness and the need for wage moderation (which I do not agree with). In this context, it is useful to reflect on the role of inflation in all this, and how it may hurt the official policy goals that it is not anymore the Bank of Finland that sets interest rates.

The latest press release by Statistics Finland on wages and salary earnings can be found here. The statistics behind it (in Finnish) can be found here. The core message is that nominal wage increases are up by 2.1% compared to the same period in 2012. The graph in the press release nonetheless shows a downward trend in nominal wages.

Statistics Finland is not concerned with policy advice, but this data is in time for the collective bargaining negotiations that are going on rights now – the parties to these negotiations (state, employers, labour unions) aim to find a solution for a centralized agreement that supports the Finnish economy. One issue that participants seem to agree on is the need for wage moderation.

As can be seen from the graph in the press release, the index of real earnings, i.e. the nominal earnings index corrected for inflation, has been negative for some time for most of 2011 and is only slightly up, but fairly flat. Inflation has been quite a bit higher in Finland in 2011 and 2012 than the 2% aimed for by the ECB (see here, p. 7) but currently around 1,6%.

The issue of wage moderation is a difficult one. The labour market parties can agree that they aim for moderate increases, but nonetheless reject the zero-growth option. In that case they have to estimate the expected inflation right, because with low nominal and higher inflation you still get a decline in wages (and purchasing power) and the other way around you don’t have moderation although a higher real wage growth might be good for the Finnish domestic demand.

Considering inflation in Finland has varied quite much since 2008, and taking into account that the ECB core interest rate is already near zero, it is difficult to construct a centralized agreement that will provide steady moderate wage growth over a period of three years (the proposed duration of the centralized agreement). This dynamic can be seen in the press release for the years 2008 and 2009: nominal wage increases were significant but also inflation was over 4%, so in 2008 real wages were subdued, while in 2009 inflation went to zero, which boosted real wages.

Source: Statistics Finland

Source: Statistics Finland

Obviously, there are many other problems the labour market partners consider in the current negotiations, but regarding the role of inflation in the actual real wage increases, it remains problematic that interest rates are set in Frankfurt rather than Helsinki – the consequence of the ‘one-size-fits-all’-monetary policy in the EU. So regardless of what compromise the labour market partners reach, it still may be thwarted by forces not anymore under control by the Finnish state.

Finnish bankruptcy filings increasing – Real estate bubble deflating?

The Finnish Techology and Economics -weekly Tekniikka&Talous has a news item on Finnish bankruptcy filings. It would be interesting to see the statistics in European context but I don’t have the time, nor do I know whether Eurostat has the level of statistical refinement that the data from Statistics Finland has. Below you can first read my translation of the original post:


According to data by Statistics Finland 1856 bankruptcies were filed during February-July, which is 106 (6,1%) more than in the same period last year.

The total personnel in companies that field for bankruptcy amounted to 9.188, which is 1.122 (13,9%) more than in the same period last year.

In terms of numbers, the most bankruptcy filings occurred in the sector ‘other services’, which consists of ICT-services, finance and insurance, real estate, ‘professional, scientific and technical work’, administrative and support services, training/education services, social and health services as well as arts and entertainment services. There where 507 bankruptcy filings in this sector, which is 9,5% more than in 2012 in the same period.

A decline of bankruptcy filings in construction

Bankruptcy filings increased in agriculture, forestry and fisheries, industries and mining, retail, transport and storage, hotel and restaurant sector and in the ‘other services’ sector, but on the other hand decreased in solely the construction sector. This sector saw 7,4% less bankruptcy filings that in 2012 in the same period.

As a methodological note, filing for bankrupcy does not mean per se that the bankruptcies will be executed – the process can also be left unexecuted.


As always with such a news item, it is hard to say whether this represents positive or negative developments, exceptions from the trend etc. So for your information I have compiled two graphs: the total amount of bankrupcy filings since 2003 (the data doesn’t go back further) and the same kind of graph by sector. The sectors are according to the Finnish Standard Industry Classification TOL 2008, which corresponds with the most recent NACE-classification. C is industry, F is construction, G is wholesale and retail as well as the sale and repair of motorvehicles, H is transport and storage and I is accommodation and restaurants.

Source: Statistics Finland

Source: Statistics Finland

The data does not yet include the data introduced in the news item, but bankruptcy filings have increased. The news item gives the main ‘growth’ sectors of bankruptcy filings. In the graph below, the category ‘other services could not be incorporated easily, so while that is said to be the greatest contributor to bankruptcy filings with more than one third of bankruptcy filings in the first half of the year, it is not shown here. However, it could be about half of the missing roughly 1000 bankruptcy filings per year if we compare the numbers in the sectoral vs. total bankruptcy filings. This could be scrutinized closer.

Source: Statistics Finland

Source: Statistics Finland

Although the news item emphasises the decline in bankruptcy filings in construction, this is misleading in my opinion because it is the single largest sector for bankruptcy filings (by number of filings). Nearly all the sectors in the graph show a spike in 2009, which arguably was when the initial effects of the eurocrisis were strongest.

Usually, the construction sector is quite a good indicator of how a country is doing, as it reflects new investments in real estate (both for private and business use). I have previously mentioned the possibility of a Finnish real estate bubble, and although it is hard to say, the big increase of bankrupcies in construction since 2003 may signal the end to any such bubble. In this context it is perhaps interesting that the second-biggest sector of bankruptcy filings is the wholesale-and-retail sector: companies in this sector are typically the inhabitants of new business parks, as are the companies in the ‘other sector’ category. I can’t say if this is too big a stretch (from bankruptcies to deflating bubbles) but I have a gut feeling it is related – just like in the Netherlands where bankruptcies in construction have increased drastically since 2009.

So what does this mean? To a large extent, more data should be presented, e.g. the number of personnel affected, the regional spread, etc. But increasing bankruptcies are always a bad sign. There is an institution of Finland which has exact statistics on real estate sales, in particular business real estate, but this is a paid service.

Therefore, it is a bit wait-and-see. Today, a Finnish bank predicts that next year the Finnish GDP will grow by 1,7%. There are a lot of assumptions behind that projections, such as growth in demand from Europe (AKA the ‘Eurocrisis is over’-argument) and the assumption of a (very) moderate wage increase through the collective agreement negotiations going on right now. I wouldn’t be surprised if this projection turns out to be too optimistic.

Finnish real estate bubble?

As Edward Hugh stated on his Facebook page on the 14th of February (can’t link that, so please look it up):

The depth of Finland’s recession may raise an eyebrow or two here and there. It was meant to be a very competitive economy. I have long felt, studying the evolution of the trade balance, that it had more to do with the periphery than the core. The economy has been supported by a housing boom, but now that appears to be coming to an end. Not so different from Denmark, or the Netherlands.

As I blogged, I have shown some Eurostat statistics on housing price developments, which I thought did not look like a boom. But now I found statistics from Statistics Finland on square meter prices in various regions of Finland, and they tell something I suspected but could not put in a graph, until now. Please note that the first graph is a combination of two time series (2000-2008 and 2005-2012) which use a slightly different methodology (mainly, the latter has much more indicators on which it measures price).[UPDATE: A commenter has longer range graphs on housing prices in the Nordic countries, which make the pattern even more clearer] The picture looks a lot like the Netherlands – a slow bubble, starting in the 1990s. As for the latter graph, Helsinki 1 is basically downtown, prime, Helsinki, while Helsinki 3 is more of a peripheral area, although public transport connections are very good. Vantaa is (traditionally) a more working class city next to Helsinki, where also the Finnish main airport is located.

Source: Statistics Finland

Source: Statistics Finland

And for the capital region:

Source: Statistics Finland

Source: Statistics Finland

I don’t know how to define a housing bubble, but it seems that Helsinki prices, especially in prime and other near-center Helsinki (this holds true also for 2-room appartments and bigger) have gone up quite a bit. That has to do partly with this:

Source: Tilastokeskus

Source: Tilastokeskus

Although Tampere and Oulu are also growth centers in a sense, the Helsinki region has a much greater pull. I don’t have time now to dissect the nature of those moving to Helsinki (age, gender, where they come from) but from what I know anectdotally, there is quite a shortage of appartments for people who need only a single or double-room appartment, mainly because they are so expensive (for students etc.)

I don’t know if this is part of the possible bubble-story but it seems to happen mainly in the Helsinki area, not elsewhere.