SNS Economic Policy Council Report 2026. Staffing in the Welfare Sector

The welfare sector accounts for one fifth of Sweden’s labor market – yet it also has the lowest wages in the EU compared to the rest of the economy. Under current conditions, the welfare sector cannot both be staffed adequately and continue to expand. In the SNS Economic Policy Council report, four researchers show that uncomfortable choices are necessary: higher wages to increase attractiveness, lower formal qualification requirements, reduced ambitions for welfare services, or a combination of these. 

– A realistic way forward is to use skills more differentiated. Let highly educated staff focus on tasks that truly require their expertise, and lower qualification requirements for other duties. This makes it possible to raise wages where recruitment problems are most severe without costs spiraling, while also allowing more groups to find work in the sector, says Oskar Nordström Skans, Chair of the SNS Economic Policy Council. 

The welfare sector already faces staffing challenges today. At the same time, demographic change, rising political ambitions, and increasing prosperity point towards continued growth in demand for welfare services. 

Low Relative Wages – But Satisfied Employees 

However, recruitment problems in the welfare sector are unlikely to stem primarily from poor working conditions. On average, welfare employees report the same level of job satisfaction as others. They experience their work as meaningful and are more likely to remain in the labor force at older ages than others. There are no signs of a general flight from the sector, although mobility has increased with more people both entering and leaving. But the researchers point to a Swedish peculiarity: 

– In an international perspective, Sweden stands out because its welfare sector has lower wages compared to the rest of the economy than any other EU country, while the sector is also larger than in most other countries. An effective way to increase attractiveness – though not without cost – is to raise relative wages in shortage occupations, says Olof Åslund. 

Structural Problems Require Political Decisions 

The report shows that many welfare occupations require specific education, making it difficult to scale up quickly by attracting labor from other parts of the economy. When needs increase, recruitment therefore becomes expensive, slow, and uncertain. 

– Ultimately, the supply of labor and people’s willingness and ability to work in the welfare sector are determined by politicians. If the recruitment challenges are to be solved, political leaders must priorities among the paths we outline, says Lena Hensvik. 

Paths Forward for the Welfare State 

According to the report, there are three main ways to meet the recruitment challenge. All options involve difficult trade-offs and increased costs – economic or political. 

Make More People Want to Work in the Sector

Higher wages can facilitate recruitment. A related tool is targeted education subsidies, which in other countries have been shown to generate more and better applicants to specialist training programs. This path will likely require additional funding through higher taxes or fees. 

Ensure that More People Can Work in the Sector

To ease recruitment, it is reasonable to minimize formal competence requirements and other barriers. Over recent decades, the share of foreign-born workers in the welfare sector has increased sharply, largely because many people with refugee-related migration backgrounds work in the sector. Yet political debate consistently emphasizes reduced migration. 

Lower Recruitment Ambitions

This can be achieved through prioritization between services or through increased productivity. However, the researchers show that the welfare sector is dominated by tasks that are difficult to streamline to such an extent that staffing shortages can be solved through AI and other technologies. A general increase in demand for welfare may also increase recruitment needs: 

– If productivity grows faster in other sectors, giving people greater purchasing power, the result may be that a larger share of economic demand is directed towards welfare services. Paradoxically, technological development may therefore worsen welfare recruitment problems, concludes Georg Graetz. 

About the SNS Economic Policy Council 

Since 1974, SNS annually appoints a group of academic researchers that, going under the name of the SNS Economic Policy Council, analyses how various key aspects of the economy function over time. Based on its conclusions, the Council makes recommendations to politicians and also, occasionally, to other decision-makers.

SNS’ purpose is to ensure that the public debate is based on high-quality scientific research; the Economic Policy Council reports usually attract a good deal of attention in the media. The authors take full responsibility for the analysis, conclusions and proposals in the report, on which SNS as an organisation adopts a neutral stance.

About the Authors

Oskar Nordström Skans (Chair), Professor of Economics, Uppsala University 

Georg Graetz, Reader in Economics, University of Edinburgh 

Lena Hensvik, Professor of Economics, Uppsala University 

Olof Åslund, Professor of Economics, Uppsala University