Unions and opposition criticise government’s active labour market policy

In July 2007, the Swedish centre-right government introduced a new work scheme to battle long-term unemployment. The scheme, called ‘phase three’, is offered to people who have been out of work for 300 days and have used up their allowance of unemployment insurance. The work scheme, where the person is paid for working by the state, has been heavily criticised by the unions and political opposition. Now, the Public Employment Service will review all phase three employments.


To battle long term-unemployment, the Swedish centre-right government introduced a job and development guarantee programme in July 2007. The programme is offered to people who have been out of work for 300 days and have used up their time on unemployment insurance, and is divided into three phases.

Phases one and two contain preparatory measures such as job coaching, career guidance, internships and work training. They are carried out by the Public Employment Service (Arbetsförmedlingen). Phase three comes into play if the participant is still unemployed after 450 days; the person in question will be offered a job where the payment consists of basic state benefits from the Social Insurance Agency, and employers who participate will receive SEK 5,000 (€553 as of 11 April 2011) a month in compensation from the state.

There are a number of rules regulating phase three employment. For instance, participants are not allowed to perform tasks normally carried out by permanent employees. The number of participants in phase three increased by nearly 75%, from 15,000 to 26,000, during 2010.

Criticism from political opposition and unions

Since employers can effectively make use of free labour, unions and opposition parties describe phase three as exploitation of the long-term unemployed. The Leader of the Left Party (Vänsterpartiet), Lars Ohly, compared the phase three work scheme to slave labour in a parliamentary debate in 2009, and leading representatives from the Swedish Trade Union Confederation (LO) have expressed similar views on several occasions.

The efficiency of the work schemes is also in question since only 1% of phase three participants went on to permanent employment during 2010. This is logical according to the critics, since no employer wants to hire someone who can work for free.

Furthermore, some of the features of phase three have been publicly criticised by the Director General of the Public Employment Service, Angeles Bermudez-Svankvist. He advocates that rules regulating the participant’s work tasks should be removed. Moderate Party representative and the Chair of the Labour Market Committee, Tobias Tobé, has called the criticism ‘unbalanced’, but admits that the supervision of employers could be improved.

Investigation by the Swedish Union of Forestry, Wood and Graphic Workers

In September 2010, a forest worker participating in phase three died in a work-related accident. The case attracted media attention, especially since the deceased lacked sufficient training and safety equipment. The Swedish Union of Forestry, Wood and Graphic Workers (GS) decided to conduct an investigation, where union members and participants of phase three expressed their opinions of the work scheme. A third of respondents reported that they lacked safety equipment, and 44% stated that the training was unsatisfactory. 

Investigation by the Public Employment Service

On 16 March 2011, the Public Employment Service announced that all phase three employment will be investigated, following recent revelations of misuse of the scheme. Where employers are failing to comply with current regulatory frameworks, contracts will be terminated. The investigation is due to be finalised by June 2011.


The heated debate on phase three is highly contentious; the unions and the government have different perspectives on how to battle unemployment, which is reflected in a number of labour market issues (SE1001029I). However, the criticism is serious and cannot be solely attributed to ideology. The investigation by the Public Employment Service will show how frequently regulatory violations occur.

Mats Kullander and David Björnberg, Oxford Research

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment