Swedes push for inclusion to avert jobs meltdown

reinfeldt.jpg

Amid growing unemployment and fears spreading that temporary schemes to keep people employed will be unsustainable in a prolonged recession, the Swedish EU Presidency is aiming to depart from old solutions in favour of labour market inclusion.

“Our aim is for the EU to emerge from the financial crisis in a stronger position,” said Swedish Prime Minister Fredrik Reinfeldt, presenting the presidency’s priorities in front of the Riksdag, the Swedish parliament, on Tuesday (23 June). 

According to the Swedish prime minister, Europe cannot create jobs by way of communications, regulations and directives from Brussels, but by devising short-term pro-active labour market policies in order to maintain employability, and prevent long-term unemployment and the re-emergence of protectionist pressures. 

“What Europe can do in the long run is to reform, adapt and modernise,” he added. 

Social inclusion at the heart of Sweden’s recovery agenda 

With unemployment hitting a 10-year high of 8.6% in April and amid forecasts predicting that job losses will hit double-digit figures by the end of the year, the Swedish Presidency is gearing up to prevent the current situation from escalating and want to find an exit strategy. 

Officials at the Swedish Ministry of Employment are hedging their bets on inclusive labour market policies as these, they say, yield significant economic gains in the short and long term. 

Active labour market policies help the unemployed to find work and increase their skills with training in periods between jobs. Scandinavian countries spend more on active labour market policies than all other European countries – investing a large part of this funding in training and significant sums on employment incentives and the integration of disabled persons in work. 

The idea is to make the journey from the old job to the new job as short, easy and productive as possible.

“Past experience shows that many of those who become unemployed due to a temporary decline in labour demand risk drifting into permanent labour market exclusion with dire consequences for individuals and societies,” said Barbro Carlqvist, senior economic advisor at the Swedish Ministry of Employment.  

Scandinavian country to preach what it practices

Sweden always ranks top, with Denmark, in the Centre for European Reform’s (CER) Lisbon Scorecard, which assesses the 27 EU member states’ progress towards achieving the Lisbon Strategy targets. 

Sweden and Denmark show that it is possible to combine competitive markets with high levels of taxation and comprehensive welfare provisions, the scorecard states. 

A key objective of the Lisbon Agenda at its inception was to raise the level of ‘labour utilisation’ across the EU to 70% by 2010. In 2000, when the strategy was launched, two-thirds of the difference between US and EU living standards was explained by two factors: fewer Europeans had jobs than Americans, and those Europeans with jobs did not work as hard (because of shorter working weeks and longer holidays).

Even if the overwhelming majority of member states have enjoyed increses in their employment rates, overall, few can claim to have pushed through radical reforms to their labour markets since 2000, notes CER. The great blot on the EU’s labour market record continues to be exceptionally high rates of unemployment among the young.

Avoiding old mistakes  

In the past months, leaders have heavily relied on social safety nets to shelter Europeans from the worst of the economic crisis in the hope of a quick economic recovery. 

However, job-saving schemes like short-time work and unpaid or training leave, some analysts say, are ill-fated for lengthy recessions. Companies seem convinced that if the economy does not pick up by the autumn, a growing number of redundancies is to be expected, and Europe will revert to the old systems of early retirement and disability benefits as ways to mitigate the rise in unemployment. 

“That is both costly and counterproductive,” said Carlqvist. “To avoid repeating previous mistakes, it is necessary to replace policies that facilitate pathways out of the labour market with policies that facilitate access to employment for all those who can work and want to work,” she added, stressing that the EU needs to push for reform to get more people of all working ages into work and put member states in a better position when the economy recovers. 

Social Security policies: A springboard for labour-market entry 

The Swedish Presidency is convinced that inclusive active labour market polices go hand-in-hand with active social security policies. 

With populations ageing, EU member states should intensify efficient reforms, aimed at increasing labour supply and encouraging hiring and retention of older workers as well as those with reduced work capacity, noted the Swedish official. 

“Such actions will help to ensure the long-term sustainability of public finances, maintain the effectiveness, adequacy and quality of welfare systems and enhance social inclusion,” Carlqvist said, stressing that adequate safety nets can be a springboard to enter and re-enter the labour market. 

Sweden will assume the six-month rotating presidency of the EU from the Czech Republic on 1 July 2009. The country will have to deal with global challenges facing the Union, including climate change, a financial crisis and an economic downturn. 

But it will also lead the EU's work and be responsible for moving important EU issues forward, such as the review of the Lisbon Strategy and the implementation of the Lisbon Treaty, if it is ratified before the end of Sweden's mandate. 

The Swedish government has held the bloc's six-month rotating presidency on one previous occasion, in the first half of 2001. During that time, it managed to successfully push the Union to launch its sustainable development strategy, which added a third, environmental dimension to the Lisbon Strategy.

  • 6-9 July: Informal Meeting of EPSCO Council in Jönköping. 
  • 15-16 Sept.: Conference on Healthy and Dignified Ageing.
  • 29-30 Sept.: Mental Health among young people. 
  • 1 Oct.: Employment, Social Policy, Health and Consumer Affairs Council. 
  • 15-16 Oct.: What does gender equality mean for economic growth and employment? 
  • 15-16 Oct.: 8th Round table on Poverty and Social Exclusion. 
  • 22-23 Oct.: Conference on New Skills for New Jobs in Göteborg. 
  • 22-23 Oct.: Healthy ageing in Europe: Lessons learnt and ways forward. 
  • 26-27 Oct.: High level conference on labour market inclusion.
  • 16-17 Nov.: Equality summit.

Subscribe to our newsletters

Subscribe