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Labour shortage despite financial crisis?

The Nordic labour market faces several challenges. In the short term, the current financial crisis threatens to cause higher unemployment but in the long term, the ageing population and manpower shortages may pose an even graver threat to the future of the welfare state. These issues formed the theme of a Nordic conference held in Stockholm on Tuesday about demographic challenges. It was co-hosted by The Nordic Region in Focus and among those in attendance were the Swedish Minister for Employment Sven Otto Littorin and the EU Commissioner Vladimir Spidla.

08.10.2008

"The Nordic countries have different ways of tackling the labour-market issues of the day," Littorin noted in his welcome speech. "However, in a time of crisis it is more important than ever to forge links in the Nordic Region and learn from each other's experiences." He also stressed the importance of using Nordic co-operation as a joint platform in relation to the EU.

Exclusion from the job market has been one of the priorities for the Swedish Presidency of the Nordic Council of Ministers 2008, and the Swedes aim to shed further light on the issues during Sweden's Presidency of the EU in the second half of 2009.

The big question at the conference in Stockholm was whether the expected manpower shortages will be best solved by mobilising existing labour resources or by increasing the amount of immigrant labour.

For the EU Commissioner Vladimir Spidla immigration is not a question of either/or but of how, of successful or poor integration of the manpower that all the statistics suggest Europe and the Nordic Region will lack in future. Prognoses suggest that by 2050 one in three EU citizens will be over the age of 65. Spidla did however identify increasing the number of women in jobs as one means of exploiting untapped resources, and praised the Nordic countries for being far ahead of the rest of Europe on this front.

The Nordic countries differ on other fronts, however. Speakers at the conference suggested that Denmark and Sweden lean towards integration and active labour-market policies as the best means of tapping into existing manpower reserves, while Finnish, Norwegian and Icelandic speakers were more open to immigration as a potential solution to the ageing workforce.

According to a recent Nordic Council of Ministers' study Norway has by far the largest proportion of labour from the new EU countries. No less than 60% of all immigrant labour from Eastern Europe – about 160,000 in the period 2004-2007 – has found work in Norway.

Does this immigration constitute a gain or a strain for the Nordic welfare state? Again it depends which country you ask. "But new manpower is also getting older," Rune Solberg of the Norwegian Ministry of Labour and Social Inclusion concluded. "And that means that increased immigration might just postpone the ageing of the workforce, not prevent it."

One suggestion for a solution put forward in the report "Mobility of labour from the new EU countries to the Nordic Region" is a more integrated and co-ordinated use of service mobility, i.e. the stationing abroad of workers from other EU countries. This would require ongoing co-ordination in the Nordic Region and the EU in order to remove obstacles to cross-border freedom of movement, a process the Nordic Council of Ministers actively seeks to promote, e.g. in the Council of Ministers for Labour and the Work Environment (MR-A), which also discussed the demographic challenge at its meeting on October 8.

The conference reached the conclusion that the population is ageing and that the evidence suggests that a possible Nordic solution to the problem would tend towards greater mobilisation of current manpower resources rather than towards increasing immigration.