Stefano ScarpettaDirector

Directorate for Employment, Labour and Social Affairs

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

Launch roundtable, Stockholm, 16 December 2015

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

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

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

(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

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

00.5

11.5

2

Scale 0-6

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

(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

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.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0.0

0.2

0.4

0.6

0.8

1.0

1. PES and administration 2. Training (including apprenticeship)

4. Employment incentives 5. Other

% of GDP

Expenditure on ALMPs in Sweden from 1998 to 2013,percentage of GDP

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

(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

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 characteristicsPercentages

• 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

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

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