(1) Job displacement in Sweden particularly impacts low-skilled and younger workers, though 85% of displaced workers find reemployment within a year, with average annual earnings falling 4-5% in the following 4 years. (2) Sweden's system has strengths in anticipating and managing restructuring through early intervention and employment support from Job Security Councils, though not all displaced workers receive support and training opportunities can be limited. (3) Unemployment insurance generosity varies significantly between older and younger workers and between blue-collar and white-collar workers, with disparities in income support that could be addressed through broader coverage and benefit adequacy monitoring.

1. Stefano Scarpetta
Director
Directorate for Employment, Labour and Social Affairs
Back to Work: Sweden
Improving the re-employment prospects of displaced
workers
Launch roundtable, Stockholm, 16 December 2015

2. Outline of the presentation
• Job displacement in Sweden – some facts
• Key strengths of the Swedish system
• Main challenges and possible ways forward
– Prevention and early intervention
– Re-employment assistance
– Income support

3. Job displacement in Sweden: Key facts
• During 2002-12, 2.1% of employees with at least one year
of tenure lost their job due to economic reasons
• Some groups are particularly vulnerable to displacement
– Low skilled workers
– Younger workers
• On average, during the period 2000-09, around 85% of
displaced workers were re-employed within one year…
• …but average annual earnings fall by approximately 4-
5% in the 4 years after displacement

4. Major Strengths of the Swedish system
• A sound ability to anticipate and manage restructuring
• Early intervention to provide employment support
before dismissal takes place
• Tailored employment support for different types of
displaced workers provided by Job Security Councils to
complement government assistance
 This results in prompt and efficient early action
facilitated by the social partners

5. (1) Employment protection hurts vulnerable
groups and job-loss prevention is rare
• Large disparities across workers in employment
protection legislation
– Huge gap in employment protection between permanent and
temporary Swedish workers
– Widespread use of the ‘seniority rule’ despite considerable
flexibility in collective agreements
• Limited attention on job preservations policies
– Newly developed Short-time Work Scheme developed after GFC
and may restrict take-up in future

6. Permanent workers are much better
protected than temporary workers
Source: OECD (2015), Back to work Sweden – Improving the re-employment prospects of displaced workers, Paris: OECD Publishing.
Gap in the strictness of employment protection legislation (EPL)
between permanent and temporary contracts in 2013
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
Scale 0-6

7. Prevention policies: Ways forward
• Reduce the gap in employment protection
between permanent and temporary contracts
• Further ease the last-in-first-out rule which
penalises disadvantaged groups
• Evaluate the effectiveness of the recently
introduced short-time work scheme

8. (2) Re-employment services provided
by JSCs are effective but can be limited
• Some workers are excluded from tailored support of the
job security councils (JSCs)
– Fixed-term and temporary workers
– Youth and vulnerable groups
• Many who qualify for support receive only partial services
– TSL does not offer training services to blue collar workers
• PES fails to deliver timely and tailored training to workers
who cannot access JSC services
– The PES mostly caters for difficult-to-place unemployed people

9. Public spending on training has
declined sharply
Source: OECD (2015), Back to work Sweden – Improving the re-employment prospects of displaced workers, Paris: OECD Publishing.
0.0
0.2
0.4
0.6
0.8
1.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
% of GDP
1. PES and administration 2. Training (including apprenticeship)
4. Employment incentives 5. Other
Expenditure on ALMPs in Sweden from 1998 to 2013,
percentage of GDP

10. Re-employment assistance:
Ways forward
• Extend support provided by JSCs 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 PES to cater better and earlier for the displaced
workers who face the highest adjustment costs
• Invest in and improve access to training for low-skilled
and blue-collar displaced workers disadvantaged in
today’s dual-support system

11. (3) Disparities in the provision of
income support
• The generosity of unemployment insurance (UI) is quite
satisfactory for those eligible; but inequalities exist:
– Between older and younger workers
– Between blue-collar and white-collar workers

12. Benefit coverage is quite variable
0
5
10
15
20
25
30
35
40
45
Men Women 15-24 25-54 55-64 Low-skilled Medium-
skilled
High-skilled Blue collar White collar
Gender Age Education Profession
Unemployment benefit coverage rates vary strongly by personal characteristics
Percentages

13. • Broaden UI coverage to
– eliminate disparities in income support provision
– re-establish the legitimacy of the system
• Implement a monitoring system including
benefits that are not publicly provided to assess
whether there are gaps in benefit adequacy
Income support: Ways forward

14. Conclusions
• Sweden has been relatively successful in minimising
the adverse consequences for displaced workers,
mainly due to the active role of the social partners
• A number of steps can be taken to improve disparities
among displaced workers:
– Offering re-employment support to displaced workers who
need intensive help
– Providing adequate income support to all displaced workers
– Encouraging systematic evaluations on the effectiveness of
policy measures targeted at displaced workers

15. Thank you for your attention
Stefano.Scarpetta@oecd.org
For more information and OECD publications on the topic:
http://www.oecd.org/els/emp/displaced-workers.htm
To contact the authors of the report:
Shruti.Singh@oecd.org
Elena.Crivellaro@oecd.org