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Back to work: Sweden

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

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Back to work: Sweden

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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