Back to Work: Sweden Improving the re-employment prospects of displaced workers

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