The labor market is constantly evolving – jobs disappear and new jobs are created. Thus far, this transformation has primarily benefited highly educated individuals. As new technologies involving artificial intelligence are introduced, however, an increasing number of highly educated people will also suffer from changes in the labor market, argues the SNS Economic Policy Council in its report Structural Transformation of the Swedish Labor Market: Consequences and Policy Measures.
Overall, being made redundant in Sweden is less dramatic than in many other OECD countries. Most people transition from one job to another without any major problems. However, there are also groups that tend to experience problems. The ones affected the most by structural changes are older and low-skilled individuals in sparsely populated areas losing their jobs in the manufacturing industry. Situations in which the level of redundancies is high in relation to the local labor market also have a particularly negative and permanent effect on people’s incomes.
“We see how, in recent years, employment has decreased in the industrial sector and increased in the private service sector. This change is quite undramatic for many – they change occupations without any significant loss of income. But some groups have a hard time managing this change and might need more support,” says Peter Fredriksson, chairperson of the SNS Economic Policy Council.
General training initiatives are not enough for older and low-skilled individuals. What they need, according to the researchers, is relatively short courses with a clear link to occupations demanded in the labor market. They also point to the importance of the Public Employment Service (Swedish: Arbetsförmedlingen) being present in rural municipalities.
“Personal job-seeking support and presenting positions that job-seekers are required to apply for seem to reduce the time for finding a new job. However, the Public Employment Service has in recent years reduced its presence in rural municipalities. Unfortunately, this affects the ones who need the most support,” says Peter Fredriksson.
The researchers believe that the transition student finance scheme introduced on October 1, 2022, will not reach those affected the most by structural changes. They stress that the target group is too broad and that the transition student finance scheme should be more clearly targeted at those who need the most retraining.
The SNS Economic Policy Council Report 2023 is funded with support from the Jan Wallander and Tom Hedelius Foundation.
Each year, SNS appoints a group of researchers who, referred to as the SNS Economic Policy Council, analyze how the Swedish economy operates over time in relation to key issues. Based on their conclusions, the researchers then make recommendations to politicians and occasionally to other decision-makers as well.
The SNS Economic Policy Council has existed since 1974 and more than a hundred researchers have participated so far. The authors of these reports are responsible for analyses, conclusions and suggestions. SNS as an organization does not take a position in relation to these.
Peter Fredriksson is a professor of economics at Uppsala University. He is director of Uppsala Center for Labor Studies (UCLS), member of the Royal Swedish Academy of Sciences and is affiliated with the Institute of Labour Economics (IZA) in Bonn, CESIfo in Munich and the Institute for Evaluation of Labour Market and Education Policy (IFAU) in Uppsala.
Georg Graetz is an associate professor of economics at Uppsala University. He is also affiliated with UCLS, Centre for Economic Performance (CEP) in London, CESIfo, IZA and IFAU.
Lena Hensvik is a professor of economics at Uppsala University. She is editor of the journal Labour Economics and also affiliated with UCLS, IFAU and the Centre for Economic Policy Research (CEPR) in London.
David Seim is a professor of economics at Stockholm University. He is editor of the Journal of Public Economics and also affiliated with UCLS, IZA and CEPR.
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