Chapter 1. Trends and challenges: An updated snapshot of Småland-Blekinge

An evolving national context

According to the recent OECD Economic Survey of Sweden (OECD, 2017[2]), Sweden weathered the global financial and economic crisis with limited damage, thanks to strong macroeconomic, fiscal and financial fundamentals, as well as a competitive and diversified business sector. Output has grown faster than in most other OECD countries over recent years (Figure 1.1, Panel A). Population increases, to a large part related to immigration, have contributed significantly to growth. Even so, the country’s gross domestic product (GDP) per capita has expanded faster than in most OECD countries (Figure 1.1, Panel B). Business investment has picked up, which has contributed to reviving labour productivity, now increasing rapidly. Employment has also increased more rapidly than in most OECD countries over recent years, and the unemployment rate has receded and is now around 7%. In a weak global environment, Sweden’s growth has been primarily driven by strong domestic consumption and investment. The trend of growth is expected to remain solid over the coming years.

Figure 1.1. GDP growth in OECD member countries, 2011-15

Source: OECD (2018[3]), Economic Surveys: Sweden 2017, OECD, Paris.

Over the past two decades, inclusive, sustainable and green growth has underpinned a high quality of life for Swedes. The country has welcomed a large number of immigrants, which have both contributed to and benefitted from economic prosperity. The foreign-born accounted for over 16% of the population in 2015, up from 10% in 1993 at the low point of the early-1990s recession. The country faces challenges of integrating foreign-born, which are less likely to be employed, often earn less and work in occupations with lower status than natives with similar education.

The areas of relative weakness highlighted by the Better Life Index and identified in previous OECD Economic Surveys include:

• Housing market which penalised households with low income and wealth, leading to a widening of inequalities despite remaining relatively low.

• Rigidities in the labour market, hampering access to jobs for the low-skilled and putting pressure on inequality.

• Declining educational performance.

• Persistent gender gap, particularly for foreign-born women, despite Sweden being one of the most gender-equal countries in the OECD.

Sweden has maintained a high level of performance in science, technology and innovation (STI) but there are signs of weakening. As the OECD Review of Innovation Policy: Sweden 2012 (OECD, 2013[4]) observed, Sweden’s research performance has lost some ground vis-à-vis traditional comparators such as Denmark, the Netherlands and Switzerland, and a number of emerging economies are catching up fast. Business research and development expenditure has declined in the wake of the restructuring and change in ownership of large multinational enterprises of Swedish origin, which now have new global corporate strategies. Sweden’s overall research and development intensity is no longer the highest in the world.

Against this backdrop, the government introduced the Research and Innovation Bills of 2008 and 2012 aimed at strengthening the performance of the Swedish STI system. These include:

• A significant increase in the “block funding” for universities and the introduction of a performance-based allocation mechanism.

• Additional funding for selected Strategic Research Areas (SFOs); an enhanced role and funding for research institutes (RIs).

• The development and funding of public-private partnerships within selected Strategic Innovation Areas (SIOs).

• The initiation of a Challenge-driven Innovation (UDI) programme focusing on societal challenges.

• Improved prioritisation and support for Swedish participation in European research and innovation activities.

These efforts have reached mixed results with limited success in strengthening the university research base, commendable efforts to link research and innovation with some concerns, a need for more concerted effort to tackle societal challenges and prioritisation and strategy development constrained by weak governance (OECD, 2016[5]). Despite these mixed results, Sweden remains one of the most innovative countries in the OECD with business research and development expenditure standing at 2.31% of GDP well above the OECD average (Figure 1.2). Government research and development expenditure also stands above the OECD average with a large share allocated for research to Swedish universities, well placed in global rankings of world-class universities and publications. Higher education research and development, at 0.92 in 2014, is amongst the highest in the OECD (OECD, 2017[6]).

Figure 1.2. Science and innovation in Sweden, 2016

Comparative performance of national science and innovation systems

Note: Normalised index of performance relative to the median values in the OECD area (Index median=100).

Source: OECD (2016[7]), “Sweden”, in OECD Science, Technology and Innovation Outlook 2016, https://doi.org/10.1787/sti_in_outlook-2016-88-en.

Population and demography

Settlement patterns and population dynamics

The population in Småland-Blekinge amounted to 948 117 people in 2017, which is equal to 9.5% of Sweden’s population, with the largest share of inhabitants living in Jönköping (352 735), followed by Kalmar (242 301), Kronoberg (194 628) and Blekinge (158 453).

Overall, the population in Småland-Blekinge increased annually on average by 0.33% between 1968 and 2016 against 0.58% in Sweden. The population dynamics show a relatively flat trend from 1970 to 2011 and a significant increase since 2011 (Figure 1.3). Over this latter period (since 2011), the increase amounted to 0.89% annually, below the average in Sweden (1.23%) – primarily driven by Stockholm (2.09%) – but slightly above the un-weighted average of Swedish counties (0.88%). Amongst the 4 counties from Småland-Blekinge, Kronoberg experienced the highest annual growth (1.16%) adding 10 688 inhabitants over 2011-17 and Jönköping experienced the highest absolute growth (15 869). This rise in population is primarily driven by an increase in migrants (see next section and also Chapter 3).

The population growth was highly concentrated in a few municipalities. Only 4 municipalities, Habo, Jönköping, Kalmar and Växjö out of the region’s 39 municipalities contributed to 46% of the net population growth (39 498) in the region during 2011-16. In total, 19 municipalities recorded population declines over the 1991-2016 period (Figure 1.4). The municipalities experiencing population growth were, in general, the largest and most densely populated in the region and home to almost half its population.

Figure 1.3. Population in Småland-Blekinge and its counties, 1968-2017

Sources: Statistics Sweden, (2018_[8]), Befolkningsstatistik i Sammandrag 1960-2016 [Population Statistics in Summary 1960–2016], https://www.scb.se/hitta-statistik/statistik-efter-amne/befolkning/befolkningens-sammansattning/befolkningsstatistik/pong/tabell-och-diagram/helarsstatistik--riket/befolkningsstatistik-i-sammandrag/ (accessed on 31 January 2018); Statistics Sweden  (2018[8]), Population by County, 1968-2016, http://www.statistikdatabasen.scb.se/pxweb/en/ssd/START__BE__BE0101__BE0101A/BefolkningNy/table/tableViewLayout1/?rxid=709a880a-2c74-413a-9dd8-dc463b18f609 (accessed on 31 January 2018).

Figure 1.4. Population growth and density at the municipal level, 1991-2016

Note: Population growth is percentage change between 1991-2016 and population density is population per km², 2016.

Source: Statistics Sweden, (2018_[8]), Befolkningsstatistik i Sammandrag 1960-2016 [Population Statistics in Summary 1960–2016], https://www.scb.se/hitta-statistik/statistik-efter-amne/befolkning/befolkningens-sammansattning/befolkningsstatistik/pong/tabell-och-diagram/helarsstatistik--riket/befolkningsstatistik-i-sammandrag/ (accessed on 31 January 2018).

Population density remains stable and increased slightly in all four counties over 2012-17. Population density in Kalmar and Kronoberg remains close to the Swedish average (24 inhabitants per km²), while Jönköping has a higher (34) density and Blekinge the highest (55) despite its small population size found (Figure 1.5). In comparison to OECD TL3 regions (200), the lower density of the 4 countries confirms their rural nature. According to the OECD extended typology, Blekinge, Kalmar and Kronoberg are predominantly rural remote regions and Jönköping is predominantly rural close to the city. Despite their relatively low population density, the four countries in 2017 are facing the challenge of population decline – particularly prominent in rural remote regions – albeit to a lesser extent than in 2012.

Figure 1.5. Population density of Småland-Blekinge’s TL3 regions, 2012 and 2017

Source: OECD (2018[9]), Regional Demography, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

The increase in population growth in the four counties has been mainly driven by a growth rate in the youth population over the last five years. The percentage change in the share of youth (ages 0-14) has increased in Småland-Blekinge above that of the Swedish average between 2012 and 2017 (12.4% versus 11.2% percentage change respectively). Amongst its counties, all except Jönköping recorded a higher youth population growth rate than the Swedish average and Blekinge and Kalmar host the largest share of youth. In contrast, population growth amongst the working-age population (15-64) and seniors (65 years and more) has remained relatively stable between 2012 and 2017 standing below the average growth rate in Sweden (Table 1.1).

Table 1.1. Population by age cohort of Småland-Blekinge’s TL3 regions, percentage change, 2012-17
	Sweden (%)	Jönköping County (%)	Kronoberg County (%)	Kalmar County (%)	Blekinge County (%)	Småland-Blekinge (%)
Youth (ages 0-14)	11.2	10.8	14.3	13.7	12.0	12.4
Working age (ages 15-64)	2.3	1.1	1.6	-0.4	-0.2	0.6
Seniors (ages 65 and more)	10.8	9.4	9.8	9.6	8.2	9.3
Source: OECD (2018[9]), Regional Demography, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

The four counties still face the pressures of an ageing population

Despite these receding pressures, population ageing remains prevalent in Småland-Blekinge, most notably in Kalmar County. Among all counties in Sweden, Kalmar has the second oldest age profile – with an average age of 43.8 in 2017 and the highest elderly dependency ratio at 40.72 (Table 1.2). All counties in Småland-Blekinge saw in increase in the average age of their population between 2012 and 2017 with the exception of Kronoberg, which saw a slight decline (-0.5%). This is undoubtedly related to the fact that Kronoberg has experienced high population growth in the past five years. Despite the population increases, the share of elderly and the share of youth increased at a higher rate than the rise in population. In other words, the elderly dependency ratio and the youth dependency ratio increased from 2012-17 against a drop in the working-age population (Figure 1.6). Among all OECD TL3 regions, the four counties are amongst the second and third quartiles in terms of the elderly dependency ratio.

Figure 1.6. Demographic profile of population share by age cohort Småland-Blekinge TL3 regions and Sweden, 2012 and 2017

Source: OECD (2018[9]), Regional Demography, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

Table 1.2. Average age by county, Sweden, 2010 and 2016
	2010	2016	Percentage change 2010-16
Stockholm County	38.9	39.1	0.5
Uppsala County	39.8	40.2	1.0
Skåne County	40.8	40.9	0.2
Västra Götaland County	40.8	41.0	0.5
Östergötland County	41.2	41.3	0.2
Jönköping County	41.4	41.5	0.2
Kronoberg County	41.8	41.6	-0.5
Västerbotten County	41.3	41.7	1.0
Örebro County	41.8	41.7	-0.2
Halland County	41.6	42.1	1.2
Västmanland County	42.1	42.2	0.2
Södermanland County	42.3	42.3	0.0
Blekinge County	43.0	43.1	0.2
Jämtland County	43.1	43.2	0.2
Gävleborg County	43.3	43.4	0.2
Värmland County	43.3	43.5	0.5
Dalarna County	43.3	43.5	0.5
Västernorrland County	43.3	43.5	0.5
Norrbotten County	43.2	43.7	1.2
Kalmar County	43.7	43.8	0.2
Gotland County	43.4	44.6	2.8
Source: Migrationsverket (2018[10]), Översikter och Statistik från Tidigare år [Reviews and Statistics from Former Years], https://www.migrationsverket.se/Om-Migrationsverket/Statistik/Oversikter-och-statistik-fran-tidigare-ar.html (accessed on 31 January 2018).

Economic performance of the four counties

The territorial review highlighted the strong performance of Blekinge before the 2007 financial crisis period (OECD, 2012[1]). Whereas the county had the lowest level of GDP per capita in the region in 1995, it was the only amongst the four counties to record GDP per capita growth rates well above the average for Sweden over 1995-2007. Jönköping’s performance was slightly above the average and Kronoberg’s slightly below it.

After the crisis period, the convergence pattern of Blekinge halted, due to a slower growth rate in GDP per capita than the national average (Table 1.5). Kalmar’s performance, which recorded the second lowest level of GDP per capita in 1995, has also trailed behind the national average, especially in recent years. Jönköping has also performed behind the national pattern in recent years in contrast to Kronoberg, the only region that outperformed the national rate in GDP per capita, especially over 2011-15, even surpassing the performance of Stockholm.

Thus, amongst the four counties, only Kronoberg has been catching up to the national level of GDP per capita from standing 10 percentage points below the national average in 2000 to 7 percentage points in 2015 (Figure 1.7). Blekinge and Kalmar have been diverging and falling behind the national average over the last decade standing 20 percentage points below the national average. Jönköping reduced their distance from average levels of GDP per capita, albeit by just two or three percentage points, although from 2011 it has been growing at the same pace as the national average.

Figure 1.7. GDP per capita in Småland-Blekinge TL3 regions relative to the Swedish average, 2000-15

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

In terms of productivity growth, all 4 counties have been performing below the national average of 1.54 percentage points over 2000-15 (Table 1.6). Yet in recent years, over the period 2011-15, performance has overall improved. Jönköping has shown growth rates of 0.2 percentage points, very similar to the national ones. Kronoberg’s growth rates have been slightly higher, of 0.3 percentage points. Blekinge occupies the top end among the 4 counties, with 0.6 percentage of productivity growth, only below the capital city, Stockholm. Only the county of Kalmar has shown negative productivity growth rates over the recent years.

The gap between the counties’ labour productivity and the national average is wider than the one regarding GDP per capita. In 2000, Blekinge figured 20 percentage points below the Swedish average, which was the smallest difference, as the other counties were between 24 and 25 points below (Figure 1.8). Since then, despite spikes in 2003 and 2008, counties have been losing ground to the national average of productivity growth. Once the effects of the financial crisis could be observed, the counties have maintained a trend which points towards stabilisation. Still, in 2014, the gap was wider than the one observed in 2000. It varied from 26 percentage points in Kronoberg to 31 in Jönköping. Improving productivity levels, more than GDP per capita, should be a priority in these 4 counties.

Figure 1.8. Labour productivity in Småland-Blekinge relative to the Swedish average, 2000-15

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

It is important to highlight the strong performance of Sweden’s economy during this period under which the analysis benchmarks the four counties. It is also important to understand how the four counties have performed globally against comparable regions. To draw these international comparisons, the analysis identifies 44 OECD TL3 regions similar to the 4 counties of Småland-Blekinge, using 4 criteria to measure regional economies with a similar economic base. These include:

• Density: measured by the level of population density in 2012 with values between 0.5 to 2 of the average population density in Småland-Blekinge.

• Level of development: measured by the level of GDP per capita in 2012 with values ranging between 0.5 to 2 of the average level of GDP per capita in Småland-Blekinge.

• Economic structure: measured by the share of the manufacturing sector in the economy, between 20%-40% in 2012.

• Type of region: only considers predominantly rural regions or intermediate regions excluding predominantly urban regions according to the extended TL3 classification.

Applying these 4 criteria to all OECD TL3 regions, 44 TL3 regions are identified (Table 1.7):

Comparing the performance of Småland-Blekinge in this group of regions from the OECD in GDP per capita reveals that the level of GDP per capita of the 4 counties was around the average, which was of USD 33 344 in 2012 (Figure 1.9). In the Småland-Blekinge region, it varied from USD 32 709 in Blekinge and USD 38 272 in Kronoberg, as of 2012.

In terms of growth rates in GDP per capita, all 4 regions were amongst the top 50% group of regions with the fastest growth, over the period 2012-15. Kronoberg and Blekinge record the 10th and 11th positions in this group, with a 2.4 percentage point of GDP per capita growth rate. The top performers in this comparison are the two Irish Regions of South-East and Mid-West, with a growth rate of 6.7 and 6.2 percentage points respectively. The other 2 Swedish regions in the comparison, Södermanland and Örebro, have experienced a decrease of GDP per capita, with negative rates of 1.8 and 0.4 respectively.

Figure 1.9. GDP per capita levels and growth in 44 OECD TL3 regions, 2012-15

Squares and dots represent Swedish regions

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

Comparing the performance of Småland-Blekinge to the benchmark regions from the OECD in labour productivity, the figure is less optimistic. Their productivity is relatively low in the four counties, falling into the bottom half of the distribution amongst the group. Kronoberg is placed in the 22nd position, right in the middle, with USD 68 803 Gross Value Added (GVA) per worker as of 2012 (Figure 1.10). The other three counties analysed in this study occupy a few positions below. The Swedish regions of Örebro and Södermanland are in the top half of the spectrum.

In terms of growth rates in labour productivity, all four regions were amongst the upper half. Blekinge recorded the 4th fastest growth rate in labour productivity in the period between 2011 and 2014, of 2.3%. The labour productivity in the other 3 counties has gained between 0.25% and 5.1% in the same period. Albeit small, the growth is positive, whereas all the regions in the bottom half of the spectrum have registered negative labour productivity growth rates.

More recent trends are not available, given that data at subnational level have a 3-year lag. Thus, they are only available up to 2014 for labour productivity and 2015 for GDP per capita. Nevertheless, more recent trends can be captured through the 2017 Regional Potential Index (RPI) produced by Nordregio. This index ranks all 74 European Nordic regions, in terms of demography, labour force and the economy3 (Grunfelder, 2018[14]). According to this index, the following patterns can be detected:

• Blekinge and Kalmar, which were at the bottom of the distribution in 2014, have made significant progress in the most recent years. Blekinge moved from 59th place in 2015 to 50th place in 2017 in the RPI rankings, while Kalmar has moved from the 62nd to the 45th place.

• Meanwhile, Jönköping and Kronoberg, which have strong rankings, maintained relatively well their position. They have declined only marginally between 2015 and 2017. Jönköping has fallen slightly from 30th place in the rankings in 2015 to 35th in 2017 while Kronoberg has fallen from 30th to 32nd.

• Stockholm, which occupied 3rd place in 2015, is in the first place as of 2017. This strong performance of the capital region of Sweden must not be forgotten when comparing the four counties with the Swedish average, as above.

Figure 1.10. Labour productivity in 44 OECD TL3 regions, 2012-15

Squares and dots represent Swedish regions

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

In terms of sectoral composition, the four counties continue to be more specialised in manufacturing and the primary sector than the rest of the country (Table 1.8). The sector has gravitated around 2% and 4% of their GDP as of 2014 whereas, in Sweden, it represented 1.5% of the GDP. The importance of agriculture, forestry and fishing has decreased in Blekinge and Jönköping from 2008 to 2014, while Kalmar and Kronenberg have registered the opposite trend. Still, this variation has been quite constrained: no more than 1% change has been observed during this period.

Manufacturing is the most important economic sector in the region. In 2014, it accounted for between 22% and 26% of the GDP of these counties whereas the manufacturing sector for the whole country represented 16.7% of the GDP. The weight of manufacturing has decreased in all the counties, while that of financial, insurance and real estate activities has increased in all of them from 2008 to 2014. These trends are consistent with the national ones, in which Swedish firms have been moving up the value chain, which partly explains the increasing share of services in output. More value is created in upstream activities (e.g. research and development, and product design) and downstream operations (e.g. marketing and customer services) than at the production stage, a pattern which has been accentuated over time by productivity gains in manufacturing and offshoring to low-cost production sites. Such activities require a high level of skills and intangible capital to allow firms to gain or retain a comparative advantage by differentiating their products from those of competitors.

In terms of industrial specialisation (see Box 1.1), the region is more specialised in low to medium technology sectors, in comparison to high technology ones. All counties except Blekinge are more specialised in medium-low and low technology sectors (Figure 1.11). Between 2007 and 2015, some changes are visible:

• The county of Jönköping has increased its specialisation in both medium-low and low technology sectors, maintaining its position as the most specialised county among the four.

• Kalmar has become less specialised in medium-low technology and more specialised in low technology sectors.

• Kronoberg has become less specialised in low-technology sectors, whilst variation in the medium-low sector has been less prominent.

• Blekinge has become less specialised in low-technology sectors and more in medium-low technology sectors, yet remaining as the least specialised among the four counties, given its greater specialisation in high technology and knowledge-intensive sectors, as discussed further below.

Figure 1.11. Specialisation in medium-low and low technology industries in Småland-Blekinge TL3 regions and Sweden, 2007 and 2015

Note: Balassa Hoover Index, so BHI = (Eij/Ej) / (Ei/E). BHI measures the degree of specialisation per region. A ratio where BHI>1 indicates a relatively high degree of specialisation, and vice-versa. BHI is equivalent to the more common location quotient (LQ), which is typically used to indicate whether a region is export/import oriented in a particular industry.

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

With respect to knowledge-intensive services and high-technology industries, only Blekinge is more specialised in these two sectors than Sweden as a whole (Figure 1.12). Particularly, Blekinge has gained further specialisation in high tech industries over the period 2007-15. Jönköping has also increased specialisation in high-technology manufacturing; as a result of which the county is now one of the top ten in Sweden.

Despite slight improvements in higher-technology and knowledge-intensive activities, Kalmar and Kronoberg Counties remain at the bottom of the rankings of Swedish counties in these fields. The current favourable economic climate in the region may be an important factor in explaining companies’ low motivation to engage in more technology-intensive activities.

Figure 1.12. Specialisation in high-technology and knowledge-intensive industries in Småland-Blekinge TL3 regions and Sweden, 2007 and 2015

Note: Balassa Hoover Index, so BHI = (Eij/Ej) / (Ei/E). BHI measures the degree of specialisation per region. A ratio where BHI>1 indicates a relatively high degree of specialisation, and vice-versa. BHI is equivalent to the more common location quotient (LQ), which is typically used to indicate whether a region is export/import oriented in a particular industry.

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

Across sectors, labour productivity in Småland-Blekinge regions compared to the benchmark regions from the OECD in 2014 was higher in smaller sectors such as professional and information services, and lower in larger sectors such as manufacturing and trade (Figure 1.13). Among Småland-Blekinge regions, Blekinge and Jönköping showed improvements between 2012 and 2014. The fast improvement in labour productivity in manufacturing of Blekinge is particularly notable given that the average level across comparable regions declined during the same period. Despite its small share in employment across regions, labour productivity in the agricultural sector improved in 2012-14 is all Småland-Blekinge regions except for Blekinge.

The labour market has been picking up, but large differences remain in the employment of native and foreign-born

Labour-market performance in Småland-Blekinge prior to the 2007-08 crisis was mixed, with Blekinge and Kalmar experiencing greater difficulties than Jönköping and Kronoberg (OECD, 2012[1]). Blekinge County had the largest gaps in unemployment and employment rates with respect to the Swedish averages, and Kalmar experienced consistently lower employment rates. Blekinge nevertheless weathered the crisis better than its neighbours, with a smaller rise in the unemployment rate over 2008-09 (OECD, 2012[1]).

Figure 1.13. Labour productivity for selected sectors in Småland-Blekinge and selected OECD TL3 regions, 2012-14

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

Over the past few years, in all 4 counties, the unemployment rates of those aged 16-24 have been declining. Blekinge still has higher unemployment rates than the national average in 2016 but has almost closed the gap in the last reducing the unemployment rate by 2 full percentage points from 9.7 in 2015 to 7.7 in 2016 (Figure 1.14). Kronoberg’s unemployment rate remained below the national average from 2001-15 and only in the last year (2015-16) has surpassed it, standing at 7.9. In contrast, the unemployment rates of Kalmar and in particular Jönköping are lower than the Swedish average both improving their unemployment situation since 2010, standing at 5.6 and 5.8 respectively in 2016.

Figure 1.14. Unemployment rate in Småland-Blekinge TL3 regions, 2010-16

Percentage of unemployed individuals over labour force 15 years of age and over

Note: Unemployment and employment rate is for those aged 15 and over (definition from the Labour Market Agency, Arbetsförmedlingen).

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

All four counties display the same cycle movement in employment rates. The employment rates in Jönköping and Kronoberg remained above the national average from 2010-16, although in Kronoberg it has dropped in the last year (2015-16). In contrast, the employment rates in Blekinge and Kalmar remain below the national average and since 2013 both have been converging standing less than 1 percentage point (0.7 and 0.9 respectively) below the national average in 2016 (Figure 1.15).

In addition, the employment difference between native workers and those born abroad remains large in Småland-Blekinge: close to a 20 percentage-point gap in all counties, with Blekinge and Jönköping recording the largest and smallest variations respectively (Statistics Sweden, 2016[16]).

The gap between female and male participation rates has increased but more women have accessed managerial positions

The difference in labour market participation rates between males and females in Småland-Blekinge has increased in the past few years, as opposed to the continuously narrowing gap which is observed in Sweden on average (OECD, 2018[17]).4 In 2015, female participation rates were lower in all 4 counties than for Sweden as a whole (-6.8%). The counties of Kalmar (-5.6 to -9.4) and Kronoberg (-6.1 to 8.4) experienced the most dramatic increase between 2013 and 2015, but Jönköping remains the county with the highest gender difference gap, reaching -10.9% in 2015 (Figure 1.16). While important gender differences persist, the proportion of women accessing a managerial position between 2009 and 2015 has steadily increased in all counties, oscillating between 30% and 35.5% in 2015, but there again Jönköping County lags behind its peers (Statistics Sweden, 2016[15]).

Figure 1.15. Employment rate in Småland-Blekinge TL3 regions, 2001-16

Percentage of employment for individuals aged 15 and over, over population aged 15 and over

Source: OECD (2018[16]) Regional Labour, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

Figure 1.16. Gender difference (female-male) in participation rates (%), Småland-Blekinge TL3 regions, 2009-16

Individuals aged 15 or more

Source: OECD (2018[16]) Regional Labour, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

The gap in unemployment rate female vis-à-vis male is larger than the national gap (Figure 1.17). Between 2010 and 2013, the gap (female unemployment rate minus male unemployment rate) decreased in all counties following the national trend. The national trend declined further until 2016 and, in contrast in Småland-Blekinge, the female unemployment rate increased again vis-à-vis the male from 2013 to 2016, except in Blekinge which decreased in 2016.

Figure 1.17. Unemployment rate gender difference in Småland-Blekinge TL3 regions, 2010-16

Unemployment rate gender difference, 15 years old or more (female-male)

Source: OECD (2018[16]) Regional Labour, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

In terms of employment rates in Småland-Blekinge, the rates between men and women were very similar in 2013 with the exception of Jönköping (Figure 1.18). Sweden, which had a bigger gender gap than the three counties, has been reducing the gap. In contrast, the gap has increased in all four counties.

Figure 1.18. Employment rate gender difference in Småland-Blekinge TL3 regions and Sweden, 2013-15

Employment rate gender difference, 15 years old or more (female-male)

Source: OECD (2018[16]) Regional Labour, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

Inter-regional disparities and well-being

Stockholm is the strongest performing large (TL2) region in Sweden recording the highest level of GDP per capita and labour productivity growth.5 Stockholm was responsible for over 40% of national GDP growth between 2000 and 2013 (Figure 1.19). Only Upper Norrland and East Middle Sweden were able to keep pace with Stockholm between 2000 and 2013, while in the rest of regions GDP per capita and labour productivity growth is slower.

Figure 1.19. Percentage contribution to national GDP growth, Swedish TL2 regions, 2000-13

Note: Percentage contribution shows the share of total GDP growth due to growth in the indicated region. Total contribution equals 100%.

Source: OECD (2016[18]), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, https://doi.org/10.1787/9789264260245-en.

The strong performance of Stockholm contributes to national prosperity but also puts pressure on inter-regional inequalities in Sweden, which have been rising over the last years. Despite recent increases, Sweden still enjoys relatively low levels of inter-regional inequalities when compared with OECD countries (Figure 1.20) recording the 6th lowest level in 2016.

Sweden and Småland-Blekinge show relatively high levels of well-being compared to other OECD regions

Småland-Blekinge is an attractive region with high levels of well-being offering high quality of life for its residents.6 The OECD Regional Well-being dataset measures 11 dimensions of well-being standardised across all TL2 regions in the OECD. There are currently no comparable data for well-being across TL3 regions (e.g. counties). Jönköping, Kalmar and Kronoberg along with Gotland are part of the TL2 region of Småland with Islands while Blekinge and Skåne are part of the TL2 regions of South Sweden.

The well-being indicators for Småland with Islands and South Sweden reveal a similar picture scoring relatively high in 9 of the 11 dimensions of well-being and low in just 2 of them (income and housing) (Figure 1.21). When comparing the individual dimensions of well-being amongst the 2 regions, Småland with Islands fares similarly or better in 9 of the 11 dimensions with respect to South Sweden.

Figure 1.20. Regional disparities in GDP per capita, OECD TL3 regions, 2016

Source: OECD (2018[13]), Regional Economy, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en. 

Figure 1.21. Well-being across 11 dimensions, selected Swedish TL2 regions, 2016

Source: OECD (n.d.[19]), Regional Well-Being Database, www.oecdregionalwellbeing.org.

The OECD Regional Well-being dataset also identifies OECD TL2 regions with a comparable level of well-being to Småland with Islands and South Sweden. These include Central Jutland (Denmark), Helsinki-Uusimaa (Finland), Brittany (France), Utrecht (Netherlands) and Oslo and Akershus (Norway).

Småland with Islands ranks at the top of Swedish rankings and in the top 20% of OECD regions in safety, life satisfaction and civic engagement (Figure 1.22). Housing also comes at the top of Swedish rankings but when compared to OECD it only stands at 60% of the distribution. Education is the area in which improvement is most needed, as Småland with Islands occupies the lowest ranking of all Swedish regions. In contrast, South Sweden, of which Blekinge County is a part of, tends to be in the bottom rankings, in environmental sustainability, employment outcomes and civic engagement. It is fair to assume that the weight of Skåne County may be greater than that of Blekinge County in determining those results, however, no distinction is possible under the South Sweden T2 region.

Figure 1.22. Well-being in Swedish TL2 regions, 2016

Note: Access to services is measured by household broadband, civic engagement by voter turnout, education by the share of the labour force with at least secondary education, jobs by employment and unemployment rate, community by perceived social support network, environment by average level of fine particulate matter (pm 2.5) in the region experienced by the population, income by disposable income per capita, health by mortality rate and life expectancy, safety by homicide rate, housing by number of rooms per person and life satisfaction by life satisfaction.

Source: OECD (2016[20]), Regional Well-Being in OECD Countries: Sweden, http://www.oecd.org/cfe/regional-policy/hows-life-country-facts-sweden.pdf (accessed on 30 January 2018).

Housing shortages remain a challenge

Akin to the rest of Sweden, the region of Småland-Blekinge is also faced with housing shortages which impact the lives of its residents and represent a bottleneck to economic development. Regional data from the Swedish National Board of Housing, Building and Planning (Boverket) reveals that the housing market in Småland-Blekinge is unbalanced with a deficit on housing in all 38 municipalities of the region (Boverket, 2018[21]). Estimates project no change to this situation in the coming 3 years in most municipalities. More precisely, the situation is estimated to improve in only 7 of the 38 municipalities comprising the Småland-Blekinge region.

A shortage of housing on the market or a lack of appropriate housing (in terms of cost and type) can have wide-ranging impacts. It can, for instance, reduce labour mobility as individuals find it more difficult to move in order to access employment and it prevents a barrier for new migrants to a region. While the housing shortage in Sweden is most pronounced in the largest cities where demand is the greatest, these trends are impacting a wide range of municipalities.

Rising property valuations are as a major challenge for Sweden as noted in the latest OECD Economic Survey (2017[22]), penalising households with low income and wealth and leading to a widening of inequalities. In Småland-Blekinge, property prices have followed the national trend, increasing from 2008-10, then declining until 2012 and increasing again until 2015 (Figure 1.23). In Jönköping and Kronoberg property prices are above the national average while in Kalmar and particularly Blekinge, they are below.

Figure 1.23. Property price index, Småland-Blekinge counties and Sweden, 2008-15

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

Accessibility, mobility and digital connectivity

The 2012 territorial review recommended improving the accessibility of Småland-Blekinge, both internally and externally, to enhance the competitiveness of the region. Although the region is geographically relatively close to European markets in the Swedish context, improving its accessibility has been at the forefront of the policy discussion.

There have been improvements in internal mobility via public transportation

While representing a small share of total public transportation journeys by bus and trains in Sweden in 2016, between 2010 and 2016 all counties in Småland-Blekinge have recorded annual developments higher than the Swedish average, with the exception of Blekinge County (Blekinge, 2018[23]) (Figure 1.24). This signals a positive transition of the region towards the adoption of more sustainable modes of transportation.

Figure 1.24. Journeys by public transportation (bus and train) in Swedish counties (%), 2010-16

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

Digital connectivity across the region has improved

Broadband connectivity has been an infrastructural priority for the past five years. All counties of Småland-Blekinge show significant increases in broadband connectivity at 100 Mbits deployed both in the home and work environments. In 2016, Jönköping and Kronoberg Counties registered the highest deployment figures: 62% and 58% in the home, and 50% and 51.5% in workplaces respectively. Blekinge and Kalmar Counties are the counties that made the most remarkable advancements between 2012 and 2016 in terms of deploying broadband both to homes and workplace. While important progress has been made in raising digital connectivity in the region, access to broadband remains limited compared to other OECD regions and the rest of Sweden. In terms of average speed for receiving data, Småland and Blekinge are still low. Despite improvements on access to 100 megabits for households between 2008 and 2016 (Figure 1.26), Blekinge, Kalmar and Kronoberg Counties are among the 6 counties with the lowest average speed among 21 counties in Sweden (Bredbandskollen, 2017[24]).

Figure 1.25. Share of annual road freight transport by regions of loading relative to national, Småland-Blekinge counties, 2013-17

Share of total transported goods (1 000 tonnes) to Swedish total

Source: Eurostat (2017[25]), National Annual Road Freight Transport by Regions of Loading (NUTS 3) and by Group of Goods (1 000 t), from 2008 Onwards, https://ec.europa.eu/eurostat/web/products-datasets/product?code=road_go_na_rl3g (accessed on 08 January 2019).

Figure 1.26. Broadband access for households, 10 and 100 megabits, Småland-Blekinge counties, 2008 and 2016

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

Innovation

In the counties of Småland-Blekinge, research and development expenditures as a percentage of GDP have either increased slightly or stagnated between 2013 and 2015. In 2015, Kronoberg County recorded the highest percentage of research and development expenditures as a percentage of GDP (3.1%), which brought it close to Sweden’s national average (3.3%), and was followed by Blekinge County (1.6%) (Figure 1.27). Research and development expenditures by the business community have most likely been driving those increases.

Business research and development expenditures as a percentage of GDP have increased in all four counties between 2013 and 2015, with Kronoberg and Jönköping as leading counties. The weight of business research and development expenditures is most visible when looking at Blekinge County in which, unlike its peer counties, business research and development expenditures almost doubled from 353 in 2013 to 680 in 2015. This important increase is also visible in terms of overall research and development expenditures as a percentage of GDP from Blekinge went from 1.1% in 2013 to 1.6% in 2015. In all counties, after the business community, the largest shares of research and development expenditures as a percentage of GDP come from universities and colleges.

Figure 1.27. Research and development expenditures as a percentage of GDP, Småland-Blekinge counties, 2015

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

In terms of patent intensity, all 4 counties recorded a higher patent intensity than their comparable group of 44 regions. Jönköping recorded the 10th highest patent intensity followed by Kalmar (11th), Blekinge (13th) and Kronoberg (21st). Over the last years, from 2012-15, Kronoberg recorded the 7th highest patent-intensity growth amongst the 44 comparable countries, followed by Blekinge (14th) and Jönköping (18th) (Figure 1.28). In contrast, patent-intensity growth in Kalmar was below the average growth of the 44 regions.

Figure 1.28. Patent-intensity levels and growth, Småland-Blekinge and selected TL3 regions, 2012-15

Source: OECD (2018[26]), Regional Innovation, OECD Regional Statistics (database), https://doi.org/10.1787/a8f15243-en.

Human capital and skills

…however, progress is being made

Despite the high shares of low-skilled people in the workforce, progress has been made over 2007-16 with all four counties reducing the share of low skills in their workforce at a higher rate than nationally. Jönköping recorded the highest decline (-5.4) across all Swedish regions, followed by Kalmar (-5.3) and Blekinge recorded the fourth highest decline (-4.9).

Figure 1.29. Low-skilled educational attainment of the labour force by county, Sweden 2007-16

Share of population (aged 25-64) with only primary and lower secondary school education

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], http://www.statistikdatabasen.scb.se/pxweb/en/ssd/START__UF__UF0506/Utbildning/table/tableViewLayout1/?rxid=364e5a0c-2341-4fd5-80f7-27f70a40408b (accessed on 30 January 2018).

Compare to national levels Blekinge and Kronoberg have a similar share of high-skilled workers while Kalmar and Jönköping have lower levels

Despite relatively low stock of skills compared to the Swedish average, the share of the labour force with tertiary education or higher is lower in all four counties than nationally. Kronoberg (22%) and Blekinge (22%) stood right below the Swedish average (23%) in 2016, in contrast to Kalmar (19%) and Jönköping (22%) both recording the 4th and 5th lowest score in Sweden (Figure 1.30).

Between 2007 and 2016, the share of the labour force with some form of tertiary education or higher (e.g. three years of post-secondary education) increased in all four counties. In Kronoberg (4.6 percentage points) and Jönköping (4.5 percentage points), the increase was larger than the national average (4.2 percentage points) against a lower increase in Kalmar (3.9 percentage points) and Blekinge (4.1 percentage points) (Figure 1.30).

In accordance with the Swedish average, the counties of Blekinge and Kalmar are characterised by a prevalence of foreign-born entrepreneurs. The share of Swedish native entrepreneurs is higher in Jönköping and Kronoberg.

Figure 1.30. Share of population with high skills by county, Sweden, 2007 and 2016

Individuals aged 25-64 with at least 3 years of post-secondary education

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).

Recent graduates have mixed success gaining employment post graduation

Recent graduates in Småland-Blekinge have mixed success gaining employment one-year post graduation. Among the counties, Jönköping and Kalmar Counties fair comparatively well, ranking 5th and 6th respectively among Sweden’s counties, while Kronoberg and Blekinge rank 13th and 18th respectively (Figure 1.31).

Figure 1.31. Share of graduates in employment one year after graduation by county, Sweden, 2014 and 2016

Individuals completing vocational education and training (VET) and transitioning into the labour market

Note: 2014 and 2016 values for Gotland not available.

Source: Myh (2018[28]), Swedish National Agency for Higher Vocational Education, http://www.myh.se (accessed on 30 January 2018).

In accordance with the Swedish average, the counties of Blekinge and Kalmar are characterised by a prevalence of foreign-born entrepreneurs (Figure 1.32). The share of Swedish native entrepreneurs is higher than that of foreign-born in Jönköping and Kronoberg.

Figure 1.32. Share of entrepreneurs in Småland-Blekinge counties and Sweden (%), 2015

Swedish native and foreign-born

Source: Statistics Sweden (2016[15]), Arbetskraftsundersökningarna (AKU) [Labour Force Surveys], https://www.scb.se/hitta-statistik/statistik-efter-amne/arbetsmarknad/arbetskraftsundersokningar/arbetskraftsundersokningarna-aku/ (accessed on 30 January 2018).