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1. Labour market situation in the country

2. Main concepts

Labour market situation in the country

Sweden is one of the most comprehensive welfare states in the world, characterised by universal coverage, high levels of social protection and a large public sector. The labour market is mainly regulated through collective agreements between social partners without any interference from the government.

The main agreement regulating the relationship between social partners was set up in 1938 and is called Saltsjöbadsavtalet. The agreement gives trade unions and employers the right to negotiate working conditions and wages in collective agreements.

The relationship between employers and workers and their organisations is governed by several laws, granting basic protection for employees. However, the social partners can deviate from legislation by collective agreements.

According to a report (2019) from the Swedish National Mediation office (Medlingsinstitutet), about 70% of workers in Sweden are organised into unions, and nearly 90% of all employees are affiliated to an employers' organisation. The high percentage of members gives legitimacy to collective agreements. Also worth mentioning is that a collective agreement bound employer must apply the agreement equally to employees who are not members of the contracting employees.

Acts and ordinances relating to working life in Sweden

The employment protection Act (Lagen om anställningsskydd) regulates the relationship between employees and employers in the public and private sector. 

The Codetermination Act (Lagen om medbestämmande i arbetslivet) regulates collective agreements, employees’ right of trade union representation and the right to join a trade union or employers’ organisation.

The Work Time Act (Arbetstidslagen) regulates working hours. 

The Work Environment Act (Arbetsmiljölagen) regulates obligations of employers on the prevention of illness and accidents at work.

Discrimination Act (Diskrimineringslagen) is intended to combat discrimination and promote equal rights and opportunities regardless of sex, gender identity or expression, ethnicity, religion or other belief, disability, sexual orientation or age.

The Annual Leave Act (Semesterlagen) regulates benefits with regard to annual leave, holiday pay and vacation pay. 

The Parental Leave Act (Föräldraledighetslagen) regulates the right of a parent to be on leave from their employment. 

The Rental Workers Act (Lag om uthyrning av arbetstagare) regulates the conditions for workers who are employed by temporary work agencies. A fundamental rule of the law is the principle of equality – that wages and working conditions should be the same regardless of whether a person is directly employed by the company or working for a temporary work agency. The law can in some parts be replaced by collective agreements.

Ordinance on the Job guarantee for young people (Förordning om jobbgaranti för ungdomar) contains provisions on the labour market policy programme Job guarantee for young people.

Labour market trends from the 1990s until today

During the early years in the 1990s an economic crisis occurred in Sweden, which led to greatly increased unemployment. To curb youth unemployment, upper secondary level vocational programmes were extended from two to three years. The intention was to broaden the general theoretical elements in vocational education in order to give all pupils the possibility to continue with post-secondary studies. Accordingly, the number of student places in higher education also increased, which meant more people went on to secondary and higher education levels (Olofsson & Wadensjö, 2015).

Since the 1990s crisis, the development of the labour market has undergone dramatic changes. Both the social functioning and its composition composition in respect to different expertise and training requirements have changed drastically. The Swedish workforce has today a considerably higher formal education level of attainment compared to the early 1990s. Within industry, the demand for workers with specialized skills is higher compared to a few decades ago.

Harder labour market requirements

Conditions in working life are crucially different compared to a few decades previously, when the transition phase to the labour market was more well-defined and time-delimited. A study (Eklund, Karlsson & Pettersson, 2015) indicated that the labour market functions less effectively. An issue that has attracted much attention recently concerns matching the labour market development with the demand of skills in various companies and different employees.

Previously, professional skills development was largely ruled by a company’s needs. The opportunities for young people (including those with relatively weak levels of basic education) to get a permanent job with extensive skill and wage development, were then quite common. This has however changed; today the labour market is characterised by much greater flexibility in employment conditions and higher demands on constant individual development. Companies are also less likely to invest in young people’s career and skill development (Olofsson, 2014).

Therefore, today young people have a much more protracted and tortuous path towards finding a job. This is illustrated by the fact that the age at which young people become established on the labour market is higher. It is therefore not unusual for young people to be engaged in short-term and temporary employments, and to commute between working and studying.

Many young people are also referred into entry-levels jobs or work conditions similar to internships. Young people therefore tend to be caught in unsafe or relatively unskilled jobs for longer periods of time compared to the population in general (Olofsson, 2014).

In the light of the labour market development described above, and in the context of obstacles when entering the labour market, a study by Olofsson and Wadensjö (2012) showed that:

• An incomplete upper secondary school education today creates major problems in the transition from school to work
• Swedish work legislation favours those with permanent jobs. Young people are therefore in a weaker position as they more commonly have temporary jobs. Usually they are last in and therefore the first to go
• Young people are, compared to middle-age workers, at a disadvantage because they have less experience and are therefore expected to have lower productivity levels.

Labour market situation today

According to statistics from the Statistics Sweden's labour force survey, LFS (Arbetskraftsundersökningarna, AKU), youth unemployment level in 2018, 17.4% in the age group 15-24, was at its lowest level since 2003. Since then, the unemployment rate has been rising, and was 24.0% in 2020. Over the years, the proportion has been slightly higher among young men compared to young women. In 2020, the share was 25.1% among young men and 22.8% among young women.

There are groups of young people who have particular difficulties entering the labour market. Among young people born in Sweden, 20.3% were unemployed in 2020, compared to 36.6 % among  young people born abroad.

Main concepts

Unemployment measures

The official unemployment rate is measured by Statistics Sweden's labour force survey, LFS (Arbetskraftsundersökningarna, AKU). LFS describes the current employment conditions for the population aged between 15 and 74 years of age and gives information on the development of the labour market. The survey is conducted regularly every month during the whole year. The results are presented as monthly, quarterly and annually statistics, with focus on both the number and the percentage of employed and unemployed persons. 

The definition of unemployment and employment is in accordance with the guidelines given by the International Labour Organization (ILO) and follows the ordinances available in the EU.

In regard to young people, the labour market measurement alone does not tell the whole picture for the youth population in general. In order to be able to discuss young people’s integration into the labour market, several measurements are needed simultaneously.

This is because young people are a group of individuals who switch between studying and part-time jobs. They are on the path from full-time education to a permanent job, or between their studies and facing exclusion. They is also a group wherein a large proportion of the unemployed are short-term unemployed. This means that young people within the labour force survey is a very changeable group, and that they can be more or less employed at different times of the year.

Statistical Sweden has therefore worked to present additional statistics on youth unemployment, presenting quarterly LFS reports which include a section reporting on the unemployment rate taking into account, among other things, the number of unemployed young people who are full-time students and the number of occupying a NEET status.