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Financial policy - 05.05.2021 klo 08.00

Service sectors looking ahead to growth – hospitality sector emerging from setbacks at start of year

As vaccine coverage increases and the Covid epidemic retreats, there is growing confidence in all PAM sectors about the year ahead for employer companies.

The gloomy Covid numbers and the restrictions on consumer services at the start of the year made the situation even worse for employees in the hospitality sector, according to PAM’s economic survey. But as vaccine coverage increases and the Covid epidemic retreats, there is growing confidence in all PAM sectors about the year ahead for employer companies.

The responses by hospitality sector employees to the economic survey carried out by Service Union United PAM show how dismal the situation was in the sector during the restrictions in the spring. 50.0 per cent of respondents in the sector had been laid off during the month preceding the survey and 62.6 per cent report their finances have deteriorated over the last 3 months.

“For many, working hours have been low in recent months and, with lay-offs continuing from one month to the next, earnings-related unemployment benefits aren’t enough to support their incomes”, says PAM’s economist Olli Toivanen. 

“The unemployment security system, which encourages people to look for jobs, seems cruel in this situation since in reality people who have been laid off due to Covid don’t stand a chance of finding a new job.”

Of the respondents in the hospitality sector, a historically high proportion – 33.3 per cent – think that finding a new job would take over a year or they wouldn’t find one at all.

“The labour market in the hospitality sector has been extremely active in recent years and there have even been staff shortages. But it’s still unclear whether many companies will survive and recruitment has been on hold for a long time”, Toivanen adds.

Employers expected to increase sales as Covid gradually recedes

On the other hand, respondents have high expectations of the year ahead for employer companies. The largest proportion of all respondents to the economic survey during the epidemic – 36.8 per cent – believe employers’ financial situation will improve over the year ahead. According to Toivanen, this is not just down to an optimistic assessment of the economy.

“Many service sectors hit rock bottom over the winter. When you start from a low base and there is good news about the epidemic and vaccine coverage, it’s easy to be optimistic that in a year’s time things can’t be any worse.”

One such sector is property services, where just 6.3 per cent of respondents say their employer’s sales have increased compared to a year ago. This share is the lowest in the history of the economic survey, even though a year ago we were already in the first wave of the Covid epidemic.

Brighter outlook for the commerce sector as restrictions on movement avoided 

Just 19.0 of respondents in the commerce sector report decreased sales by their employer compared to the previous year. Respondents in the sector say their concerns about their own financial situation have also levelled out. 25.3 per cent of respondents now say they have been more worried over the last three months, whereas the corresponding share a year ago was 49.3 per cent.

“Comparing with a year ago shows how dramatic the first Covid spring was for companies and employees in the commerce sector”, Toivanen points out.

“The fact that the planned restrictions on movement were avoided was very important for speciality shops in large centres, and the outlook for retail is now also looking up beyond grocery stores.”

Data based on the PAM survey carried out between 1 and 14 April 2021. 670 PAM members responded to the survey. PAM publishes its economic survey every quarter.