According to the Confederation of Finnish Industries, the cost of strikes at the beginning of the year to the Finnish economy will already rise to close to a billion euros. According to other economists, it is very difficult to isolate the effects from the rest of the economy.
Extensively strikes affecting society cause considerable economic losses. But how considerable, there is no consensus among economic experts.
Traditionally, the Confederation of Business and Industry (EK) has put clear numbers on the table. So this time too. Managing director Jyri Häkämiehen according to the three-day strikes in January cost around half a billion euros, and the strikes in February will double the bill to around one billion euros.
Although the numbers are suspiciously round, they have not been pulled from a stetson, so to speak. Liaison manager of the person responsible for EK's assessment Lauri Vuoren according to the calculations are based on the number of participants in the strikes. Information on how strikes affect production is obtained from member unions and companies.
“With Statistics Finland's input-output tables, it is possible to calculate the multiplier effects due to production losses on other sectors,” says Vuori.
Production losses are further converted into a combined gross domestic product effect. According to Vuori, calculated since last autumn, the impact of all strikes on the gross domestic product (GDP) has been around 900 million euros according to EK's calculation method.
If Finland's GDP was about 270 billion euros in 2023, a loss of 900 million euros would eat up about 0.3 percent of it.
Others according to economists, evaluating the effects is not quite so straightforward. At the moment, the situation is complicated by the economic downturn.
In Vuori's calculation, for example, it is assumed that if no employees have been laid off, the company's production runs all the time.
The forecasting manager of the Institute for Economic Research (Etla). Päivi Puontin according to almost half of the industrial companies have estimated at the end of last year that they have too much capacity in relation to demand.
If the production is in any case insufficient, the production of one or two strike days can perhaps easily be replaced at other times. Also, the shutdown of ports for a couple of days does not necessarily affect exports as much as during very busy times.
The same the Forecasting Manager of the Bank of Finland agrees with the difficulty of the assessment Meri Obstbaum. The bank has not even tried to make an estimate because there are too many unknown factors involved.
“Of course, the effect is negative, but if the duration of the strikes is very short, the effects can be temporary,” he says.
According to Obstbaum, it is impossible to estimate to what extent production losses can be recovered on other days. “The economic situation and capacity utilization is low in industry anyway.”
In theory, according to him, it can be calculated that the loss of one day's exports would mean 220 million euros.
“But that's far too rough an estimate and would only apply to exports,” says Obstbaum.
The most obvious the production losses are in the so-called process industry, where the process usually runs at a steady pace and its ramping up and down is exceptional. Thus, for example, the effect of the strike stoppage at the Neste refinery was relatively straightforward to calculate.
In the end, companies will be able to calculate the true size of their losses, at least in retrospect. It is a different matter whether they have an interest in sharing information with the public.
When we start to assess how a strike at kindergartens or public transport will indirectly affect the economy, we are instead in really muddy waters. Working remotely is common, you can often get to work temporarily by other means, and day care is often arranged somehow.
I'm working Forecasting Manager Juho Koistinen still even tried to calculate the effects of the strikes. Koistinen simply calculated how much labor is lost due to strikes. According to it, one strike day, when 130,000 people are on strike, would eat up about 0.02 percent of the year's GDP.
“This is an extremely rough estimate that does not take into account, for example, sector-specific productivity differences at all or multiplier effects,” says Koistinen.
He estimates that the effects should actually be multiplied by at least three.
Koistinen also says that making a reliable assessment is extremely difficult.
“It's almost impossible to evaluate the effects, even in retrospect, because it's really difficult to isolate them from other factors affecting the economy,” says Koistinen.
Etlan Puonti thinks the same.
“We don't have a point of comparison, i.e. information about how the economy would have developed without the strike.”
According to Puonti, a strike of a few days is practically not taken into account when preparing Etla's financial forecast.
Specially on the employer's side, we are also concerned about reputational damage, i.e. how frequent strikes affect the desire of foreign companies to invest in Finland. Reputational damage could also occur if orders were not delivered due to strikes.
“On the other hand, the labor market and social security reforms planned by the government can increase employment or productivity in the long term. The IMF has also recommended this type of action to Finland,” says Puonti.
Obstbaum also thinks that the costs of strikes should be weighed in relation to the reforms they oppose.
Both Puonti and Obstbaum, on the other hand, state that there is little empirical research evidence on the
effects of many so-called structural reforms, because it is difficult to study them reliably when it is impossible to organize a genuine comparative setting.
One the way to evaluate the effect of strikes is to look at how they affect the valuation of companies on the stock exchange.
An experienced investor, who does not want to use his own name due to the sensitivity of the situation, estimates that the impact of strikes on company valuations is small.
Even the strike of forest company UPM's employees, which lasted more than three months in the spring of 2022, was treated as a one-time expense.
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