Unequal access to employment support hurts laid-off workers in Sweden
Back to Work: Sweden says that 2.1% of Swedish workers with at least one year of tenure are laid off each year as firms close or downsize in response to fluctuations in demand and production. The share of workers who find a new job within one year after displacement is higher than in most other OECD countries, standing at 85%.
But successful outcomes are not shared equally between all workers. Blue-collar workers are less likely to find a new job and, when they do, are more likely to end up in temporary or fixed-term employment.
Displaced low-skilled workers suffer the greatest earning losses at re-employment and these losses tend to be more persistent.
Early response measures before a dismissal takes place through Job Security Councils, which are based on collective agreements and financed by employers, are effective for many workers at risk of being dismissed.
However, they do not reach all workers. Disadvantaged groups rely on job-search counselling and re-training measures provided by the public employment service, and this support is coming too late.
A major challenge is to share the economic costs of structural adjustment more equally. Large gaps in the employment protection legislation governing hiring and firing of temporary and permanent workers penalise youth and low‑skilled workers who already have a high risk of displacement, leading to a vicious circle of temporary jobs interspersed with unemployment for many young workers.
To help address these challenges, the OECD recommends that Sweden:
Further ease the last‑in‑first‑out rule used to determine the priority of dismissals, as it penalise disadvantaged workers and can hamper efficient economic restructuring.
Expand the adjustment support provided by Job Security Councils during the notification period to all types of displaced workers, including youths and workers with atypical employment contracts.
Improve timely re‑employment counselling and support by the public employment service.
Invest in, and increase access to, training for low‑skilled and blue‑collar displaced workers, who are disadvantaged in today’s dual‑support system.
Broaden the coverage in the unemployment insurance especially for vulnerable groups, to re-establish the legitimacy of the system.
Encourage systematic and rigorous evaluations on the effectiveness of policy measures targeted at displaced workers mainly provided by the social partners. ■