New moves to create jobs for people under 25

Legislative initiatives to tackle unemployment in Sweden among the under-25s have been rare. However, in January 2104, the Swedish Government introduced ‘working life introductory positions’, a form of employment which combines work with vocational training. It is hoped they will give young people with little or no experience of work the chance to establish themselves in the labour market. Companies who take part in the scheme will be eligible for subsidies.

Background

Tripartite discussions started in Sweden in 2011 on reducing barriers to the labour market for young people. The discussions between employers, unions and the government have focused on those without any higher education and little or no work experience.

Social partners have introduced some initiatives, including working life introductory positions (in Swedish). This is a form of employment which combines work with vocational training, and was introduced primarily for the health sector, although it has been used in the industrial and retail sectors (SE1303019I). However, this initiative has not been backed by legislative action.

With elections to the Swedish Parliament coming up in September 2014, the government has been under pressure to implement new legislative measures. A pilot project for working life introductory positions began in the spring of 2013. But the results have been inconclusive – the scheme only led to the creation of four new employment positions for young people.

Government subsidies

Working life introductory positions is a form of employment which combines work and vocational training. The aim is to introduce people aged 15 to 24 to the labour market and for them to gain real-life work experience.

The government decided in December 2013 that secondary legislation should be introduced to cover working life introductory positions and this was done on 14 January 2014. The legislation states that as part of the initiative, vocational training should form at least 15% of the working time of someone employed in a working life introductory position. It also specifies that employers taking part in the scheme will receive financial support from the government.

The idea is to make it cheaper to employ young people while making sure they have access both to proper training and to the labour market.

The financial incentive for employers is exemption from the regular employment tax of 31.41% of the gross salary, and a supervisor support payment of approximately SEK 2,500 (€278 as at 15 May 2014) per month.

A company’s employees must, however, be covered by a collective agreement for the company to be eligible to receive the support. However, a company not covered by the agreement may hire a young person for this scheme and, instead of receiving the tax break and supervisor support payment, pay them 75% of the wage set by the collective agreement for their sector. The length of the young person’s employment contract must be at least six months and no more than 12 months.

The Swedish Employment Service said in a newspaper article (in Swedish) that most agreements between employers and unions about this type of employment were much narrower than the government’s legislation. It said they generally set out ‘sector specific competence profiles’. For example, agreements in the retail sector have specified that young people employed in this way must be at least 20 years and have a high school degree in commerce.

Criticism of the legislation

Sweden’s largest business organisation Företagarna has criticised the legislation, saying the requirement for eligible companies to be covered by collective agreements makes it difficult for some small enterprises to take advantage of the scheme. Lars Jagrén, Chief Economist at Företagarna, said the rule would exclude 60% of Sweden’s small enterprises from the scheme.

Estimates of how many jobs the reform will create have also attracted criticism, especially given the pilot project’s lack of success. The government’s own figures (in Swedish) suggest the scheme will eventually create 30,000 new jobs per year. However, the Minister of Employment, Elisabeth Svantesson, estimates that it may be between five and seven years before the scheme creates new employment on this scale.

Commentary

It will probably take some time for the scheme to have an effect on youth unemployment. The likely short-term effects are unclear and may be negligible. However, this is Sweden’s first legislative measure targeted specifically at youth unemployment as a result of the tripartite discussions, and it may prove to have ground-breaking policy implications.

Mats Kullander & Nils Landén Helmbold, Oxford Research

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