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Income - 01.11.2022 klo 14.38

PAM Economic Survey: service sector workers foresee difficult year as costs increase

The employment situation in service sectors remains strong, but rising costs are lowering expectations of the financial outlook for both employees and employers. The recovery in the hospitality sector following the Covid epidemic remains encouraging.

Service sector employees who responded to Service Union United PAM’s Economic Survey foresee a difficult year financially as living costs continue upwards. 45.9 per cent of respondents to the Economic Survey expect their financial situation to worsen over the coming year and only 11.8 per cent think it will improve.

“The share of those who think their personal financial situation will worsen over the coming year is approaching the level we saw at the start of the Covid epidemic”, says PAM’s economist Olli Toivanen.

At that time service sectors faced an all-out shock and the employment situation fell off a cliff, especially in the hospitality sector. Now the reason for the pessimism among survey respondents is different.

“The employment trend has continued to be good in service sectors and survey respondents mostly report being in a strong position in the labour market. They just feel their own earnings are inadequate as costs increase”, Toivanen estimates.

Strong quarter in the hospitality sector – most respondents don’t see unemployment as a threat

Respondents are in a stronger employment situation, especially in the hospitality sector. A full 50.4 per cent of respondents working in the sector don’t see unemployment as a threat at all. This share is the highest since autumn 2019.

“It’s very encouraging how the hospitality sector has continued its recovery going into the autumn. From late summer, turnover on both the accommodation and restaurant side has been well above pre-Covid highs”, Toivanen says.

At the same time, though, the share of respondents in the hospitality sector who expect their employer’s financial situation to worsen over the coming year has increased from 13.8 per cent in the last survey to 24.4 per cent. Toivanen says the responses show how higher food and energy prices are making life difficult for companies, but on the other hand prices have been raised in response to the higher costs.

“Producer prices in hospitality services have risen rapidly this year – in recent months even a lot faster than the consumer prices index – so companies have managed to react to higher costs or even anticipate them”, he points out.

Dearer food a major factor weighing on respondents’ financial situation

The  Economic Survey asked how higher costs had affected respondents’’ financial situation over the previous year in the expenditure categories motoring, housing and food. 59.6 per cent of respondents said higher food prices had slightly impacted their financial situation in the last year and 23.2 per cent said they had seriously impacted their finances.

“Understandably, higher food prices are affecting just about everyone. Higher costs for motoring and housing don’t hurt city centre residents so badly, but low-income wage-earning families could see their finances ruined by higher bills for electric heating”, Toivanen points out.

Higher costs for motoring and housing were seen as a negative for personal finances especially among respondents in the security sector. A full 35.7 per cent of respondents in the sector said that higher housing costs had seriously impaired their finances.

 

Information based on survey carried out by PAM in the period 1.−16.10.2022. 695 PAM members responded to the survey. PAM publishes its Economic Survey quarterly.

 

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