How the Nordic labour markets should cope with future crises

16.03.23 | News
kvinnor som jobbar på ett cafe
How resilient are the Nordic labour markets when crisis strikes? A new OECD report has studied the countries’ political responses to the pandemic and provides advice on resilience.

During work on the report, two further crises arose: the Russian invasion of Ukraine led to millions of refugees and the ensuing energy crisis led to high inflation. One of the report’s conclusions is that the ability to take quick decisions is of great importance, and that this is facilitated by the tripartite labour-market system in the Nordic Region.

“A striking and positive feature of the Nordic policy response to the crisis was the high level of social partner involvement,” according to the report, Nordic Lessons for an Inclusive Recovery?

Stefano Scarpetta of the OECD to Iceland

The report was commissioned by the Nordic Council of Ministers and presented by the Icelandic Presidency of the Nordic Council of Ministers in Reykjavík on Thursday at a conference attended by the Icelandic Minister of Social Affairs and the Labour Market, Guðmundur Ingi Guðbrandsson, the OECD Director for Employment, Labour and Social Affairs, Stefano Scarpetta, and the Secretary General of the Nordic Council of Ministers, Karen Ellemann. 

According to the report, unemployment rose faster during the pandemic in the Nordic Region – especially in Iceland – than in most European countries but the economy in the region has also recovered more quickly than the average in the OECD countries.

Rapid recovery

Recovery was noticeably faster than after the 2008 financial crisis, when it took several years for the Nordic countries to return to previous levels of employment.

Relative to the OECD as a whole, GDP fell less in the Nordic countries at the height of the COVID-19 crisis and grew more in the recovery. 

The largest increases were recorded in Denmark (+5.5%) and Sweden (+5.1%).

Jobs and pay the top priorities

“Nordic countries utilised a wide range of policy initiatives – with their first priority being the protection of jobs and incomes. Their experience offers various lessons not only for future crises, but more generally to foster more inclusive and resilient Nordic labour markets in the post-pandemic period,” says Stefano Scarpetta, OECD Director for Employment, Labour and Social Affairs.


The vulnerable were hardest hit

The report title ends with a question mark, perhaps implying some doubt about whether the recovery has indeed been inclusive. However, as in so many other parts of the world, there were differences in the Nordic Region between which groups were hardest hit. Young people, people with poor qualifications and immigrants were among the groups to suffer most. 

However, thanks to the rapid recovery, much of the lost ground had been regained by early 2022.

The safety net worked

“It is positive that the report shows our social security model helps support and include vulnerable groups on the labour market, especially in times of crisis,” says Guðbrandsson. 

The crisis did not have a greatly different impact on men and women, as initially feared, although women did more work from home than men, according to the report.

More double work for women

There may be aspects of how the crisis affected gender equality on the labour market, something at which the report did not look.

During lockdown it was easy to return to outdated family patterns, which made it more challenging for women than men, to perform professionally at work. I believe there could also be a lesson to be learned for policy makers to pay particular attention to prevent that any future crisis does not lead to an unforeseen gender gap,” adds Guðbrandsson.

OECD advice to the Nordic Region about future crises:

• Draw up procedures for rapidly adapting rules and labour market measures to the new situation 

• Concentrate efforts to protect jobs n the companies with the greatest liquidity problems. Companies can pay back after the acute stage of the crisis.

• Exchange information quickly and provide job centres with better access to data so that professional development is targeted where it is needed most.