The rules regarding the student finance for transition and retraining program need to be altered to ensure that the individuals with the greatest needs can engage in further training in order to improve their position in the labor market. According to two researchers in a new SNS report, this support should in particular be aimed at those at risk of becoming unemployed, such as individuals having been made redundant by their employer.
The student finance for transition and retraining program was introduced in connection with the new LAS agreement in 2022, in which employers were given more ways of departing from the first-in-last-out rules in cases of redundancies. This program is meant to give employees the chance to engage in further training and broaden their skills to thereby become more attractive in the labor market. It represents a major initiative, and the government has set aside SEK 2.84 billion in the 2024 state budget. This corresponds to approximately 15 percent of the total budget related to student finance available to the Swedish Board of Student Finance (CSN).
In the SNS report Who Receives Student Finance for Transition and Retraining? An Empirical Study of the First Two Application Periods, economists Peter Fredriksson and David Seim analyze the individuals who applied for and received this type of support. The study constitutes the first evaluation of the student finance for transition and retraining program since it was launched and contains data from the first two application periods – the fall of 2022 and the spring of 2023.
Among other things, the results of the study show that
- primarily individuals with a higher level of education apply for student finance for transition and retraining
- groups severely affected by structural changes – low-skilled individuals and individuals who work in occupations facing the greatest risk of being replaced by AI – apply for this support to a lesser extent
- the individuals having been granted support by CSN exhibit a higher level of education and overall face a lower risk of becoming unemployed compared to those who are rejected
- the student finance for transition and retraining program subsidizes training programs that would have been carried out even without this support
“The fact that people with a higher level of education and facing a lower likelihood of becoming unemployed are more often granted this support is partially due to CSN using the ‘first come, first served’ principle. In our study, we saw that individuals with a high level of education tend to apply more quickly and thus also have a greater chance of being granted this support,” says Peter Fredriksson.
The researchers also point to the importance of the statements collected by CSN from the transition organizations. These statements contain an assessment of the applicant’s labor market prospects and play an important role in the application process.
“These statements carry a great deal of weight. The chances of your application being successful are significantly higher for individuals presenting a statement from a transition organization, such as TSL or TRR. We see in our study that applicants facing a high risk of unemployment do not present such statements to the same extent as others,” according to David Seim.
Hence, this support should be aimed at individuals with the greatest need to change careers and engage in further training. This is especially true for low-skilled individuals, individuals facing a higher risk of unemployment and individuals working in occupations facing the greatest risk of being exposed to AI. The researchers furthermore argue in their report that this support should not be used to pay for training for individuals whose prospects in the labor market already look good.
about the report
The report is a follow-up to SNS Economic Policy Council Report 2023: Structural Changes in the Swedish Labor Market: Outcomes and Policy Measures. In that report, the authors argued that the individuals affected the most by structural changes are older and low-skilled individuals in sparsely populated areas who lose their jobs in the manufacturing industry. The report is part of the SNS research project Economic Security.
About the authors
Peter Fredriksson is a professor of economics at Uppsala University
David Seim is a professor of economics at Stockholm University