Comparison between the Baltics and Sweden: Shortage of specialists has also become a major concern for Swedish companies
Surveys of large corporations conducted in October by SEB revealed that, despite the ongoing pandemic, supply chain problems and the upsurge in energy prices, CFOs are optimistic about the business climate in Estonia, Latvia, Lithuania, and Sweden. The positive outlook for the next 12 months has also given confidence to take more risks. What are the similarities and differences in the assessments and challenges facing Baltic and Swedish CFOs over the next 12 months?
Business climate assessed as favourable
Of the survey respondents, 73% of Swedish and 62% of Estonian CFOs believe that the business climate would be good or very good for their company over the next 12 months. In Lithuania and in Latvia, 55% and 51% of corporations, respectively, view the business climate as being favourable.
‘Although this autumn has brought along new risks, Swedish CFOs are looking beyond the pandemic even more clearly than before; the survey revealed that the CFOs believe that many of the problems are only temporary in nature,’ commented Marcus Widén, an economist at SEB.
Confidence and a positive attitude towards the coming year have also given the confidence to take greater risks, even though there are plenty of challenges remaining.
Shortage of specialists now affecting everyone, including Sweden
Rising labour costs and a shortage of skilled labour have already been a source of major concern for Latvian and Lithuanian companies for several years. CFOs in Estonia and Sweden are also now afraid of a shortage in skilled labour and increasing labour costs. ‘While COVID became the primary topic for companies for a time, the long-standing number one concern has now returned – the lack of skilled labour and thereby also the overall increase in labour costs,’ said Artjom Sokolov, Head of Corporate Banking at SEB.
In the case of large Swedish corporations, expectations regarding the number of employees have reached a level not seen since the spring of 2018. At the same time, however, the shortage of skilled labour has gradually risen to the point where it has become part of the daily agenda of Swedish CFOs. In spring, 26% of respondents considered the shortage of specialists to be a problem, with that number now having reached 34%. In Lithuania, this figure was the highest, with 59% of corporations reporting a shortage in skilled workers.
Swedes’ concerns about labour costs are on the rise
In addition to the shortage of labour, labour costs are also seen as a concern. In Lithuania (57%), Estonia (56%) and Latvia (41%), the increase in HR costs is among one of the biggest challenges facing CFOs over the next 12 months.
In Sweden, the increasing cost of labour remains relatively low among the risks, but it is one of the risks that has risen the most in the last two surveys. In spring, only 6% of respondents considered it a challenge, with the number now reaching 14%. While the deficit caused by the pandemic is expected to resolve itself, there is a risk that this will take a long time. If the problem persists, labour costs are likely to rise in the future, as competition for the necessary skilled workers is high.
Other major challenges
In Latvia, the new Covid restrictions are still the biggest concern, cited by 59% of respondents.
Estonia (67%) and Sweden are also seeing greater pressure on prices and profit margins, although these risks are seen as being lower in Sweden (33%) than in the spring survey (41%).
Cyber risks are seen as a growing threat in both the Baltics and in Sweden.
Compared to two years ago, the total lack of concern about cyber risk is decreasing. In the Baltics, 7% of Lithuanian, 4% of Latvian and 8% of Estonian CFOs cited this risk.
In Sweden, cyber risks are also seen as an increasing threat. Compared to last autumn, cyber risks were viewed as one of the most important threats by 15% of CFOs, up from 6% last autumn. This is probably due to the attacks by hackers during the year that caused major business damage and media attention.
The top priority for Estonian and Latvian corporations is digitalisation, while in Lithuania it is investments in production capacity.
Organic growth in Sweden
The priorities of corporations differ quite significantly in a comparison between companies in the Baltic States and Sweden.
Estonian companies are focusing on digitalisation, automation and innovation.
Latvia has similar priorities. However, large Lithuanian corporations (25%) prioritise increasing the volume of investments.
Swedish CFOs have set organic growth as a top priority, while they also prioritise new product launches, investments in increased production capacity and cost reduction. Acquisitions remain a high priority, but have remained on the same level when compared to the spring.
In the Baltics, the focus continues to remain on domestic markets in terms of investments and possible business expansions. ‘The priority given to digitisation has doubled in just a few years among the CFOs in Estonia. However, only 10% of Estonian companies still see that their future growth could come from expanding abroad. The question is, how long can we, as a small economy, limit our growth to local expansion?’ Sokolov commented.
Sustainability and climate change awareness is high everywhere
More than one half of the companies in the Baltics already have a strategy in place to adapt to the challenges caused by climate change and more than one half are assessing the footprint of their products/services. Out of all CFOs, 80% claim that their company intends to invest in sustainability over the next 12 months. Carbon footprint measurement is one of the most important investment targets. Out of the CFOs in the Baltics, 87% see economic benefits in environmental investments.
‘When it comes to sustainability, the bank sees itself not only as a financier for companies, but also as an adviser. In this journey, SEB will be supportive and reflective for its partners, helping the parties to find a solution that suits them and that is in line with the sustainability standards,’ said Sokolov.
See the summaries of surveys:
*For the CFO surveys, respondents are companies from Sweden and the Baltics with an annual turnover of at least EUR 20 million.
*SEB conducted the Baltic Corporate CFO Survey for the eighth time. The focus of the survey is the assessment of companies concerning the economic situation, the main problems and opportunities in the business environment.
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