The Finnish labor market has become strongly polarized over the past decades. Polarization of the labor market refers to the division of the occupational structure into low- and high-wage jobs more clearly than before. At the same time, the share of medium-wage occupations in the labor market in particular has decreased. We are talking about a shrinking middle class.
The reasons for the division of the occupational structure have been attributed to structural changes in industry, technological development, the ageing population, the growth in demand for service goods and the outsourcing of functions. Technological development in particular has led to machines replacing routine work, for example in office, process and manufacturing work. The occupational group of loggers is a good example of the rebellion of machines. As late as the 1970s, there were around 100 loggers working in Finnish forests. With the mechanisation of timber harvesting, the number has shrunk to a few thousand.
Outsourcing has also displaced functions in Finland that are not geographically tied to a specific location. In this respect, many forest industry jobs are secure, although abstract specialist work can be done from abroad.
The growth in demand for goods produced by various service sectors, such as beauty, health, cleaning and outsourced gardening, reflects not only the aging population but also income growth.
Highly skilled professionals – such as researchers and engineers in certain fields – are unlikely to be spared by the change in professional structures. Many specialist jobs usually go hand in hand with technological skills, and highly skilled specialists are able to utilize technology in their own work. On the other hand, specialists are also needed to create new technology.
The reassuring news is that the Finnish labor market has adapted surprisingly well to the change in occupational structures. Robotization has not led to mass unemployment. However, the change in the occupational structure is expected to accelerate in the future, so society must react quickly to it. One way is to take into account the balance of labor demand and supply in the future.
Two characteristics have already been identified in the labour market, the importance of which has only increased over time. These are social skills and mathematical skills. In addition, flexibility is needed in the labour market, as work can be very diverse. Work is not necessarily done in one place, and income does not necessarily come from one source.
Education policy and continuous learning are key to preparing for the transformation of work. The reallocation of education places should therefore be more in line with future labour market prospects. According to statistics, up to a third of those who have lost their jobs in the transformation of work have relied only on basic education. It is difficult to target adult or conversion education to this group. It is important that in the future no one is left relying on basic education. Raising the compulsory school age is one answer to this problem.
Terhi Maczulskij
research manager
EAST
