Labour markets in Finland during the great twentieth centuty1

Abstract

The study compares the great depressions of the twentieth century in Finland from the perspective of labour market adjustment channels. The increase in employment was much more rapid during the rebound from the great depression of the 1930s compared with the recovery from the great slump of the 1990s. There was a moderate decline in real wages in manufacturing industries during the early 1990s, However, the slump of the 1930s brought a severe fall in real wages. The nominal wage adjustment of the Finnish labour markets was entirely dissimilar in these two depressions. During the 1990s nominal wages in the manufacturing industries did not decline at all. This pattern is in sharp contrast to the deep cuts in nominal wages during the 1930s. There was an increase in the level of labour productivity during the great depressions of the twentieth century which is linked to restructuring during the times of economic slowdown.