Is the labour market pressure cooker about to boil over? Is there enough restraint in the labour market?

Real wage growth and improvements in living standards are based on productivity growth. In 2008, Finland experienced a negative shock that led to a decline in productivity and a slowdown in growth. However, wage growth continued at a rapid pace.

As a result, real wage developments decoupled from productivity, creating a need for adjustment in the labour market. Prior to the COVID-19 pandemic, labour markets had already largely adapted to the new situation. A low unemployment rate no longer accelerates wage growth to the same extent as before. (AI translation)

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