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Back to Work: Sweden

Improving the Re-employment Prospects of Displaced Workers

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less and have fewer benefits than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report is the fourth in a series of reports looking at how this challenge is being tackled in a number of OECD countries. It shows that Sweden has been relatively successful in minimising the adverse effects of displaced workers, manily due to the longstanding tradition of collaboration between the social partners to share responsibility for restructuring by creating special arrangements and practices that provide help to workers much faster that in other OECD countries. Despite this positive institutional framework, there is room to improve policies targeted to displaced workers as remarkable inequalities still exist in both the Swedish labour market and in the way workers are treated.

 

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Executive summary

Workers who lose their jobs, as firms close or downsize in response to fluctuations in demand and production, face substantial economic and non-economic costs. On average, each year around 2.1% of Swedish workers with at least one year of tenure involuntarily lose their job. In an international comparison, Sweden has been relatively successful in minimising the adverse consequences for workers who bear the brunt of structural adjustment. This is mainly due to the longstanding tradition of collaboration between the social partners to share responsibility for restructuring, which has resulted in special arrangements and practices that provide help to workers affected by economic change much faster than in most OECD countries. As a result of this approach, at over 85% the share of retrenched workers who find a new job within one year is higher than in any other OECD country. The Swedish strategy not only has a distinct advantage in the way firms adapt to change but also underpins public acceptance of economic restructuring.

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