Finland’s unemployment rate has climbed to 9.9%, making it the second highest in the European Union, according to the latest figures from Eurostat. Only Spain, at 10.4%, records a higher rate. The new data signals a striking shift in the EU’s labour landscape, where high joblessness was traditionally concentrated in Southern Europe.
A reversal of EU unemployment trends
In previous years, countries such as Greece, Portugal and Italy consistently registered the highest levels of unemployment in the EU. However, this pattern has reversed: Finland and Sweden (8.3%) now both rank above Greece (7.9%) in unemployment figures. This change is not due to a worsening Nordic labour market alone, but also to gradual improvements in Southern Europe.
“This situation is perverse – we’re not used to seeing this,” said Elina Pylkkänen, Under-Secretary of State at Finland’s Ministry of Economic Affairs and Employment.
Recovery funding favoured Southern Europe
One factor behind the trend is the Next Generation EU plan. The 750 billion euro package delivered substantial funding to Southern European economies such as Spain and Italy, helping them stimulate growth and create jobs. By contrast, Nordic countries, including Finland, received less support from the package.
According to Pylkkänen, this uneven distribution contributed to a widening economic gap: while Southern Europe recovered faster than expected, Finland was left more vulnerable to external shocks.
Domestic pressures on Finland’s economy
Finland has been disproportionately affected by other crises. The war in Ukraine, coupled with soaring inflation and the European Central Bank’s high interest rates, has undermined domestic demand. High borrowing costs have especially impacted Finnish homeowners and weakened sectors like construction, further driving unemployment.
“Monetary policy isn’t always optimal for Finland,” noted Päivi Puonti, forecasting director at the Research Institute of the Finnish Economy (ETLA).
Youth unemployment at alarming levels
Finland also struggles with youth unemployment, which reached 23% in June. This is the fourth-highest youth jobless rate in the EU, following Estonia, Spain and Sweden. While the situation of younger workers has long been a challenge across Europe, Finland’s recent surge is especially stark.
Statistics Finland reported that the number of unemployed individuals rose by 27,000 in the second quarter of 2025 compared to the same period last year.
Looking ahead
With the ECB unlikely to reduce interest rates in the short term and public spending constrained, Finland may face a prolonged period of economic stagnation. The government is expected to revise labour market policies in the autumn, but no concrete plans have been announced.
Experts say that addressing structural vulnerabilities, especially in youth employment and housing affordability, will be key to reversing the trend.
