Finland unemployment crisis has become a growing concern after new Eurostat data revealed the country now has the second-highest jobless rate in the European Union. Only Spain ranks higher.
In May, Finland’s unemployment rate hit 9.9 percent, trailing Spain’s 10.4 percent. Sweden followed with 8.3 percent, while the EU average remained significantly lower.
A decade ago, high unemployment was concentrated in southern EU nations such as Spain, Greece and Italy. That pattern has reversed, with Finland now in a position once associated with the most crisis-hit economies of the eurozone.
According to Elina Pylkkänen, Under-Secretary at the Ministry of Economic Affairs and Employment, the shift is not due to worsening conditions in the south but rather improvements there. She points to the EU’s pandemic recovery package as a key factor.
Southern EU countries received large grants from the €750 billion recovery fund, while Finland and Sweden were allocated much smaller amounts. About half of the total fund was distributed as grants. These funds helped stimulate growth and create jobs across the Mediterranean, bringing unemployment down in countries that were once struggling the most.
Greece, which had been second-highest last year, was not included in the latest Eurostat release. Finland now surpasses even Greece in jobless rankings.
Finland’s economy has been hit harder by the fallout from the war in Ukraine and prolonged high interest rates. Päivi Puonti, Head of Forecasting at the Research Institute of the Finnish Economy (Etla), explained that European Central Bank interest rate hikes have had a stronger impact in Finland than in many other EU countries.
“When the ECB sets its rates, they may not always match Finland’s needs,” Puonti said.
Higher borrowing costs have quickly impacted households, driving up mortgage expenses and pushing the construction sector into a slump. Inflation affected the whole eurozone, but the ECB’s monetary response has disproportionately hurt Finland’s economy.
Sweden has also seen unemployment climb, placing both Nordic countries among the EU’s top five for joblessness.
Youth unemployment is particularly severe. In June, 23 percent of Finns under 25 were unemployed, ranking the country fourth in the EU for youth joblessness. Only Estonia, Spain and Sweden reported higher rates.
These numbers reflect deeper structural and cyclical problems. Weak domestic demand, global industrial uncertainty and slow investment have all contributed to the ongoing challenges. Analysts also note that Finland’s export-driven economy has been slow to recover.
Shifts in US trade policy have added more uncertainty, particularly for export-dependent countries like Finland.
With both overall and youth unemployment well above the EU average, pressure is growing on policymakers to deliver targeted solutions. Officials warn that without stronger measures to boost growth and create jobs, Finland risks remaining near the top of Europe’s unemployment rankings for the foreseeable future.
