copy the linklink copied!1. The changing policy context
After years of lacklustre economic performance, Finland has seen a strong improvement of its labour market conditions since 2016. Its future economic prospects will depend on the readiness of its continuous learning system to respond to the changing skill needs of the labour market. In the context of globalisation, technological progress and demographic change, the demand for high-level skills is growing and skill imbalances are starting to intensify. There are concerns in how far the high skill levels of the Finnish population can be maintained and further increased to address these changes. This chapter discusses how skill demand and supply are changing in Finland, as well as arising skill imbalances. It concludes that Finland can build on high participation in continuous learning to address these changes, but some groups are at risk of being left behind.
copy the linklink copied!Introduction
Finland’s skill development system is one of the most successful in the OECD. The country’s 15-year old students have been amongst the top performers of all the countries participating in the Programme for International Student Assessment (PISA) since its first edition in 2000. Its adult population has some of the highest levels of literacy and numeracy in the OECD, according to the OECD Survey of Adult Skills (PIAAC), surpassed only by Japan. Large shares of the population continue learning over the life-course, as two in three adults participate in formal or non-formal learning activities every year.
Yet, the skills needed in the labour market are changing. Globalisation, technological change and population ageing are affecting the types of jobs that are available in Finland and how they are carried out. National and international research shows that the level of skills needed to obtain and maintain jobs is rising, meta-cognitive skills, such as learning to learn, are becoming more important and advanced technology use is becoming omnipresent in working life. This review comes at a time when skill shortages in the Finnish labour market are becoming increasingly apparent and there are growing concerns about the supply of high-level skills, given demographic change and stagnating educational attainment levels. To maintain its position as one of the world’s foremost knowledge economies, Finland’s skill development system must adapt to these changes in the labour market.
Managing these changes starts with investment in early childhood and initial education to equip young people with strong foundation skills for a changing world of work. However, it may take 10-25 years for these investments to translate into changes in the supply of skills in the labour market; far too long given the current pace of change if the Finish economy is to remain competitive. As the vast majority of people affected by these changes are already in the labour market, addressing the skills of the existing workforce will be key to managing the transition. Giving adults the opportunity to upskill and reskill will support their economic outcomes and well-being, as well as maintain the competitiveness of Finnish firms and the economy as a whole.
One can further distinguish between three types of continuous learning: formal and non-formal education and training, as well as informal learning (Eurostat, 2016[1]):
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Formal education are intentional, institutionalised learning activities, which are recognised by the relevant authorities and have a minimum duration of one semester.
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Non-formal education are intentional, institutionalised learning activities, e.g. short-courses, workshops or seminars, which are either of short duration (less than one semester) or not recognised by the relevant authorities.
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Informal learning is intentional, non-institutionalised, less structured and can take place anywhere, e.g. when learning from colleagues, friends or learning by doing.
In the following, individuals who engage in continuous learning in working life are referred to as adult learners. Continuous learning in working life, continuous learning, adult learning and adult education and training are used interchangeably to refer to learning opportunities for this group.
copy the linklink copied!Labour market context
Having been hit hard by the global financial and economic crisis, Finland experienced an extended period of lacklustre economic performance over the past decade (OECD, 2018[2]). In the past two years, the economy has regained momentum and, in 2018, the employment rate hit 72% for the first time on record. Yet, the new jobs that are being created are not the same as those lost during the crisis. The interlinked challenges of globalisation, technological progress and population ageing are changing the type of jobs that are available in Finland and how they are carried out. Today, the majority of new jobs are emerging in high-skilled occupations, be it in the thriving technology sector, education or high-skilled care professions.
Following a protracted recovery, the Finnish employment rate is at an all-time high...
Finland ’s economy has only recently strengthened, following a near-decade of low economic growth. The impact of the global economic crisis hit Finland harder than many other OECD economies (Figure 1.1). GDP growth plummeted to -8% in 2009, compared with smaller declines in the Nordic neighbour economies Norway (-2%) and Sweden (-5%). The economy entered a short period of recovery in 2010/2011, but was hit by major economic challenges in its electronic, paper and forest industries, as well as a severe economic recession in Russia from 2014, one of its major trading partners (OECD, 2018[2]; OECD, 2016[3]; OECD, 2014[4]; OECD, 2012[5]). Finland fell back into a protracted recession between 2012 and 2014 and returned to economic growth only in 2015. Since then, the economy has seen robust growth, outperforming other OECD and Nordic economies. Economic expansion is projected to continue in the coming two years, albeit at a slower pace than previously (OECD, 2019[6]). Overall, Finland’s GDP remains lower per capita than in other Nordic countries, primarily due to lower productivity and labour utilisation (OECD, 2018[1]).
Source: OECD National Accounts database.
Finland’s economic performance over the past decade is mirrored in the labour market. Employment rates dropped to 68% in the last quarter of 2009 from a peak of 71% in the second quarter of 2008; a decrease equivalent to close to 100 000 people (Figure 1.2). After years of stalling growth, the employment rate has steadily increased since 2017, surpassing 72% in the second quarter of 2018, which is the highest rate on record. However, a substantial gap between Finland and its Nordic neighbours, Norway (Q2 2019: 75%) and Sweden (Q2 2019: 77%), remains.
The new government has set an ambitious employment rate target of 75% (Finnish Government, 2019[7]), which will require structural reforms to activate the so far unrealised potential of the population. Total unemployment is already close to the estimated structural unemployment levels. Growth could come through speeding up young people’s labour market entry (OECD, 2019[8]), delaying the labour market exit of older workers, raising participation of women with small children, addressing labour market imbalances, and strengthening work incentives and activation policies more widely (OECD, 2018[2]). The latter is especially important, given the comparatively high unemployment rates in Finland. While the unemployment rate is now close to pre-crisis levels (Q2 2019: 7%), it remains above the OECD average (5%) and the rate of Norway (3%) (Figure 1.2).
Note: Employment rate as percentage of population aged 15-64, seasonally adjusted; harmonised unemployment rate as percentage of people of working age who are without work, are available for work, and have taken specific steps to find work, of the labour force.
Source: OECD Labour Market Statistics.
...and the vast majority of new jobs created require high levels of skills.
As employment in Finland continues to grow, it is becoming clear that the new jobs are in different sectors than in the past and require different skill-sets. According to data from Statistics Finland, employment in the service sector grew by more than 5% in the past decade alone, while employment in agriculture and manufacturing decreased by 15% and 11% respectively.1 New employment opportunities over the past decades (1998-2018) have overwhelmingly required high-level skills, while growth in the low-skilled occupations was more modest and middle-skilled jobs were displaced. It is worth noting that compared to other Nordic countries, Finland has seen higher growth of jobs in low-skilled occupations in the past two decades, and in recent years more specifically (Figure 1.3).
Note: High-skilled jobs correspond to ISCO-88 major groups 1, 2, and 3; Middle-skilled jobs correspond to ISCO-88 major groups 4, 6, 7 and 8; and low-skilled jobs correspond to ISCO-88 major groups 5 and 9. OECD average is a simple unweighted average of selected OECD countries:
Source: Update of OECD (2017[9]): "How technology and globalisation are transforming the labour market", in OECD Employment Outlook 2017, https://doi.org/10.1787/empl_outlook-2017-7-en, based on data from the European and national labour force surveys.
These developments have translated into imbalances in the Finnish labour market. According to the most recent occupational barometer by the Finnish Ministry of Economic Affairs and Employment (Ammattibarometri), 52 occupations were in shortage in the second half of 2019, more than twice the number of occupations than only two years earlier, but slightly down from the first half of 2019 (Ministry of Economic Affairs and Employment, 2019[10]; Ministry of Economic Affairs and Employment, 2019[11]). Among the top 15 occupations in shortage, there are many high-skilled occupations in health care and education professions, such as social work and counselling professionals, medical practitioners and early childhood educators (Table 1.1). The list also features several middle and low-skilled professions.
Finland stands out in international comparisons for the concentration of shortages in high-skilled occupations. According to the OECD Skills for Jobs database, more than 9 in 10 jobs in shortage in Finland were in high skilled occupations such as managerial or professional occupations (Figure 1.4) – the highest share of shortages in predominantly high-skilled occupations across all countries analysed (OECD, 2018[12]). In contrast, on average across the OECD countries analysed, this was the case for only about 5 out of 10 jobs in shortage. Instead, approximately 4 in 10 jobs in shortage were in medium-skilled occupations, such as sales or handicraft workers, and 1 in 10 jobs in shortage were in low-skilled elementary professions.
Note: High, medium and low skilled occupations are ISCO occupational groups 1 to 3, 4 to 8 and 9 respectively. Shares of employment in each skill tier are computed as the corresponding employment in each group over the total number of workers in shortage in each country. Data refer to the latest year for which information is available: AUS (2016), DEU (2012), ILS (2013), MEX (2016), NZL (2017), NOR (2014), SVN (2012), USA (2017)
Source: OECD (2018[12]), Skills for Jobs, https://www.oecdskillsforjobsdatabase.org/data/Skills%20SfJ_PDF%20for%20WEBSITE%20final.pdf, based on the OECD Skills for Jobs database (2018).
Technological progress will induce further changes in the labour market…
State-of-the-art technologies, such as artificial intelligence or industrial robotics, are increasingly able to perform many of the tasks traditionally done by human labour. These technologies have the positive effect of enabling workers to focus on less routine, safer and more productive tasks, as well as giving consumers access to more and higher quality goods and services (OECD, 2018[13]). However, they also change the way jobs are done, requiring workers and companies to adjust, and can make some jobs entirely redundant, putting individuals at risk of displacement. According to OECD estimates, 14% of jobs in countries for which data is available could be automated in the coming 10 to 20 years, and a further 32% of jobs may see significant changes in how they are carried out (Figure 1.5). Finnish jobs face comparatively low risks of being automated or changing significantly in content, yet changes are still likely to affect one in three workers in Finland.
Note: High risk – more than 70% probability of automation; risk of significant change – between 50 and 70% probability. Data for Belgium correspond to Flanders and data for the United Kingdom to England and Northern Ireland.
Source: OECD calculations based on the Survey of Adult Skills (PIAAC) (2012); and Nedelkoska and Quintini (2018[14]), “Automation, skills use and training”, https://doi.org/10.1787/2e2f4eea-en.
In this context, the National Forum for Skill Anticipation (Osaamisen ennakointifoorumi) finds that more than half of new entrants to the labour force will need higher education degrees to satisfy the skill demands of the future (Finnish National Agency of Education, 2019[15]). It also finds that meta-cognitive skills that enable individuals to analyse and adjust to change, such as problem-solving skills, the ability to learn, and information evaluation skills, will become increasingly important across jobs (Finnish Board of Education, 2019[16]). In terms of more specific skills, skills in customer-related development of services, knowledge of sustainable development, and skills related to digitalisation are highlighted as the most important skills needed for tomorrow’s jobs in Finland.
…and population ageing could exacerbate skill shortages in the future.
At the same time, the Finnish working population aged 15-64 is projected to decrease by 57 000 people by 2030 and 208 000 people by 2050 (Figure 1.6). This is equivalent to a 2% and 6% drop in the population, respectively, compared to 2017. Population decline will be unevenly distributed across Finnish regions. It is projected that in 2040, the only region with population growth will be the Uusimaa region due to positive net migration (Statistics Finland, 2019[17]). Populating ageing is expected to lead to skill shortages in the future when, because of both smaller cohorts are replacing retiring workers and changes in labour demand in sectors such as health and care services. Additionally, older workers are playing an increasingly important role in the labour market. Employment rates of 55-64 year olds have risen by close to 30 percentage points in the past 20 years, pointing to a need to keep the skills of workers updated over longer careers.
The extent to which individuals, firms and economies can harness the benefits of these changes in the labour market will critically depend on the ability of the Finnish skill development system to equip people with the right skills. Given the demand for high-level skills in Finland will continue to increase, this will need concerted efforts by public and private actors to shift the entire skill distribution of the adult population upwards towards higher levels.
Source: Adapted from Statistics Finland (2018[18]), Population Projection 2018-2070, https://www.stat.fi/til/vaenn/2018/vaenn_2018_2018-11-16_tie_001_en.html.
copy the linklink copied!Skill levels of the adult population
Finland has one of the strongest skill development systems in the world in terms of the proficiency of both young and older people in information processing skills. The country consistently scores amongst the top performing countries in the international skill assessment tests PISA and PIAAC. Large shares of adults aged 25-64 hold tertiary degrees (44%), well above the OECD average (37% in 2017). However, there is some concern that skill and education levels are declining, rather than increasing in line with labour market demand.
The skill levels of the Finnish population are high by international comparison…
According to the 2012 OECD Survey of Adult Skills (PIAAC), Finnish adults display above average literacy and numeracy proficiency, second only to Japan, and above average abilities to solve problems in technology-rich environments (OECD, 2016[19]). The share of adults who do not hold basic information-processing skills is low by international comparison and encompasses around 600 000 people, who have low literacy skills, low numeracy skills, or both (see Chapter 4).
In 2012, 63% of the adult population scored at the three highest proficiency levels in literacy, which is very high in international comparisons but also compared with its Nordic neighbours Norway (55%) and Sweden (58%) (Figure 1.7). The Finnish advantage is slightly smaller when it comes to numeracy, with 58% of the population scoring at the three highest proficiency levels, compared to 57% in Sweden and 55% in Norway. Finnish adults are similarly proficient in technology use than their Nordic neighbours, with 42% scoring at the highest proficiency levels (Norway: 41%, Sweden: 44%). Nevertheless, in Finland, as in all other countries that took part in the OECD Survey of Adult Skills, a substantial proportion of adults have basic or poor problem solving skills in a technology-rich environment.
Source: OECD PIAAC data (2012, 2015).
… but there is some concern that skill levels are declining…
Despite these favourable comparisons, there is concern that the skill levels of Finns are declining. Once the top-performing OECD country in PISA, average mathematics, science and reading skills of 15-year olds have declined since 2006, although Finland remains in the group of best performing countries (OECD, 2016[20]). Time-series data on adult skill levels is scant. A comparison of adults’ performance in the 2012 PIAAC and the 1998 Adult Literacy Survey (IALS) shows that, while average literacy proficiency increased in this time period for individuals aged 25-65, it decreased for those aged 15-24 (Musset, 2015[21]). This result may be partially explained by later entry of the youngest cohort into tertiary education and a decrease in the years of formal education completed by this point in their lives compared to older cohorts.
In addition, the share of younger Finns obtaining a tertiary degree is declining rather than rising even though the demand for high-level skills has been increasing in the labour market (Figure 1.8). Adults aged 40-44 are now the most educated cohort in history, with 47% holding tertiary degrees. Only 44% of 35-39 year olds and 39% of 30-34 year olds hold tertiary degrees and shares of tertiary attainment in this age group are declining. There is a chance that this gap may close, as adults pursue tertiary degrees later in life, although this cannot be taken for granted given the push to prioritise recent graduates in higher education admission.
Between 31% and 47% of adults in each age group hold tertiary degrees, whether short-cycle tertiary degrees (opistoaste) (phased out in the 1990s), bachelor’s or master’s degrees. This group is well equipped to continue developing their high-level skills over the life-course and often takes up learning opportunities (see below), but may need training offers that are relevant to individual and labour market needs.
Source: Statistics Finland, Finnish education statistics.
While investment in early-childhood and basic education is essential to equip individuals with strong foundation skills, rapid labour market change suggests that the above described challenges cannot solely be overcome through investment in young people. Today’s adults need appropriate opportunities to update and upgrade their skills and acquire new ones on a regular basis throughout their life to improve their labour market prospects and boost the competitiveness of the Finnish economy. Making use of Finland’s strong, well-utilised and comprehensively funded adult education system to upskill and reskill the population will be key to aligning skill demand and supply.
Note: Bachelor’s and Master’s degrees include degrees at Universities and UAS.
Source: Vipunen education statistics Finland.
copy the linklink copied!Patterns of adult learning participation
International surveys consistently find that Finland has one of the highest participation rates in adult learning in the world. However, participation is likely to be overestimated in comparative data, due to the high shares of people aged 25 and above in Finland who are pursuing initial education and training rather than further training after the completion of initial education. Despite high participation in training, Finland has large participation gaps for some groups, most notably adults with low skills, older workers and the long-term unemployed.
Participation in adult learning is one of the highest in the world...
Just over half of the population aged 25-64 takes part in job-related learning every year (55%), according to OECD PIAAC data. This is the fourth highest adult participation in OECD economies, exceeded only by Denmark (58%), New Zealand (57%) and Norway (56%). However, many adults in Finland face barriers to participating in training. Around 20% of adults would have liked to participate in even more training than they already did and a further 10% would have liked to participate but did not for a variety of reasons. In addition, around 35% of adults did not participate in job-related learning and did not want to for various reasons, including a lack of motivation or awareness of the potential benefits from engaging in training.
Note: Formal and non-formal job-related education and training.
Source: OECD PIAAC data (2012, 2015).
While adult learning participation in Finland is high by international standards, there has been some concern about decreasing participation rates. These concerns are primarily driven by results of the 2016 Adult Education Survey (AES), which recorded a drop of 3.2 percentage points compared to the previous wave in 2011 (see also Ruuskanen and Niemi (2018[22])). However, this drop may be due to changes in the mode of data collection (see evidence from Sweden facing similar issues: (Statistics Sweden, 2017[23])). Analysis of European Labour Force survey data (LFS) shows opposite trends, with adult participation in education and training steadily increasing since 2009 and sharper yearly increases since 2016 (Figure 1.11). This poses the question of which data source best reflects the true picture of trends in training participation.
There are a number of possible explanations for the discrepancies between the two sources, including differences in the coverage period (4-week vs. 12-month window), differences in the structure of the surveys (general labour market vs. life-long learning survey) and differences in the definition of learning activities (Goglio and Meroni, 2014[24]). In the case of Finland, an additional difference between AES and LFS arises from the fact that the AES data published by the Finnish statistical office only refers to participation in specific educational programmes that are traditionally considered adult learning.2 The discrepancy between AES and LFS may therefore reflect a decrease in adult participation in these traditional forms of adult learning, but an increase in participation in other education and training opportunities, for example initial vocational degrees or regular degree education at universities and universities of applied sciences (UAS). Data by the Finnish statistical office indeed confirms an increased participation of older adults in initial vocational education and training, as well as degree courses at UAS and to a lesser degree universities (see Chapter 3).
An additional explanation for the discrepancy lies in the different reference periods for both data sources. As the LFS measures the share of adults participating in a 4-week time period, it effectively measures ‘training events’ rather than ‘participants’ in a given year. An increase in the LFS may reflect the same individuals participating more often over the year or for longer time-periods, not necessarily an increase in the learning population (Goglio and Meroni, 2014[24]). There is no data available that could confirm this suggested increase in repeated participation by individuals.
Note: For AES definition of adult education and training as per Ruuskanen and Niemi (2018[22]), Osallistuminen Aikuiskoulutukseen. Vuonna 2017 [Participation in Adult Education. In 2017]; for LFS definition includes all formal and non-formal learning, break in time series 2003.
Source: Statistics Finland (AES 2006, 2012, 2016, national adult education survey 2000); Eurostat (LFS, yearly averages).
Adult learners in Finland participate in 156 hours of non-formal learning on average, which is equivalent to just under four weeks of full-time study per year (Figure 1.12). Learning intensity is high by international comparison, only in Denmark (167 hours) and Slovenia (180 hours) do adult learners spend more time learning. Other Nordic neighbours display much lower intensity: Adult learners in Norway, for example, receive around half the instruction time. This can likely be explained by the pervasiveness of longer course options in Finland’s adult learning provision (see Chapter 3).
Note: Refers only to participation in non-formal learning.
Source: Eurostat, AES data (2016).
…but some groups are at risk of being left behind.
Not everyone in Finland takes part in adult learning to the same extent and some of the groups who would strongly benefit are the least likely to participate. According to PIAAC data, 29% of all low-skilled adults participate in job-related learning, while 60% of those with medium to high-skills do. Participation gaps between prime age and older adults (64% vs. 35%), the employed and long-term unemployed (66% vs. 33%) and workers in jobs at high and low risk of automation are similarly large (53% vs. 74%) Figure 1.13).This is problematic for a number of reasons, including that it implies that continuous learning widens the skill gap between advantaged and less advantaged adults.
According to the OECD’s ranking of the performance of each country’s adult learning systems, Finland has one of the least inclusive systems across the OECD, exceeded only by Chile, Germany, the Netherlands and the Slovak Republic (OECD, 2019[25]). Finland has the largest participation gaps of all OECD economies when it comes to adults with low skill levels or low wages relative to those with, respectively, higher skills or higher wages. For individuals, firms and economies to respond to changes in the labour market, it is imperative for Finland to find ways to make its adult learning system more inclusive (see Chapter 4).
The role of formal adult education is increasing…
As in most countries, the bulk of learning takes place informally in Finland, with 69% of adults taking part in non-institutionalised learning activities every year, e.g. learning from peers, according to AES data. Close to one in two adults take part in non-formal learning (48%), i.e. in courses of short duration and/or not leading to a certification, while a smaller share of adults takes part in formal learning (14%). Participation in formal and informal learning has increased in Finland over the past decade, while non-formal learning participation has decreased. This is the inverse of the pattern for the EU28 as whole, where there was an increase in informal and non-formal learning, as well as a slight decrease of formal learning (Figure 1.14).
Note: The baseline varies across categories, e.g. skill-level refers to all adults, while contract type refers to employed adults only. Low-skilled refers to adults scoring at level 1 or below in literacy and/or numeracy in PIAAC; long-term unemployed are defined at those who have been unemployed for 12 months or more; low-wage refers to workers who earn at most two third of the national median wage; high risk of automation refers to adults in jobs with at least 70% probability of automation; temporary refers to workers in temporary contracts; workers in SMEs refers to workers in enterprises between 1 and 249 employees.
Source: OECD PIAAC data (2012).
By age, the increase in formal learning in Finland was strongest for the younger age groups. Participation by 25-34 year olds increased from 24% to 32% between 2007 and 2016. A smaller increase from 11% to 15% was observed for those aged 35-44. This raises the question of whether the observed increase in formal adult learning participation is in reality a symptom of increasingly drawn-out initial education careers.
It should also be noted that it is becoming difficult to distinguish between formal and non-formal learning in Finland. Modularisation, the possibility to take partial degrees and recognition of prior learning have blurred the lines between the two forms of learning. Non-formal learning is becoming increasingly formalised.
Source: Eurostat, AES data (2016).
…, but the available data may overestimate participation.
As defined in this report, adult learners are individuals who have finalised their initial education including higher education and are re-entering the education system to upskill or reskill, typically after having spent time in the labour market. However, this definition is not reflected in the data presented above. Official published statistics from international surveys (AES, LFS and PIAAC) count all adults aged 25 and over in education as adult learners, irrespective of whether this learning constitutes part of their initial degree.
Young people in Finland often have longer initial education careers than in other countries. In particular, they start later and take longer to complete higher education. The average age of graduation with a Bachelors’ degree is 28 years, significantly higher than the OECD average of 26 years. Master’s graduates are on average 32 years of age, compared to an OECD average of 30 years. This is likely to overestimate adult learning participation in Finland compared to other countries. An exact assessment of the extent of the issue is difficult. However, it can be shown that the group of 25-34 year olds in formal education make up a high share of ‘adult learners’ (Figure 1.15). One can assume that a significant share of this group represents young adults still completing their initial education.
Source: OECD elaboration based on Eurostat, AES and population statistics.
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Notes
← 1. Source: Statistics Finland, Labour Force Survey data, indicator: 11pw, own calculations.
← 2. Institutions include: adult and evening secondary education, apprenticeships, vocational training institutes, polytechnics and adult education centres, open polytechnics, continuous vocational training courses at universities or colleges and their continuing education centres, training activities for summer universities, non-vocational training of folk high schools, non-vocational training of music schools, sports colleges, training provided by civic and labour colleges, training in language schools, training provided by organisations, study clubs, dance schools, course training organised by the employer, training activities of specific training firms of training centres, conferences, seminars and similar training events, other education and training and studying abroad.
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