Finland’s unemployment rate will remain high for years as economic recovery slows and labour demand stays weak, the Ministry of Economic Affairs and Employment said on Tuesday.

The ministry forecast an unemployment rate of 10.2 per cent for 2026. It expects the figure to fall to 9.8 per cent in 2027 and 9.3 per cent in 2028.

The forecast marked a weaker outlook than the ministry’s previous estimate published last autumn.

Officials linked the delay in labour market recovery to weaker economic growth and a lack of strong signals from employers.

Consumer confidence in personal employment prospects also remains low, according to the report.

The ministry said employment growth has started in some sectors, though the pace remains slow across the wider economy. Hotels, restaurants, culture and entertainment services have reported gains, while industrial employment is forecast to rise at a moderate pace.

Construction and specialist sectors continue to struggle. Officials said the recovery in construction jobs appears slow after a long downturn. The ministry also warned that changing skill demands in the information technology sector are slowing the return of unemployed workers to jobs.

The ministry expects employment growth to strengthen later in the forecast period. It projects an increase of 18,000 employed people in 2027 and another 25,000 in 2028.

The employment rate among people aged 20 to 64 is forecast to rise from 76 per cent this year to 77 per cent by 2028.

At the same time, the number of unemployed jobseekers is expected to remain high. The ministry estimates there will be 342,000 unemployed jobseekers this year, falling to 338,000 next year and 324,000 by 2028.

Officials said one factor behind the high unemployment rate is the rise in labour force participation among older people. More Finns aged over 55 are staying in work or seeking jobs later in life.

The ministry said labour supply has increased while demand has remained weak.

“Employment growth has started, but the turn is slow,” the report said.

The ministry forecast long-term unemployment will begin to fall after summer 2026. It expects the number of people unemployed for at least one year to peak at about 144,000 during the summer before declining.

The number of long-term unemployed people is forecast at 141,000 this year, 138,000 next year and 129,000 in 2028.

Regional differences remain wide. The ministry expects unemployment to fall fastest in Lapland and Kainuu. The slowest decline is forecast in Kymenlaakso and the Helsinki region.

The forecast also points to lower migration levels after record inflows in recent years.

Net migration reached almost 58,000 people in 2023. The ministry now expects annual net migration to settle at about 25,000 in the coming years, close to the level recorded in 2021.

Officials linked the decline to lower work-based immigration and fewer Ukrainians arriving under temporary protection schemes.

HT