The pandemic and the employment of foreigners in Finland

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In this week’s blog, we’ll take a look at a recent research article discussing how the pandemic affected the employment of foreigners in Finland.

Previously, we’ve talked quite a bit about how the pandemic affected the Finnish labor market. We have examined, for example, how the effects have differed for men and women. Very early in the pandemic, we also took a look at which occupations were the hardest hit by it. Recently, though, we have focused more on how employment figures, in general, have bounced back.

Antti Kaihovaara’s very recent article examines how the employment of foreigners in Finland has developed during the pandemic. He also examined how and why their employment has different from that of Finnish nationals. 

In Kaihovaara’s article, “foreigners” are either foreign nationals or those whose native language in Finnish national databases is marked as something else besides Finnish, Swedish, or Sami. Whichever group Kaihovaara actually refers to depends on the data source he is using at any given time. In the interest of brevity, however, I will only use the term foreigners in this blog. Similarly, when I use the term “Finns”, that can variably refer to Finnish nationals or the speakers of Finnish, Swedish, or Sami. 

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The employment of foreigners in Finland during the pandemic

Kaihovaara reports that early on in the pandemic the number of unemployed foreigners rose at a slightly slower pace than that of Finns. 

In the summer of 2020, however, the unemployment figures for Finns started to go down quite fast. From there on, the descent has clearly been faster than for foreigners.

In percentages, unemployment among foreigners (19 % to 26 %) increased more than among Finns (9 % to 13 %) from 2019 to 2020. 

Irrespective of a demographic group examined, unemployment among foreigners increased more than among Finns between December 2019 and December 2021. 

During that period, unemployment among Finnish men increased by 5 %. Among foreign men, it increased by 19 %. For Finnish and foreign women, these figures were 6 % and 16 % respectively. 

Among those over 50 years of age, unemployment among foreigners increased by 25 %. Among Finns the same age, it increased by 10 %. 

Particularly notable is the increase in those foreigners who have continuously unemployed for a long term (over a year). Their numbers increased by 123 % compared to an increase of 66 % among Finns.

A silver lining here, perhaps, is that the share of long-term unemployed among the unemployed is lower for foreigners (33 %) than for Finns (40 %).

In the beginning, the share of those furloughed was lower among unemployed foreigners than it was for unemployed Finns. In 2021, the situation had reversed itself. Kaihovaara suggests that this is because industries that suffered from the pandemic longer tend to also employ larger shares of foreigners than others. He refers specifically to the hospitality industry. 4 % of employed Finns work in that industry. In contrast, 10 % of employed foreigners do. 

Kaihovaara did not detect significant differences in the employment trends between different foreign nationalities. 

There were, however, regional differences. The number of unemployed foreigners grew faster in Uusimaa than elsewhere. There the increase was 39 % between December 2019 and 2021. At the same time, the number of unemployed Finns in Uusimaa increased by 24 %.

Why did more foreigners become unemployed during the pandemic?

In the article, Kaihovaara finds that the different labor market profiles of foreign and Finnish employees explain these differences in unemployment numbers to large extent.  

For example, Kaihovaara explains that in Uusimaa the pandemic-related restrictions were heavier than elsewhere in the country. Foreign residents in Finland, in turn, are heavily concentrated in Uusimaa. Hence what happens in Uusimaa significantly affects the overall employment numbers of foreigners in Finland. 

Also, the service industry is quite dominant in Uusimaa. Particularly the hospitality, restaurant, and travel industries have been hard hit. Those industries also employ proportionally more foreigners than some other industries. The same is true for admin and support services. 

About 30 % of employed foreigners are employed in these industries. In contrast, these industries employ about 10 % of employed Finns. 

Another explanatory factor is the difference in employment sectors. The majority of foreigners in Finland (72 %) are employed in the private sector. For Finns, this percentage is 59 %. Again, this makes foreigners more exposed to labor market disruptions than Finns.

Foreign employees in Finland are also more often in fixed-term (18.2 % vs. 11.4 %) and part-time (24.7 % vs. 16.9 %)  employment relationships than Finns. This means that more often than Finns their situation is precarious even when times are good. And as Kaihovaara points out, when they are not, people who are already in vulnerable positions tend to suffer more.

A few additional notes

Kaihovaara notes that the foreign population of Finland has suffered from the pandemic more than Finns also in other ways. They have been proportionally more hit by the disease itself. Compared to Finns, they more often work in occupations where remote work is not possible.

He also notes that the pandemic made it more difficult to organize integration training for newly arrived foreigners. This together with the general economic downturn made it more difficult for new arrivals to integrate into the Finnish labor market. This, he suggests, has contributed to the significant uptick in long-term unemployment among foreigners in Finland.  

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