The Nordic countries are extensively reforming their active labour market policy (ALMP) systems. The success of these reforms will depend heavily on strengthening co‑ordination and co‑operation frameworks as the organisational landscape changes. Nordic Public Employment Services (PES) are also undergoing significant transformation through their digitalisation agendas, seeing increased reliance on digital service channels and adoption of Artificial Intelligence (AI) technologies. At the same time, Nordic PES co‑operation is taking place through various channels and at a number of levels (regional, Nordic and international), but could be further enhanced and expanded. This chapter provides an assessment of Nordic PES across these dimensions and provides a set of key policy recommendations for Nordic PES to promote a more inclusive common Nordic labour market. It highlights that future changes in the Nordic ALMP systems, including PES digitalisation efforts, should continue moving away from political motivation to instead be driven by evidence and best practices in other Nordic and OECD countries.
The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market
1. Assessment and recommendations
Copy link to 1. Assessment and recommendationsAbstract
1.1. The systems of active labour market policies are extensively reformed in the Nordic countries
Copy link to 1.1. The systems of active labour market policies are extensively reformed in the Nordic countries1.1.1. Nordic labour markets are performing well despite a number of concurrent challenges
Within the Nordic region, unemployment remains below the OECD average in Denmark, Iceland and Norway in 2023. This follows a period of heightened unemployment during the COVID‑19 pandemic period, as in OECD countries more widely. All Nordic countries have been consistently maintaining higher employment rates than the OECD average in recent years, with rates exceeding pre‑2019 levels by 2022 except in Sweden. However, employment and unemployment disparities persist for foreign-born populations, especially in Sweden, where foreign-born unemployment rate is 16%, 3.4 times higher than for the native‑born population. Nordic countries also have high labour force participation rates, all exceeding 80% in 2023, with Iceland leading all OECD countries at 86.7%. In addition, Nordic women show strong labour force participation, resulting in narrower gender gaps compared to the OECD average.
Against this positive labour market backdrop, Nordic labour markets are grappling with a mix of intertwined challenges, creating a complex environment for Nordic Governments and Public Employment Services (PES). Despite strong employment rates, labour shortages have intensified post-pandemic, while roughly one‑fifth of the Nordic working-age population still faces significant obstacles to joining the workforce, particularly among vulnerable groups such as older adults, youth, immigrants, and people with disabilities. Although attracting skilled migrants is often considered a key avenue to alleviate these shortages, Nordic countries now face stiff competition from other European and OECD countries in this domain. In addition, these challenges are compounded by a number of structural changes that are underway in Nordic countries. These include the green and digital transitions – reshaping skill requirements and demand for labour across sectors – and demographic changes likely to lead to a declining working age‑population in Nordic countries over the coming decades.
The trends and challenges in the individual Nordic labour markets have significant implications for the functioning of the common Nordic labour market. The common Nordic labour market agreement was signed in 1954 to foster integration and co‑operation among Nordic countries in terms of employment and mobility. This agreement creates a common labour market across Nordic countries as it facilitates Nordic nationals to freely take up employment and establish residence in another Nordic country. In the past, the common Nordic labour market has helped correct imbalances between those Nordic countries with higher levels of unemployment and those facing labour shortages. As the Nordic labour markets face currently many similar challenges co‑operation between the Nordic labour authorities can facilitate finding solutions that simultaneously support the common and the individual labour markets.
1.1.2. ALMP reforms are needed in case of major shortcomings in the system
To better address labour market challenges, many OECD countries are implementing or considering reforms to their systems of active labour market policies (ALMPs) and PES. This report defines ALMP reforms as comprehensive changes affecting several functions and processes of PES, substantially altering eligibility criteria or target groups of ALMPs, remodelling the organisational landscape or extensively reshuffling tasks and co‑ordination models of providers of ALMPs and related services. The reforms in ALMP systems can be relevant if the continuous improvement processes are not sufficient to address substantial and permanent shifts in labour market needs (e.g. due to megatrends), investments in PES and its modernisation have not been kept up, or new evidence on ALMPs and related strategies calls for significant changes. ALMP reforms can significantly increase efficiency and effectiveness in supporting strong labour market performance in these cases.
The Nordic region is currently undergoing particularly extensive ALMP reforms, where four of the five Nordic countries reviewed in this report are reforming their ALMP system. The reform in Sweden has moved towards more contracted-out employment services, and Denmark is likely to follow to increase efficiency of their systems and give jobseekers the freedom to choose their preferred service provider. Finland is decentralising its ALMP implementation to the local level to bring services closer to jobseekers and employers and better utilise the municipal ecosystem to provide comprehensive support. These reforms in Denmark, Finland and Sweden are changing the high-level institutional set-up of ALMP provision, including organisational set-up, legislative set-up, governance and funding models. Iceland is planning to improve employment opportunities for people with disabilities, thoroughly revising all key pillars of supporting and incentivising people with reduced work ability to look for and find employment. While Norway is not reforming its ALMP system, the services and measures to support jobseekers, workers and employers are being extensively strengthened and improved to raise the employment rate of 20‑65 year‑olds to 82% by 2030, and to 83% by 2035.
1.1.3. The ALMP reforms in the Nordic countries need to prevent fragmentation of services as the number of providers increases
The Nordic authorities need to ensure holistic approaches in the next steps to fine‑tune reform design, as the different elements of the ALMP systems are interconnected and only limited changes might not bring the desired results. Sweden has already understood from its first evaluations of the new contracting-out model that only swopping public providers with private does not necessarily lead to better employment services and further changes in co‑operation with private providers will be necessary. Denmark must be mindful in its next steps to design the upcoming reform that the objective of the reform would not narrow down to cutting costs and administrative processes, without incentivising strengthened efforts in service content. Iceland should ensure that the different stakeholders to be involved in a model for more comprehensive support to people with disabilities will also have sufficient capacity to deliver the reformed support.
Finland’s new decentralised ALMP delivery model must be supported by a strong accountability framework for local-level ALMP providers to ensure well-performing ALMPs nationwide. Strong accountability frameworks for private providers of employment services and unemployment insurance funds will be crucial in Denmark and Sweden, particularly if the former goes ahead with the dedicated expert group’s proposal to contract a part of employment services out to private providers. Furthermore, regardless of the degree of changes in the organisational landscape of ALMP provision in the different Nordic countries, improving the co‑ordination and co‑operation models between the existing or newly established stakeholders will need to be a crucial part of all reforms. In several other OECD countries, improvements and reforms in ALMP delivery strengthen co‑operation and co‑ordination altogether (e.g. one‑stop-shops, more integrated IT systems, joint accountability frameworks and networks to share best practices), without reshuffling roles and responsibilities in the system.
Furthermore, other national level mechanisms must support the systems where employment services are contracted out and/or decentralised, balancing prerequisites for bottom-up innovation and ensuring good unfragmented services across the country. The relevant mechanisms can resemble those used for more centralised public service delivery, even if leaving more opportunities to design ALMPs at the local level and with non-public providers. The Nordic countries should create frameworks encouraging innovation among the stakeholders implementing ALMPs and facilitate sharing these new practices with other providers. This could be done in a benchmarking framework, accompanied by mechanisms to identify and share best practices. In addition, integrated IT infrastructure will be vital to ensuring that employers access the skills they need and jobseekers access good jobs, regardless of which provider of employment services supports them or where the provider is situated in the country. While Finland and Sweden are already trying to improve data exchanges in the new operating models, establishing an efficient data exchange with private partners will likely also become crucial for Denmark’s new ALMP delivery model.
1.1.4. Continuous improvement processes must be the default to strengthen and modernise ALMP provision
Continuous improvement processes must be the default mechanism for change as frequent overhauls can be more damaging than beneficial. A well designed and implemented continuous improvement process helps the PES to keep up with the changing labour market needs, technological change and changes in its environment and ecosystem more generally.
ALMPs and their delivery models change continuously in the Nordic and the OECD countries, in addition to the occasional major ALMP reforms. Labour market shocks, like the ones induced by COVID‑19 or Russia’s war of aggression against Ukraine, trigger quicker and more widespread revisions in ALMPs. Responses of ALMP systems to megatrends like the green transition and ageing are more sluggish but still emerging steadily. Digitalisation in PES is going hand in hand with digitalisation in society at large, making more enormous leaps when new technologies become widely available (such as advancements in AI technologies) or, exceptionally, in 2020, when the social distancing measures due to the COVID‑19 only enabled remote services.
As the OECD countries share many of the same labour market trends and challenges, the changes in ALMP system are often similar. PES are taking more proactive approaches to support people at risk of job loss and inactive people, and are strengthening their engagement with employers. Co‑ordination between ALMPs and passive labour market policies, as well as other services and measures, is increased to provide more comprehensive and individualised support to jobseekers, particularly considering the needs of the most vulnerable. Digital infrastructure for ALMP provision is being modernised, administrative processes are being streamlined, governance and accountability frameworks are being reinforced, and policy design and implementation are becoming more evidence‑driven. Only the high-level organisational set-ups of ALMP provision – the legal set-up of PES and the role of other providers of employment services – have remained different across countries.
The changes in the Nordic ALMP systems are similar to those in other OECD countries. While the organisational set-ups do not converge, ALMPs are being improved in all Nordic countries. For example, Iceland and Sweden are revising support to the most vulnerable, making the support more comprehensive and incentivising employment. Denmark has strengthened support for people with educational gaps to relieve labour shortages, and Finland has strengthened support for employers. Norway is thoroughly revising its ALMP package (particularly job brokerage, training and wage subsidies), strengthening employer engagement and co‑operation practices between PES and other service providers, and improving support for vulnerable groups (especially youths and people with health limitations). Furthermore, Norway plans to invest more in ALMPs and PES, and aims to move towards more evidence‑driven ALMPs across the available services and measures.
Nevertheless, several of the Nordic ALMP systems are undergoing significant changes in the organisation of ALMP delivery, and the content of ALMPs might need more attention. Even if ALMP content does not need to be fundamentally reformed, the Nordic authorities must be mindful that minor adjustments are always relevant to keep the ALMP provision current with labour market needs and the newest evidence.
1.1.5. To better support the common Nordic labour market, the Nordic PES could consider joint actions alongside the ALMP reforms
The ongoing and planned reforms in the Nordic ALMP systems and revisions to ALMP packages do not address the common Nordic labour market. Nevertheless, these changes are likely to influence the success of addressing short-term labour market shocks and megatrends like digitalisation, greening and ageing, and through this also the functioning of the common Nordic labour market.
To best support the common Nordic labour market, all Nordic countries need to have well-functioning institutional set-ups and packages of ALMPs to address any upcoming labour market challenges. As such, supporting each other to design ALMP reforms and improvements can benefit the whole region. Co‑operation of the Nordic labour authorities and exchange of good practices and knowledge can thus support ALMP improvements in individual countries and have positive spill-over effects for the common Nordic labour market.
Furthermore, the reforms and changes in ALMP systems will likely affect the attractiveness of the common Nordic labour market beyond the Nordic region. To further support the attractiveness of the common Nordic labour market and address labour and skill shortages, the Nordic countries could consider joint actions that can be undertaken alongside the ALMP reforms. For example, the Nordic authorities and their PES could co‑operate on recruiting talent from third countries to take advantage of scale in their outreach efforts, co‑ordinating Memorandums of Understanding with origin countries can help Nordic countries ensure that standards for fair recruitment practices are respected. Joint initiatives would also be able to take advantage of resources available at the EU level to develop joint Skill Mobility Partnerships (SMPs) with third countries in line with long-term goals for securing skills and improving co‑operation. The advantage of Nordic co‑operation in developing SMPs depends on the convergence of skills and training standards, since combined efforts can promote human capital development and positive labour market outcomes for both the countries of origin and the Nordic countries, as well as directly benefiting the migrants and employers participating in the SMPs.
1.1.6. Evidence needs to drive ALMP reforms and continuous improvement processes
An increase in the evidence on the effectiveness and efficiency of ALMPs and PES has made evidence‑driven ALMP reforms ever more feasible and widespread across OECD countries, including the Nordic region. Denmark went through a thorough evidence‑collection phase by an expert group to guide the reform design, and Finland and Sweden piloted the new models to fine‑tune the reform design.
Political motivation remains the main driver for launching reforms. Political will is desirable to push for change, overcome resistance to large‑scale reforms, and reach agreements between various stakeholders. However, the decision to launch a reform in the first place and the direction that the reform should take should rely on evidence. Launching any ALMP reforms in the Nordic countries in the future should be preceded by evidence collection. In addition, evidence collection for the design of the reform should be complemented by pilots for fine‑tuning the new design.
Furthermore, evidence generation should continue throughout the reform implementation phase and extend to several years after the end of the reform to evaluate whether the reform had the intended outcomes and fine‑tune policies as needed. Although systematically evaluating ALMPs and their adjustments is well-rooted in the Nordic ALMP systems, the Nordic labour authorities have scope to further strengthen their efforts to design monitoring and evaluation frameworks already during the design phase of the ALMP change agendas. Additionally, Finland should restore the funding of ALMP evaluation and cross-policy research to at least the levels of 2023 to evaluate the ALMP reform and the new system appropriately. Good examples for approaching evidence generation systematically when reforming ALMP systems are available to learn from in other OECD countries. For example, France conducted thorough evidence collection before designing its on-going ALMP reform, is piloting the new models to fine‑tune them and set up a scientific committee consisting of well-established economists and sociologists to support evaluating the reform and its labour market effects.
Disseminating evidence and peer learning is essential in guiding ALMP change agendas. Learning from peers has been particularly strong in the Nordic countries when designing their on-going ALMP reforms. On the example of peer learning initiatives between the Baltic, German-speaking countries and Ibero-American PES, the Nordic PES could consider further formalising their co‑operation in the future to strengthen exchanges on topics particularly relevant to the Nordic labour markets and good practices that are more likely transferable. Nevertheless, tighter regional collaboration should not lead to isolation from other countries. Exchanges on good practices of ALMP provision with countries beyond the Nordic region enrich the evidence available for continuous improvement processes and reforms.
1.2. Nordic PES are undergoing significant digital transformations
Copy link to 1.2. Nordic PES are undergoing significant digital transformations1.2.1. Nordic PES have all taken advantage of digital tools and service channels with the aim of providing more efficient and effective services
PES in all five Nordic countries now offer hybrid of blended models of service delivery, offering digital and remote options for core services like job-search support and counselling. While several Nordic PES already provided digital or remote access to certain services pre‑COVID, the permanent move towards hybrid engagement models was in part thanks to positive experiences in remote and digital service provision during the pandemic period. All Nordic PES also facilitate registration and monitoring of job-search activities on a digital or remote basis. This widespread availability of digital and remote access solutions for core PES services in the Nordic region offers PES clients greater flexibility to interact with the services according to their personal preferences.
In managing multi-channel services, several Nordic PES have implemented rules to guide the choice of appropriate engagement stream for clients. For example, Denmark mandates an initial in-person meeting, meanwhile in Norway digital services are primarily targeted at clients capable of self-sufficient job-search, with high digital skills and aged between 30‑59 years. In Norway, this approach is underpinned by the Channel Strategy of the PES, which establishes the shift towards digital service delivery as a means to achieve greater efficiency, by focusing in-person resources on clients requiring the most intensive support.
While the transition towards increased prevalence of digital solutions and services by Nordic PES presents a number of substantial benefits, it is important to ensure that nobody is left behind on this journey – in particular clients from vulnerable backgrounds and those lacking digital skills. Inclusive digitalisation is something being prioritised also at the Nordic Council of Ministers level. To address the risk of potential digital exclusion, Nordic PES are maintaining traditional in-person services, allowing clients to choose the most effective engagement channel for their needs. Additionally, PES across the region offer digital skills training, such as Sweden’s “Digital Me” program, which helps clients build confidence in using digital tools. To further support those with limited digital skills or access, PES in Denmark, Iceland and Norway provide digital access points in their offices, ensuring assistance is available for navigating online resources. To further align channels of service provision with the digital capacities of clients, there is scope for Nordic PES to develop digital skills assessment tools, such as the simple diagnostic tool developed by the PES in Wallonia, Belgium which assesses the digital autonomy of a jobseeker during the initial registration meeting.
1.2.2. While Nordic PES now all have AI solutions in place, steps should be taken to bolster AI governance
All Nordic PES have implemented at least one AI solution to aid PES services and processes, compared to just over one‑in-two PES in OECD countries. However, AI use by Nordic PES is limited to comparatively fewer areas of PES activity. Most commonly, PES are using AI to provide information to clients, using AI-powered chatbots or virtual assistants, and to aid various aspects of the labour market matching process. Among Nordic PES, Sweden is at the forefront of AI use, seeing the most AI solutions deployed to date, including being the sole Nordic PES currently using AI to detect illegal vacancy postings, detect fraud in the benefit administration system and generate labour market information. However, just like trends in OECD countries more widely, the prevalence of AI use within Nordic PES can be expected to increase in the coming years.
While AI offers many potential opportunities and benefits for Nordic PES, these technologies are not without risks. These include the need to define accountability for AI systems, concerns about transparency and explainability, risks related to data quality and privacy, the potential for bias and discrimination, possible resistance and skill gaps among staff and clients, as well as the need for continuous monitoring and evaluation. Successful AI adoption, involving the proactive mitigation of risks, will require Nordic PES to closely monitor and adequately govern the use of such solutions, including through the development of governance frameworks and strategies. In the Nordic region, the PES in Norway is the first to take such formal steps to navigate these issues, through the development of a dedicated AI strategy which establishes the ambitions, enablers and principles to guide AI use. There is also opportunity for Nordic PES to learn from approaches to AI governance in other OECD countries, including in France and Belgium (Flanders) for example where the PES have established Ethics Committees to ensure responsible AI use within the PES.
1.2.3. Efforts to measure the impact of digital and AI solutions are not yet systematic and should be advanced
Digital solutions, including tools and services, introduced by PES should undergo regular monitoring and evaluation to understand their effects on users and optimise their impacts. In the Nordic region, customer satisfaction surveys are the main method used by PES to gather insights on digital tool performance. For example, Iceland’s PES collects feedback from both jobseekers and employers on digital services as part of its annual client survey, while Denmark’s PES involves clients directly in the development phase by inviting users to review and provide input on new digital initiatives.
Despite progress in monitoring, formal evaluations of digital advancements in Nordic PES are not yet commonplace, even in those Nordic countries with a strong track record of evaluating ALMPs. Nordic PES could benefit from embedding formal assessment channels directly into the development of digital tools to gain insights into their real-world impact. In the same vein, AI technologies used by Nordic PES also require ongoing oversight to monitor effectiveness, prevent bias, and identify any decline in model performance over time. Evidence generation surrounding digital and AI solutions can take a variety of forms, including during roll out by piloting new initiatives (utilising randomised control trial methodology) or after implementation, through various approaches including counterfactual impact evaluations (to isolate the impact of a digital solution on end-users), process evaluations (to assess the integration of a digital solution in PES processes), and cost-benefit analyses (to assess the cost-effectiveness of digital interventions by weighing the costs against the benefits).
As important as evidence generation is the establishment of feedback loops that can incorporate the insights gained from monitoring and evaluation activities into decision-making regarding future iterations of digital solutions. This allows for corrective action to be taken, particularly concerning poor or underperforming tools, and can help ensure the long-term effectiveness of solutions.
1.2.4. A number of international policies and regulations are having significant impacts on Nordic PES digitalisation patterns
Within the regulatory environment Nordic PES are operating, the General Data Protection Regulation (GDPR) has significant implications for Nordic PES given the highly sensitive information they hold and process on their client base. It also impacts their digitalisation agendas, with digital tools relying on access to PES data to operate. Interpretation of GDPR varies across Nordic countries, as well as national data protection legislation, resulting in differing outcomes and constraints in the modernisation agendas of Nordic PES. For example, despite advanced digital job-matching systems in Finland and Sweden, the Norwegian PES has been facing challenges in identifying a solution that complies with the stringent national interpretation of GDPR. Furthermore, the recent EU AI Act, which categorises AI use according to four risk levels, poses additional compliance hurdles across EU countries. Nordic PES need to ensure AI integration is responsible, emphasising transparency, fairness, and human oversight, with opportunities to embed these principles in an overall strategy or framework to govern the use of these advanced technologies – as has already been done by the Norwegian PES. Nordic PES co‑operation could be expanded to facilitate the sharing of experiences and lessons in the interpretation of such regulations, including sharing the kinds of safeguards and other accommodations made to facilitate the implementation of specific digital tools and processes.
All Nordic PES have worked to implement the European Skills, Competences, Qualifications, and Occupations (ESCO) classification, primarily to enhance matching tools and associated vacancy portals that process jobseeker profiles and employer-registered vacancies, by enabling better competency-based matching and in turn increasing the quality of overall recommendations. Implementation was a major, resource‑intensive, multi-year effort for several Nordic PES, with challenges encountered along the way, including in adapting translations and terminology to the nuances of national contexts. However, overall experiences post-implementation has been positive, particularly in enhancing job-matching tools like that available through the Finnish PES’ digital service platform Job Market Finland. ESCO is also a useful resource for Nordic PES in navigating changing labour markets, including in response to the green and digital transitions, with the Swedish PES in particular spearheading efforts at the European level to explore how ESCO can be used to help understand green and digital jobs and skills. In addition, ESCO provides opportunities for Nordic PES to enhance the analysis of skills needs in the context of the common Nordic labour market, which in turn can be used to inform career guidance, job-search support and training recommendations provided to clients.
1.3. Co‑operation between Nordic PES to promote the common Nordic labour market is certainly an asset, but could go further
Copy link to 1.3. Co‑operation between Nordic PES to promote the common Nordic labour market is certainly an asset, but could go further1.3.1. Nordic PES co‑operate closely in border regions, particularly in providing information and aiding intra-Nordic job matching activities
The common Nordic labour market offers opportunities for Nordic citizens to seek employment across Nordic borders, either through migration or commuting. Beyond the general job-search and support services offered by Nordic PES, specialised cross-border services have been established in key border regions to facilitate labour mobility. These include Øresunddirekt in the Öresund region (Sweden-Denmark), Grensetjensten on the Sweden-Norway border, and Gränstjänsten on the Sweden-Norway-Finland border. Each service operates through multi‑institutional collaboration between the relevant PES and various government offices (including most commonly the tax and social insurance authorities) to assist both citizens interested in working in and employers seeking to hire from another Nordic country.
Within these cross-border information services, the primary work of Nordic PES is information provision and assisting job-matching. Thanks to the multi-disciplinary teams in these services, citizens can access critical information on tax, pensions, unemployment benefits, and employment laws through a single access point. Cross-border job-matching is most commonly facilitated through the EURES platform, and in some cases using national PES portals, with additional efforts such as tailored recruitment services, job fairs, and interview support to connect jobseekers with employers in the neighbouring Nordic country (or countries). In the border region between Sweden and Finland, the relevant PES also engage in outreach activities, to widen the reach of the cross-border service and associated information provision. To streamline cross-border co‑ordination and address emerging issues, structures like cross-border committees and councils have been established to foster intergovernmental dialogue and solutions, enhancing the resilience and efficiency of Nordic cross-border labour mobility.
During the COVID‑19 pandemic, border closures and fast changing public health restrictions in the Nordic countries had significant impacts on cross-border regions, restricting access to public services, disrupting labour mobility (particularly for cross-border commuters) and heavily impacting businesses operating across these borders. The unique positioning of the cross-border information services saw them play a critical role during the emergency period; identifying issues and providing critical information to national and Nordic authorities to inform responsive policy actions in these regions, including in the area of employment services and ALMPs.
1.3.2. Nordic PES in border regions face a number of challenges that inhibit their work in supporting the common Nordic labour market
Nordic PES face significant challenges in supporting cross-border labour mobility due to limited access to timely, harmonised data on migration and commuting trends within the Nordic region. The lack of reliable statistics means that Nordic PES rely on indirect indicators, such as website traffic, to estimate changes in demand for cross-border information and job-matching services. Data protection regulations like GDPR also complicate data collection, and where data is available, it often comes with considerable delays (at times exceeding one year). A formal solution for the official production of reliable cross-border statistics in the Nordic region will require alignment between national and European legislation, political will, financial backing and a Nordic agreement on the matter. A recent ongoing Nordregio project, Nordic Mobility II, aims to progress this objective. In addition, where possible, exchange of data between Nordic PES themselves (as permitted by relevant legislation, including in the realm of data protection) could facilitate more informed job-matching activities in border regions.
Administrative requirements related to cross-border employment further complicate labour mobility, as individuals, and in turn Nordic PES through their advice to citizens provided through cross-border information services, need to navigate complex national and EU regulations, including those on tax, social security, and e‑identification. Bilateral agreements, like the newly renegotiated Öresund Tax Agreement between Sweden and Denmark, address some of these barriers by allowing flexible remote work arrangements for cross-border commuters without negative tax implications, but these agreements are limited and require extensive political negotiation.
While the common Nordic labour market agreement promotes intra-regional mobility, structural barriers persist in reality, particularly for third-country nationals who do not automatically gain cross-border work rights within the Nordic countries. This limits the potential labour pool in border areas and restricts employer access to talent, creating added complexity for Nordic PES and contributing to skills shortages amid the shift toward digital and green economies. There is scope for Nordic countries to consider the solutions in place in other cross-border regions in Europe, including for example in the Germany-Netherlands border region where a cross-border endorsement sticker has been implemented to facilitate commuting of third country nationals. In addition, job-matching efforts by PES in border regions are made more complex by labour shortages common across the region and salary disparities, such as those in the Öresund region where higher Danish wages attract Swedish jobseekers, potentially contributing to intensified shortages on one side of the border and making it difficult for PES to aid job-matching efforts in the opposite direction. There is opportunity for Nordic PES to co‑operate on proactive efforts in tackling shortages and recruitment challenges, including through potential joint recruitment and talent attraction campaigns.
Finally, for many cross-border obstacles to be resolved, heighted political prioritisation of these issues will be required. While a number of structures exist to enhance co‑operation on this topic – including the cross-border information services, border councils, the Freedom of Movement Council, Info Norden and dedicated Ministers for Nordic co‑operation – persistent challenges to Nordic labour mobility remain. Effective progress will need strong political commitment at both national and Nordic levels and financial support for initiatives like improved mobility data collection and data sharing.
1.3.3. Nordic PES also co‑operate through a number of existing channels and groups at both the Nordic and international level
At the Nordic level, co‑operation between PES is facilitated through two committees under the Nordic Council of Ministers. High-level Nordic co‑operation on labour issues is directed by the Nordic Council of Ministers of Labour (MR-A) and in turn supported by the Nordic Committee of Senior Officials for Labour (ÄK-A, which includes senior representatives from each Nordic country and autonomous area. This committee monitors labour market trends and associated policy measures. Another key body, the Nordic Labour Market Committee, was established to uphold the agreement on a common Nordic labour market, providing a platform for discussing labour policies, proposing joint initiatives, and fostering collaboration among national labour authorities. This committee comprises representatives from national labour ministry and, in some cases, representatives of PES and provides an important channel for information exchange between Nordic PES, including reforms to ALMP systems. Representatives from the Åland islands, Faroe Islands and Greenland also take part in these two committees. In addition to formal co‑operation through Nordic-level committees, PES also co‑operate through a number of other channels, including staff exchanges, mutual learning activities, and informal events. However, these co‑operation practices are often ad hoc and infrequent.
At the international level, Nordic PES co‑operation takes place through a number of existing frameworks. First, Nordic PES engage in international recruitment and job-matching efforts using EURES; the European initiative to enhance labour mobility and facilitate the free movement of workers across EU and European Economic Area (EEA) countries. Within the context of EURES, Nordic PES have longstanding co‑operation, including through the joint organisation of job fairs and the creation of informal working groups among Nordic EURES advisors to enhance information exchange and co‑ordination. However, the experience of EURES among Nordic PES is not without challenges, such as resource limitations and demanding reporting requirements, particularly for smaller PES like in Iceland. Additionally, for those Nordic PES that have developed advanced digital matching tools, including in some cases aided by AI technologies, the basic and manual approach to matching required by the EURES portal can be less efficient and effective for users (both staff and clients). Second, Nordic PES take part in the European Network of Public Employment Services (henceforth EU PES Network); which is a network of all EU PES, along with Norway, Iceland, and Liechtenstein. It serves as a key platform for knowledge sharing and mutual learning, allowing PES to discuss policy developments and reforms, and includes various working groups, such as the one focused on creating a taxonomy for green jobs and skills chaired by the Swedish PES. Additionally, Nordic members of the EU PES Network benefit from an informal sub-group that meets to co‑ordinate their contributions and preparations for forthcoming meetings.
1.3.4. Overall co‑operation between Nordic PES is an important avenue for information exchange, but room for improvement exists
Although no formal co‑operation agreements or frameworks exist co‑operation between Nordic PES is well-developed, taking place through a number of formal and informal channels at the regional, Nordic and international level. This strong co‑operation among Nordic PES is aided by a number of key enablers, including shared common values on working life, similar labour market models – including in particular the strong role of social partners – and the prevalence of a number of common labour market challenges. This strong co‑operation between Nordic PES is certainly an asset, allowing for peer learning and sharing of good practices including in times of reform. However, there is certainly opportunity for it to be further enhanced and its scope extended.
First, in the context of the involvement of Nordic PES in cross-border information services, the core services delivered are information provision and recruitment services to jobseekers and employers. Overall, these limited employment services are only a fraction of the work of cross-border information services, which have a much broader role in providing information on a multitude of topics relating to working, operating a business, recruiting from or studying in another Nordic country. In addition, the employment service offering provided by Nordic PES in these cross-border services is much narrower than available through regular PES offices, most prominently due to a lack of ALMP provision and the inability to provide specialised and individualised services due to the very small scale of these services in terms of PES staff numbers.
Second, while Nordic PES co‑operate and engage with each other under the auspices of various committees and networks, this co‑operation and knowledge exchange is limited to certain parts of the PES (i.e. most commonly those staff that participate in Nordic and European level networks) and focusses mainly on knowledge exchange. Therefore, gaps in awareness of good practices from Nordic and other PES more widely exist, particularly among technical experts within Nordic PES. In addition, Nordic PES co‑operation does not include joint actions, policies, agreements, or strategies. Therefore, there is scope to expand the scope of Nordic PES co‑operation both on an expert level (on topics such as digitalisation, AI and legal matters) and through aligned approaches or responses to shared challenges such as the green and digital transitions, labour shortages, and attracting talent from outside the region.
Key policy recommendations
Copy link to Key policy recommendationsEnsure continuous improvements in ALMP provision
Implement continuous improvement processes throughout PES activities as a default way to strengthen and modernise ALMP provision, keep up with the changing labour market needs, technological change and changes in PES environment and ecosystem more generally.
Consider supporting the implementation of continuous improvement processes with adopting change management and quality management approaches.
Consider reforms in ALMP systems when the continuous improvement processes are not sufficient to address substantial and permanent shifts in labour market needs, investments in PES and its modernisation have not been kept up, or new evidence on ALMPs and related strategies calls for significant changes.
Apply comprehensive approaches to on-going and planned ALMP reforms
Incentivise strengthened efforts in service content in Denmark to balance any potential negative effects of cutting costs and processes.
Ensure that the different stakeholders to be involved in the new model for more comprehensive support to people with disabilities in Iceland will also have sufficient capacity to deliver the reformed support.
Support the new ALMP delivery models with strong accountability frameworks for local-level ALMP providers in Finland, and for private providers of employment services and unemployment insurance funds in Denmark and Sweden.
Establish co‑ordination and co‑operation models for the new organisational set-ups of ALMP provision in Denmark, Finland and Sweden.
Balance prerequisites for bottom-up innovation and ensuring good unfragmented services across the country in Denmark, Finland and Sweden. The relevant mechanisms can resemble those used for more centralised public service delivery, such as a benchmarking framework, accompanied by mechanisms to identify and share best practices.
Continue improving data exchange as the number of providers increases in Denmark, Finland and Sweden. In particular, establish an efficient data exchange with private partners.
Continue moving from politically motivated reforms to evidence‑driven reforms
Collect evidence before launching any ALMP reforms in the Nordic countries in the future. Complement evidence collection for the design of the reform by pilots for fine‑tuning the new design.
Gather evidence throughout the reform implementation phase and extend to several years after the end of the reform to evaluate whether the reform had the intended outcomes and fine‑tune policies as needed.
Strengthen efforts to design monitoring and evaluation frameworks already during the design phase of the ALMP change agendas.
Restore the funding of ALMP evaluation and cross-policy research to at least the levels of 2023 in Finland to evaluate the ALMP reform and the new system appropriately.
Continue the PES modernisation journey, while enhancing evidence generation and formalising AI governance
Continue to offer and promote a hybrid operating model combining both digital and in-person services, providing flexibility for clients and ensuring that in-person support remains available for those who need it most (including vulnerable groups and those with limited digital skills).
Develop a digital skills assessment tool to inform both a jobseeker’s need for digital skills training and the choice of channel of service provision.
Ensure that end-users (both staff and clients) are included and consulted in the development of digital tools to ensure that they are user friendly and provide added value.
Develop dedicated AI strategies (potentially as part of wider digitalisation strategies) to set out the objectives and principles for AI use within the PES, establishing accountability for AI systems and promoting transparency and explainability.
Establish systematic and comprehensive approaches to both the monitoring and evaluation of digital solutions, including formal evidence generation on their impacts (such as counterfactual impact evaluations).
Utilise progress made in implementing the ESCO classification to enhance analysis and the production of labour market information to inform service provision and the design of ALMPs, including regarding the green and digital transition and overall skills needs of the common Nordic labour market.
Exchange knowledge between Nordic and EU PES on the interpretation and implementation of GDPR and the EU AI Act.
Strengthen Nordic PES co‑operation, including by expanding its scope and promoting more formal joint actions
Consider formalising the co‑operation between the Nordic PES in the future to strengthen exchanges on topics particularly relevant to the Nordic labour markets and good practices that are more likely transferable.
Explore avenues for the regular and systematic production and sharing of cross-border statistics on mobility within the Nordic region, while complying with data protection and other relevant national and international legislation.
Strengthen the work of Nordic PES in border regions by sharing data, including for example high-level vacancy data to enhance job-matching activities.
Enhance Nordic co‑operation on an expert level, including on topics such as digitalisation, AI and legal topics, and on common challenges (e.g. skills shortages and the twin green and digital transitions).
Consider developing dedicated training for PES staff working in cross-border areas to share expertise and good practices from across the different border regions.
Strengthen and expand the role of PES within Nordic cross-border information services, including through joint initiatives by PES on both sides of the border(s), such as dedicated talent attraction campaigns for border regions and the development of joint training and other ALMP measures.
Explore legislative options to facilitate third country nationals to commute across Nordic borders.
Continue co‑operation with other countries
Continue exchanges on good practices of ALMP provision with countries beyond the Nordic region to enrich the evidence available for continuous improvement processes and reforms.
Consider joint actions vis-à-vis third countries to further support the attractiveness of the common Nordic labour market and address labour and skill shortages that can be undertaken alongside the ALMP reforms, such as co‑operating on recruitment, co‑ordinating Memorandums of Understanding, and developing joint Skill Mobility Partnerships (SMPs) in line with long-term goals for securing skills and improving co‑operation with third countries.