Swedish unemployment

Sweden is often held up as a country that manages to keep long-term unemployment relatively low, even when overall unemployment rises. The main differences come from active labour market policies, welfare design, and employer–union cooperation. 

Sweden invests heavily, more than most OECD countries, in training, job-search support, and subsidized work placements. Job-seekers are matched quickly to vacancies, retrained if needed, and given incentives to remain in the labour force. For example, someone who loses a job might enter a retraining scheme within weeks rather than sitting unemployed for months.

Unemployment benefits are relatively generous initially, but recipients must participate in training, job-search programmes, or subsidized work to keep them. This prevents people from drifting into inactivity while still providing a safety net.

There is co-ordination between unions, employers, and government. Collective agreements often support retraining and internal mobility instead of layoffs. This means displaced workers are more likely to be reabsorbed quickly, either within their sector or after reskilling.

Sweden puts big emphasis on continuous adult education, not just for the unemployed but also for employed workers who might be at risk of redundancy.This keeps the workforce relatively agile in the face of technological change.

The Public Employment Service (Arbetsförmedlingen) plays a very active role. It’s not just a ‘jobs board’ but a system that monitors the unemployed, refers them to training or subsidized jobs, and enforces participation requirements.

The obvious question is could the UK adopt a similar model? The UK already has some activation measures (like Job Centre Plus requirements), but there are key differences.

UK unemployment benefits are relatively low and time-limited, designed more to incentivize rapid re-entry into any job. Sweden instead combines generous support with compulsory participation in reskilling.

Sweden spends far more per unemployed person on ALMPs than the UK. Shifting the UK approach would mean significantly higher investment in training, apprenticeships, and subsidized employment schemes.

The UK has lower adult participation in lifelong learning compared to Sweden. To emulate Sweden, the UK would need to massively strengthen retraining programmes for mid-career workers.

Sweden’s cooperative union–employer system makes retraining and redeployment smoother. The UK’s more fragmented and adversarial labour relations could make this harder, though sectoral training partnerships, in construction or care, for example, could be expanded.

All this seems to suggest that in principle a Swedish-style approach could reduce long-term joblessness in the UK. But it would require higher investment in active labour market policies, stronger integration of training with welfare benefits, and more collaboration with unions and employers

Above all it would require a cultural shift toward seeing retraining as a normal part of working life. But all of this could be done, and would curb the UK’s long-term unemployment.

Madsen Pirie