You are here

Labour market Outlook 2020-2021 , Arbetsförmedlingen's

09 July 2020
Labour market Outlook 2020-2021 , Arbetsförmedlingen's

Labour market Outlook 2020-2021 , Arbetsförmedlingen's

Complete Document 




The economic activity is clearly affected by the pandemic


The ongoing pandemic has rapidly reduced the activity in the global economy. Restrictions and measures taken to reduce the spread of infection have contributed to a clearly reduced activity in the Swedish economy. Arbetsförmedlingen's (Swedish Public Employment Service) survey with private employers in the spring of 2020 shows low expectations regarding the demand of goods and services ahead. Arbetsförmedlingen estimates that the Swedish economic development is clearly slowing down in 2020 and that a recovery will take place in 2021. However, there is a high level of uncertainty related to the future development.


The number of employed persons will decrease during 2020 and 2021


As a result of the pandemic and its effects on the Swedish economy and the labour market, the number of employed persons is expected to decline for the first time since the financial crisis in 2008 - 2009. However, employment trends showed a clear slowdown already in the autumn of 2019 and the development is now accelerating as a result of the crisis.


Unemployment rises during the forecast period


The ongoing crisis and the sharp decline in economic activity are expected to lead to a reduction in the labour force during the forecast period. This is partly because more people are expected to start studies, and partly that people who have a weaker connection to the labour market will leave the labour force to a greater extent when the competition for the available jobs increases.


The number of registered unemployed at Arbetsförmedlingen is expected to continue to increase significantly in the coming quarters to reach over 600,000 registered unemployed in the first quarter of 2021.


Major challenges in the labour market


Higher unemployment is a major challenge for the whole society. Arbetsförmedlingen emphasizes four challenges in the labour market during 2020 and 2021: 

• More difficult situation for people who are new to the labour market

• The structural transformation increases the imbalances in the labour market 

• Long-term unemployment rises to record levels

• Changed conditions for implementing labour market policy


More difficult situation for new people in the labour market 


Those who first become unemployed when the demand for labour decreases are people with temporary employment and new people, especially young and foreign born, who enter the labour market. At the same time, the structural change in the labour market may result in that all jobs, for example in retail, will not come back after the crisis.


A completed upper secondary education is the single most important factor for the opportunities to establish in the labour market. In addition, this education level is a prerequisite for higher education. For those who have been thinking about continuing their studies, now is a good time to do so.


The structural transformation increases the imbalances in the labour market


The effects of the pandemic will speed up the ongoing structural transformation in the labour market. This is shown, among other things, by employers who have already planned cost-saving measures who now make these changes earlier than planned. At the same time, a prolonged labour shortage has created a need for new ways of working and structural rationalization in parts of the public service sector. The structural transformation now risks further increasing the imbalance in the labour market as more people lack the skills required.


Long-term unemployment rises to record levels 


Even before the crisis, there were many long-term unemployed enrolled in Arbetsförmedlingen. The ongoing crisis has led to an even more difficult situation for the long-term unemployed. When the demand for labour now temporarily or completely has stopped in areas with important entry-level jobs in the labour market, the outlook for long-term unemployed has deteriorated. The length of the crisis also increases the risk that more people will leave the workforce permanently and thus end up in long-term exclusion.


Changed conditions for implementing labour market policy 


To handle the large increase in the number of unemployed Arbetsförmedlingen needs to redistribute resources and efforts. More registered unemployed leads to a higher workload, while Arbetsförmedlingen needs to make priorities. Focus is mainly on receiving notifications and taking care of the people who are now enrolling. Those who have become unemployed should receive their unemployment benefits, but also good support and planning in order to maintain contact with the labour market. Arbetsförmedlingen emphasizes the importance of skills development, being active and trying to maintain contact with the labour market.