20.09.2024

Difficult Times Still A Reality for Companies in the Chemical Industry

Production volumes in the chemical industry have seen slight growth for the first time since summer 2022. However, demand remains significantly below average, and business outlooks are still negative. A clear turnaround for the better is yet to be seen, according to the industry review.

– The recovery is still weak, and the situation for companies in the chemical industry remains challenging. Basic demand remains low, emphasizes Mika Aalto, Managing Director of the Chemical Industry Federation of Finland.

Half of the companies responding to the Chemical Industry Federation’s member survey report their situation as poor or very poor. Over a third (36 percent) of companies indicate that layoffs are underway or expected. This number is exceptionally high. Additionally, 15 percent of respondents, slightly above the usual rate, report dismissals.

Companies responding to the member survey state that costs are rising, but demand remains low. The survey was conducted from September 4 to 6 and received responses from 69 CEOs.

Wage Development in Finland Better Than Its Reputation

Wages of Finnish employees have developed at the general European level since the 2000s, according to the September industry review by the Chemical Industry Federation of Finland. From 2000 to 2023, the wage level in Finland rose faster than in eurozone countries and at the same pace as in EU countries.

In terms of real wages, Finland saw an increase of 23 percent, significantly higher than the eurozone (12 percent) or the EU (10 percent). This is explained by the fact that inflation in Finland was considerably slower than in the eurozone or the EU between 2000 and 2023.

The most significant growth in real wages occurred in the first decade of the 2000s. In recent years, real wages have declined due to high inflation, both in EU countries and Finland.

– Weak purchasing power is linked to economic performance. GDP per hour worked has decreased in Finland almost in line with real wages, says Sampo Pehkonen, economist at the Chemical Industry Federation of Finland.

– This is not due to increased corporate profits, either. The profit margin of companies has been, on average, lower in the 2020s than, for example, in the late 2010s, Pehkonen adds.

Last Spring’s Political Strikes Still Impacting Companies

The political strikes in the spring 2024 have also caused significant economic damage, amounting to hundreds of millions of euros, and have clearly impacted business operations. According to the member survey, chemical industry companies reported that the strikes have tarnished Finland’s reputation. Trust is a part of Finland’s competitiveness, and strikes have not been viewed favorably in international markets.

Collective bargaining negotiations in the chemical industry will begin in October. The Chemical Industry Federation of Finland negotiates a total of 15 sector-specific and three company-specific collective agreements, most of them with Industrial Union.

– The outlook for the export industry remains weak. The political strikes in the spring and the resulting damages to companies and jobs cannot be brushed aside; they will affect the entire year’s results. It is crucial that the collective bargaining negotiations are conducted constructively and without unnecessary posturing. Getting the export industry back on a growth path is key to Finland’s economy and employment,” says Minna Etu-Seppälä, Director of Industrial Relations at the Chemical Industry Federation of Finland.

Negotiations with Industrial Union will begin on Friday, October 11, and with Trade Union Pro on Monday, October 14.

The collective agreements for the basic chemical industry, plastics product industry and chemical product industry, oil, natural gas, and petrochemical sectors, and the chemical sector officials’ agreement will expire at the end of December. The collective agreement for senior salaried employees will expire on January 31, 2025.