Nordic labour markets consistently perform well, yet labour shortages, the twin green and digital transitions and demographic trends represent significant challenges for the common Nordic labour market. Against this backdrop, the systems of active labour market policies (ALMPs) are being extensively reformed in Nordic countries. The reforms in Denmark, Finland and Sweden are changing the landscape of organisations that deliver employment services, and Iceland is planning to improve labour market support for people with disabilities. To provide better insights for peer learning and move towards more evidence‑based policies, the ALMP reforms and improvements should be thoroughly monitored and evaluated. While the common Nordic labour market is not addressed in the ALMP reform agendas, joint actions to ensure the functioning of the common labour market can be taken alongside the major reforms.
The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market
Abstract
Nordic labour markets, despite strong performance in recent years, are facing a number of concurrent challenges and megatrends – many of which are common among OECD countries. These include, most recently, prevailing labour shortages, the twin green and digital transitions and demographic trends (including an ageing workforce), all having significant implications for the Nordic common labour market as a whole and the role of active labour market policies (ALMPs)1 and Public Employment Services (PES)2 in supporting the economy and promoting inclusive labour markets. Against this backdrop, PES are called to serve a more diverse set of clients, identify and anticipate skills shortages, address jobseekers’ employability, prevent unemployment and promote more inclusive labour markets by supporting marginalised and vulnerable groups. At the same time, tight budgets call for effective and efficient use of resources and a robust accountability framework.
To address labour market challenges, many OECD countries are implementing or considering reforms to their systems of ALMPs and PES. The Nordic region is currently undergoing particularly extensive ALMP reforms,3 where four of the five Nordic countries reviewed in this report are reforming their ALMP system. Denmark is designing and Finland just started implementing major revisions to the organisation of ALMP provision. Sweden has just scaled up contracting-out employment services4 and is evaluating and fine‑tuning its new model. Iceland is about to reform its ALMP and other support systems for people with disabilities, aiming to implement the reform in September 2025. The only OECD Nordic country not going through a reform process is Norway which overhauled its ALMP system in 2006 and merged employment services, benefits and other related functions into a single agency.
The ALMP reforms in the Nordics have been inspired by good practices in other Nordic countries and mutual learning from each other has continued throughout the reform processes. Furthermore, the reform designs have been guided by evidence, with a dedicated expert committee to help the authorities prepare the reform in Denmark and pilots of the new ALMP delivery models in Finland and Sweden. More evidence on the performance of institutional set-ups of ALMP provision could lead to even more informed reforms in the future. Hence, the ongoing and planned reforms should be thoroughly monitored and evaluated to provide lessons on good (and bad) practices to other countries, particularly those in the Nordic region. Tighter co‑operation and sharing of best practices within the region should be maintained and further complemented by the mutual exchange of good practices with countries beyond the region.
Addressing the common Nordic labour market is not part of the ongoing and planned reforms in the ALMP systems or revisions to ALMP packages. Nevertheless, there will still be some impact on the common labour market. The Nordic countries need to be mindful of the possibilities for co‑operation in achieving an inclusive labour market for the Nordic citizens and attracting talent beyond the region, even if such efforts do not need to be part of the ALMP reform agendas.
The next section of this chapter discusses the recent trends and key challenges of the Nordic labour markets. Section 2.3 provides a high-level overview of the ALMP reforms in the Nordic countries to address the labour market challenges, and Section 2.4 focuses on the changes being made in the institutional set-ups of ALMP provision in the context of ALMP reforms. Section 2.5 discusses the importance of continuous improvement processes that should be the default way of strengthening the services for jobseekers, people at risk of job loss, and employers. The last section encourages evidence‑driven policy making in the reform and continuous improvement processes. The chapter discusses ALMP reforms in other OECD countries along with those in the Nordic countries for comparison and good practices.
This section provides an overview of the labour market trends facing Nordic countries in recent years. This includes an examination of key labour market indicators since the COVID‑19 pandemic period and gives consideration to the various ongoing challenges, including labour shortages, demographic trends and the twin green and digital transitions. These trends and challenges have significant ramifications for Nordic PES and ALMP systems, as well as for the common Nordic market (Box 2.1) more generally.
The common Nordic labour market agreement, which marked 70 years in force in 2024, was introduced to foster integration and co‑operation among Nordic countries in terms of employment and mobility. The core principle of the common Nordic labour market agreement is the facilitation of Nordic nationals to freely take up employment and establish residence in another Nordic country. In practice, this means that Nordic citizens should not be required to have work permits to work in another Nordic country and should face equal treatment in terms of working conditions and wages.
Regarding PES, the common Nordic labour market agreement establishes a number of provisions. Primarily these relate to the requirement of Nordic PES to provide support to both persons seeking employment in another Nordic country and employers wishing to recruit from another Nordic country.
Source: The Nordic Council and the Nordic Council of Ministers (2019[1]), Agreement Concerning a Common Nordic Labour Market, www.norden.org/en/treaties-and-agreements/agreement-concerning-common-nordic-labour-market.
2.2.1. Despite significant impacts of the COVID‑19 pandemic, Nordic labour markets have shown robust recoveries in recent years
The COVID‑19 pandemic had significant implications for economic activity, and in turn labour markets, across OECD countries. In response, Nordic countries implemented a wide range of interventions seeking to mitigate the impact of the crisis, including most commonly to protect jobs and incomes. All five Nordic countries saw greater rises in unemployment compared to most other European nations that also extensively used job retention schemes during this period, with Iceland experiencing a particularly sharp increase (OECD, 2023[2]). Unemployment levels in Denmark, Iceland, and Norway were quickly brought back down, while Finland and Sweden faced comparatively prolonged higher unemployment rates, remaining above the OECD average (Figure 2.1). Since then, unemployment rates are now below their pandemic highs in all Nordic countries, with Denmark (4.8%), Iceland (3.5%) and Norway (3.7%) seeing rates below the OECD average of 5.6% in 2023. However, in 2023 all Nordic countries except Iceland experienced a year-on-year increase in unemployment rates, despite a reduction on average across the OECD in the same period.
Annual unemployment rates (ages 15‑64), 2010‑23
Note: OECD is an unweighted average.
All Nordic countries consistently exceed the OECD average employment rate (Figure 2.2). As in other OECD countries, employment rates in the Nordic countries declined during the pandemic period, but by 2021 had already begun to increase again in all Nordic countries except Sweden. By 2022, annual employment rates in all Nordic countries except Sweden exceeded their pre‑pandemic levels (compared to 2019). As of 2023, employment rates in the Nordics sat above the OECD average of 72%, with Iceland having the highest rate among all Nordic and OECD countries at 83.7%; 6.9 percentage points higher than the next highest rate of any Nordic country (76.8% in Denmark).
Employment rates among foreign-born populations in the Nordic countries are relatively strong but still remain below those of the native‑born population, including in Sweden where the differential was largest among the Nordics at 11.3 percentage points in 2022 (OECD, 2024[3]). In addition, unemployment rates among foreign-born populations also exceed those of native‑born, with Sweden in particular seeing the highest unemployment rate for this group among Nordic countries at 16% (3.4 times higher than that of the native‑born).
Annual employment rates (ages 15‑64), 2010‑23
Note: OECD is an unweighted average.
Labour force participation rates within the Nordics also rank well compared to OECD countries on average (Figure 2.3). As of 2023, participation rates in all Nordic countries were 80% or higher, compared to a weighted average among OECD countries of 76.2%. Again, this rate was highest in Iceland across all OECD countries, where labour force participation reached 86.7%. For Nordic women, labour force participation rates are comparatively high, including in Iceland and Sweden in particular which have the two highest rates of female labour force participation across OECD countries (at 83.7% and 82.2% respectively in 2023). Looking at the gender gap in labour force participation, this was just over 10 percentage points in 2023 on average in OECD countries. In the Nordic region, this gender gap in participation is significantly less: with Iceland (5.8 percentage points) and Finland (1.3 percentage points) having the highest and lowest in the Nordic region respectively. Finland has the second lowest gender gap in labour force participation across all OECD countries, just narrowly behind Estonia with a gap of 1.2 percentage points in 2023.
Labour force participation rate and gender gap (ages 15‑64), 2023
Note: W: weighted, U unweighted.
Source: OECD calculations based Source: OECD Data Explorer • Employment and unemployment by five‑year age group and sex - indicators.
2.2.2. Despite strong standings overall, Nordic labour markets are experiencing a number of challenges
Nordic labour markets are facing several challenges and megatrends, many of which are also prevailing in OECD labour markets more widely. Many of these challenges are also closely interlinked, leading to compounding effects and creating a challenging backdrop for Nordic Governments and PES to navigate.
First, despite high employment rates, labour shortages in many sectors and occupations have been a common challenge for all Nordic countries in recent years; a challenge also faced more widely in many European and OECD countries. In the past, the common Nordic labour market has acted as a vehicle to help correct imbalances between those countries with higher levels of unemployment and those facing labour shortages (The Nordic Council and the Nordic Council of Ministers, n.d.[4]). While shortages pre‑dated the pandemic, they have further intensified in the post-pandemic period.
In addition, while labour demand is at historical levels and unemployment rates are low across Nordic countries, those currently outside the labour market are often those facing significant barriers to employment. A recent study indicated that approximately 21% of the working-age population in the Nordic countries have weak or no attachment to the labour market (Højbjerre et al., 2023[5]; Norlén et al., 2024[6]). This study examines a number of groups typically the traditional target groups of various labour market interventions (including older people, young people, people with disabilities and immigrants) and, using latent class analysis, finds that members of these groups are highly heterogeneous in the employment obstacles they face.5 This indicates that designing policies, including ALMPs, that target and address only the most visible or assumed barrier faced by a given group may not be enough to improve their employment prospects.
Given these various labour market challenges, international migration remains one of the key potential avenues through which labour shortages can be addressed. However, given the prevalence of labour shortages in the labour markets of many other European and OECD countries, competition to attract suitable foreign workers will continue to remain high. Therefore, while Nordic countries are considered above average in terms of overall attractiveness to highly skilled migrants (with Sweden and Norway in the top five), more can be done to enhance the talent attractiveness of Nordic countries, including reduced administrative burdens and enhanced pathways to permanent settlement (OECD, 2023[7]; OECD, 2024[8]).
Alongside this, large structural changes in Nordic economies are underway, including the twin green and digital transition and demographic changes. The green and digital transitions bring with them significant implications for Nordic labour markets, changing the profile of skills and occupations demanded by employers and having ramifications for the allocation of jobs across sectors, occupations and regions (OECD, 2024[9]). An ageing population, likely to be a key contributor to future labour shortages for many countries, is also an important factor for the Nordics. By 2060 the working age population (aged 15‑64 years) is predicted to shrink to 58.7% of the total population on average across OECD countries, with all Nordic countries except Iceland projected to be slightly below the OECD average by this time period (OECD, 2023[10]). Combined with falling fertility rates, well below replacement levels, and natural population decline, these trends pose significant demographic challenges for the Nordics.
To better tackle labour market challenges, Nordic and other OECD countries are revising and reforming their ALMP systems. This report defines reforms in ALMP systems as comprehensive changes that affect several functions and processes of PES, substantially alter eligibility criteria or target groups of ALMP provision, remodel the organisational landscape of ALMP provision or extensively reshuffle tasks and co‑ordination models of ALMP providers and providers of other types of services and measures. In the case of major reforms, all these changes occur simultaneously. Such overarching changes in ALMP systems and PES can significantly increase efficiency and effectiveness in supporting strong labour market performance while requiring strong political and stakeholder engagement.
2.3.1. Four of the five Nordic countries are undergoing a reform of ALMP provision
Some of the most significant reforms of the ALMP systems across the OECD are currently taking place in the Nordic countries, where four of the five countries are undergoing reform. These reforms can potentially make the Nordic systems more resilient to labour market shocks and megatrends and help the countries better address the current challenges like labour shortages and mismatches.
As of early 2025, Denmark is designing and Finland has just started to implement major revisions in the organisation of ALMP provision (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]; OECD, 2023[12]), and Sweden has recently re‑organised its ALMP delivery system and is currently evaluating and fine‑tuning it (OECD, 2023[13]). These three reforms are changing the high-level institutional set-up of ALMP provision, including organisational set-up, legislative set-up, governance and funding models. More specifically:
In January 2019, Sweden decided to contract most of its employment services for jobseekers out to private providers and non-governmental organisations (NGOs), while the PES (Arbetsförmedlingen) will remain responsible for labour market policy co‑ordination, basic employment services for all jobseekers, and intensive support to the most vulnerable groups.6 The new performance‑based contracting model (rusta och matcha) was launched in 32 pilot municipalities in March 2020 and gradually rolled out nationwide. The reform aimed to increase the efficiency of employment services and give jobseekers the freedom to choose their preferred service provider. Nevertheless, the data from the first years of the new service indicate that a significant proportion of clients have difficulties in making informed choices when trying to find a suitable provider (OECD, 2023[14]). Furthermore, the evaluation of the new system indicates decreased efficiency, at least regarding the first years of rollout (Egebark et al., 2024[15]). The external providers have not been able to generate better labour-market or educational outcomes for the jobseekers (e.g. no significant improvements in employment rates, sustainable employment and wages). Yet, their costs are higher than the same services provided by the public system by 46% to support jobseekers closer to the labour market and by 71% to support jobseekers further from the labour market. Due to the evaluation results, the Swedish Government aims to further fine‑tune the system in 2025, decreasing the share of contracted-out employment services again and increasing those by Arbetsförmedlingen.
Finland transferred the responsibilities for employment services from the state to municipalities and municipal co‑operation areas7 on 1 January 2025. The staff from the local PES offices was transferred to the municipalities, and the latter became responsible for organising employment services and ALMPs. The reform aims to bring services closer to jobseekers and employers and better utilise the municipal ecosystem to provide comprehensive support. The devolution of responsibilities is supported by a funding model to incentivise municipalities to provide effective employment services as the municipalities now participate in the funding of the basic amount of earnings-related and basic unemployment allowances (MEAE, 2023[16]). The Ministry of Economic Affairs and Employment (MEAE) has remained responsible for ensuring the functioning of the system of employment services, drafting the legislation regarding ALMP provision and setting national targets for the municipalities (the latter being approved by the government). The role of the national level Development and Administrative Centre (KEHA Centre) that has been previously responsible for supporting the local PES offices and regional Centres for Economic Development, Transport and the Environment (ELY Centres) in charge of steering local PES Offices, is being strengthened to better co‑ordinate and support the new system. The KEHA Centre also provides the digital infrastructure for ALMP provision and produces information on the functioning, performance and impact of the municipal employment services. The regional ELY Centres remain operational to support the employment authorities by maintaining an overall picture of regional labour markets and producing labour market forecasts (MEAE, 2024[17]) and organising yearly co‑operation and follow-up discussions for the employment areas. The ex-ante evaluations of the reform performed by the MEAE and the Ministry of Finance expect positive effects on employment (Ministry of Finance, 2022[18]) and a reduction in costs (MEAE, 2022[19]), although the actual results will heavily depend on the final design (OECD, 2023[12]).
Denmark has transferred the responsibilities for ALMPs for insured unemployed persons from the local job centres to the unemployment insurance funds for the first three months of unemployment as of January 2024. This change aims to simplify the process for the newly unemployed, having a single point of contact for the first three months. A further and more far-reaching reform is being planned for the years ahead. To prepare for such a reform, the government set up a group of experts, including academics and researchers, among others, in May 2023. The expert group was tasked to make proposals for a new system that would abolish local job centres and a greater role would be played by the unemployment insurance funds and private providers of employment services (although municipalities would remain responsible for employment services), the jobseekers would have more freedom to choose their path to employment and be subject to less restrictive administrative processes, and above all, the new system should cost DKK 3 billion less annually than currently, while the labour market outcomes should not suffer because of the cost-cutting. The expert group published the report with reform proposals in June 2024, focusing on simplifying administrative processes, increasing the user-friendliness of the system responding to individual needs, and re‑arranging tasks between stakeholders to increase efficiency and performance (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]). As of January 2025, the government has initiated a broader consultation process of the expert group’s proposals for the reform design and is expected to commence negotiations with relevant stakeholders in the near future. As no political agreement has been reached yet, this report refers to the broad intention of the Danish Government to reform and the proposals of the dedicated expert group when discussing the upcoming ALMP reform in Denmark.
Iceland is about to reform its ALMP and other support systems for people with disabilities, aiming to implement the reform in September 2025 (Social Insurance Administration, 2024[20]). The reform agenda aims to thoroughly revise all key pillars of supporting and incentivising people with reduced work ability to look for and find employment. As such, the reform agenda foresees revisions in disability assessments and the disability benefits system to tie these better with employment opportunities, new measures to prevent long-term disabilities and provide support during rehabilitation, improvements in the co‑ordination of services and co‑operation between service providers, and very importantly, also strengthened support by the PES (VMST).
Norway is the only OECD Nordic country currently not going through a reform. The country overhauled its ALMP system in 2006, merging employment services, benefits and many other related functions into a single agency, the Norwegian Labour and Welfare Administration, NAV (Duell, Singh and Tergeist, 2009[21]). The reform aimed to create a one‑stop-shop of support to help the unemployed quickly return to employment, implying more formal collaboration between national and local administrations. The evaluations of this one of the most significant public sector reforms in modern Norwegian history have not shown that the fragmentation of service provision necessarily decreased as a result of the reform (see, e.g. Aakvik, Monstad and Holmås (2014[22])), also because such a vast reform has been challenging to evaluate comprehensively (Nielsen Breidahl, et al., 2017[23]). While Norway is not reforming its ALMP system currently, the services and measures to support jobseekers and workers are being strengthened and improved to raise the employment rate of 20‑65 year‑olds to 82% by 2030, and to 83% by 2035 (see more in Section 2.5).
2.3.2. Two-thirds of OECD countries have reformed their ALMP system at least once during the past 15 years
Similarly to the Nordic countries, many OECD countries have identified shortcomings in their ALMP systems in recent years and launched reforms to overcome these. Altogether, almost a quarter of OECD countries have started implementing a reform in their ALMP system in 2024 or are planning a reform in the coming years (i.e. nine countries, out of which three Nordic countries). About 61% of OECD countries have reformed their ALMP system in the past 15 years or are designing a reform (i.e. 23 countries, including four Nordic countries, see a high-level overview in Figure 2.4, details in Annex 2.A).
The ALMP systems in the Baltic region went through several major reforms a few years ago. A thorough system overhaul took place in Estonia in 2009, giving the responsibilities for ALMP provision to an independent public organisation with tripartite governance, merging the responsibilities for benefits and ALMPs, introducing a new accountability framework, and implementing new modern concepts of ALMP provision across all functions of PES (OECD, 2021[24]; HoPES, 2013[25]). Another reform in Estonia in 2016 created a modern system for work ability assessments, benefits and ALMPs, successfully increasing the share of people with disabilities in employment (Masso, 2019[26]). The changes to introduce a new approach to prevent unemployment in 2017, and consolidate all career services for adults in PES in 2019 were additional smaller-scale reforms. Lithuania modernised its ALMP system fundamentally in 2017, centralising PES and thoroughly and successfully revising its services and processes (OECD, 2022[27]). Lithuania has continued its reforms in PES support, making career services by PES accessible for all adults in 2022 and institutionalising co‑ordination and joint case management between PES and social services in 2023 (OECD, 2023[28]).
National reforms in ALMP systems in OECD countries by the starting date of the reform
Note: ALMP – active labour market policy. Only national reforms strongly affecting ALMP provision or PES indicated, excluding other functions that some of the PES fulfil. For example, many PES are also responsible for unemployment benefits, but reforms in benefits are not indicated in this figure. Furthermore, many OECD countries have revised activation criteria for unemployment benefit recipients over the past years, which are also not marked as ALMP reforms in the figure. Reforms in ALMP systems that only touch upon digital transformation of PES are not included either.
A noteworthy initiative to reform the ALMP system in Central and Eastern Europe beyond the Baltics is being prepared in Poland (a planned adoption date of the new regulation in Q4 2024). This reform aims to prioritise the needs of jobseekers and employers, widen the groups eligible for ALMP support (e.g. inactive, retirees, farmers, people with disabilities, etc.), redesign ALMPs to shorten job search duration and lead to sustainable quality employment, as well as reduce bureaucracy, increase automation and modernise PES offices (Kancelaria Prezesa Rady Ministrów, 2024[29]).
The most significant reform of ALMP systems in Western Europe is ongoing in France. The reform aims to implement a better co‑ordination framework between the first-tier ALMP provider (the national PES) and systems to provide ALMPs for social assistance beneficiaries, jobseekers with disabilities and young jobseekers (OECD, 2024[30]; Gouvernement de la République française, 2023[31]; Ministère du Travail, 2023[32]). The new system, which will be fully implemented by 2030, aims at elaborate data exchanges between the ALMP providers, a joint monitoring and evaluation system, as well as improved services for jobseekers, people at risk of job loss, and employers. In addition, the new government in the United Kingdom published a white paper declaring a reform in the system of employment services in November 2024 (His Majesty’s Government, 2024[33]). The reform aims to transform PES offices (Jobcentre Plus) into genuine providers of employment services rather than administrative centres monitoring benefit compliance. The new national jobs and career service will co‑ordinate better with other types of services, provide personalised support, engage with employers, and involve place‑based services. The reform will be fully implemented in England where the PES will be merged with the National Careers Service. Responsibilities for skills, career and/or employment services are devolved in other areas, limiting national level changes in service provision.
In Southern Europe, the Greek PES is going through major reorganisation and modernisation, aiming to make the organisation more agile, efficient, and performance‑oriented and make its services more evidence‑based and user-friendly (OECD, 2024[34]). The reform touches upon issues ranging from re‑branding the PES and introducing an accountability framework to dropping or revising low-performing measures and introducing modern digital tools. The two decentralised systems of ALMP provision in Southern Europe, Italy and Spain, are also attempting to improve the performance of their systems and strengthen accountability frameworks. Spain successfully implemented a common digital infrastructure, introduced an accountability framework tied to budgeting in 2013 (OECD, 2019[35]), and established a National Employment System in 2023. This network includes the national agency and regional PES to support identifying and sharing good practices and tightening co‑operation. The ALMP system in Italy has undergone many reforms in the past decades. The most notable reform in Italy took place in 2014‑16, centralising the responsibilities for ALMP provision from local to regional level, as further centralisation was not possible due to the negative results of a referendum to change the constitution (OECD, 2019[35]). The same reform also created a national co‑ordination agency for ALMP provision that initiated many improvements in the system, such as agreements on minimum service standards, service outsourcing models or a common accountability framework. Despite the efforts of the national agency, not all regional PES in Italy have started to fully co‑operate in a common network, and the national agency was abolished again in 2024.
Regarding the OECD countries in Asia and the Pacific, Australia moved away from the model where all employment services were contracted out to private providers in 2022. Further, extensive changes will likely be implemented in the coming years (see section 2.5). Korea has been tackling the challenge of co‑ordination between different types of services and providing comprehensive support that considers jobseekers’ individual needs. Since 2014, local offices of employment services have been gradually transformed into Employment Welfare Plus Centres, host employment counsellors, social workers from local governments and experts from microfinance support agencies, among others (OECD, 2024[30]). These one‑stop shops enable different experts to collaborate to support jobseekers with more complex challenges. They have also been evaluated to indeed be able to better support the labour market integration of some vulnerable groups (Choi, Choe and Kang, 2021[36]).
The overall frameworks for ALMP provision have stayed broadly similar over the past years in Canada and the United States, where the responsibilities for ALMPs are decentralised. Nevertheless, changes and reforms are happening on the sub-national level. For example, the province of Ontario in Canada announced a new employment service delivery model in 2019 that integrates social assistance employment services and started piloting a prime contractor model to outsource these services in 2020 (Government of Ontario, 2019[37]; Government of Ontario, 2020[38]). The new model is being scaled up to make Ontario’s employment services more efficient, streamlined, and outcomes-focused (Government of Ontario, 2024[39]).
In Latin America, significant developments are happening in the system to provide ALMPs in Costa Rica. The ALMP system in Costa Rica is relatively young, as a network of essential employment services was created only in 2009. Over 2019‑21, the National Learning Institute (INA) has been given additional tasks related to vocational education and ALMPs. A National Employment Agency (ANE) has been established under INA, which co‑ordinates public employment services, has established a modern digital platform for job matching, and continues to improve the content and accessibility of ALMPs (OECD, 2023[40]; EUROsociAL, 2021[41]).
As many OECD countries have gone through ALMP reforms in the past years, and several of these have been subject to some ex-post evaluations, these experiences and results provide the Nordic countries valuable insights for their ALMP reforms and smaller-scale changes. Furthermore, these reforms have touched upon a wide range of aspects related to PES and ALMP provision, offering insights not only for the on-going reforms in the Nordic countries, but also for any potential future changes.
2.4.1. Reforms in the organisation and content of ALMPs are often intertwined and need to be approached holistically
Reforms in ALMP systems can concern the organisation of ALMP provision, such as the organisations responsible for ALMP delivery, co‑ordination between stakeholders or ALMP funding schemes. Others focus directly on the content of support to jobseekers and employers, such as improving outreach to vulnerable groups, providing comprehensive services based on individual needs, and addressing skill mismatches due to megatrends. Some reforms aim to change the organisation and content of ALMP provision simultaneously.
Reforms addressing ALMP content as the primary objective aim straightforwardly at the effectiveness and user-friendliness of ALMP provision, improving the systems beyond what the usual continuous improvement processes can achieve. Yet, some of such reforms trigger changes in the organisational set-up as well. For example, making service provision more comprehensive and involving different types of services available as a one‑stop-shop requires the co‑operation and co‑ordination models between different organisations to change (e.g. to implement Employment Welfare Plus Centres in Korea), setting up new frameworks to exchange data and information, and sometimes a task re‑allocation altogether (e.g. implementing comprehensive support to people with disabilities in Estonia). In the Nordic countries, such a reform is being planned in Iceland, where the focus of the reform is on improving support to people with disabilities, but better co‑ordination between services and tighter co‑operation between are some of the key pillars of the reform.
Reforms addressing primarily (or only) the organisation of ALMP provision can have somewhat weaker links to prescribing how the actual support to jobseekers and employers should look like. Furthermore, the evidence on whether some institutional set-ups of ALMPs (e.g. level of decentralisation or outsourcing employment services) perform better than others is currently ambiguous (Lauringson and Lüske, 2021[42]; Vodopivec, 2023[43]; Langenbucher and Vodopivec, 2022[44]). For example, the reform launched in Finland in 2025, shifting the responsibilities for ALMP provision to the local level, assumes that the municipalities would be able to understand the needs of local jobseekers better. However, the evidence on the performance of decentralised versus centralised set-ups of ALMP provision is still ambiguous (Lauringson and Lüske, 2021[42]; OECD, 2023[45]). Nevertheless, the reforms focusing primarily on the organisation of ALMP provision promise efficiency or financial gains. Potential cost savings have been highlighted as one of the benefits of the reform in Finland and set as crucial goals for the on-going reform in Sweden and the reform being designed in Denmark (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]; OECD, 2022[46]).
Whether a reform aims to improve the elements of ALMP organisation, content, or both simultaneously, any such reform needs to be designed and implemented using a holistic approach, as the different elements of ALMP organisation and content are intertwined. Only addressing limited or isolated aspects might not yield the desired results.
For example, the reform in Italy in 2014‑16 was not able to create sufficient prerequisites to put in place a binding accountability framework and sufficient minimum service standards to enable a shift in support for jobseekers and employers across the country (OECD, 2019[35]). The current reform in Finland faces a similar challenge to the content and effectiveness of ALMP support. It will be primarily determined by the new accountability framework, co‑ordination model and co‑operation practices, as the responsibilities for the content of ALMPs will be fully decentralised.
Denmark has acknowledged the trade‑off between expenditures and effective support to jobseekers and employers already since the launch of designing the reform. Nevertheless, the proposals of the dedicated expert group for the potential reform focus primarily on administrative processes. The policymakers in Denmark need to be mindful that cutting expenditures by simplifying processes needs to be accompanied by incentivising strengthened efforts in service content so that the system performance does not decrease.
Iceland has rightfully acknowledged the importance of changes across policy areas and service providers to achieve better support for people with disabilities. In addition, Iceland should ensure that these different stakeholders will have sufficient capacity to deliver the reformed support. For example, although the reform in Estonia in 2016 has positively affected the employment rate of people with disabilities, the full potential of the reform has not likely been realised. While the ALMPs to support people with disabilities were significantly strengthened, the capacity to provide complementary social and health services and services to prevent long-term illnesses was not sufficiently increased (OECD, 2021[24]).
2.4.2. The reform in Finland is changing the organisational landscape most radically
The institutional set-up of ALMP provision covers such elements as the organisational set-up (organisations involved in designing and implementing ALMPs, governance, co‑operation and co‑ordination models), regulatory set-up (acts and decrees defining the organisation and package of ALMPs) and the capacity of ALMP systems (financing frameworks). The different elements of the institutional set-up can influence the performance of the ALMP systems and how these adjust to the changing needs of the labour market (Lauringson and Lüske, 2021[42]; OECD, 2023[45]). For example, during the COVID‑19 pandemic, those ALMP systems where the PES had some autonomy from the government could quickly implement new working methods and introduce new measures to address the challenges imposed by the pandemic. Less decentralised systems were able to implement more homogenous approaches across the country (OECD, 2021[47]; OECD, 2021[48]).
The ongoing reforms of the institutional set-ups of ALMP provision in Finland and Denmark, as well as the reform in Italy, are significantly changing the landscape of organisations responsible for designing and implementing ALMPs (marked in red in Figure 2.5; the reforms in countries marked in blue and green are undergoing some changes in the institutional set-up of ALMP provision without changing the overall organisational framework, i.e. they are dismantling or creating new public organisations tasked with designing or implementing ALMPs or shifting ALMP responsibilities across governance levels). The reform in Finland is changing the organisational landscape most dramatically as the system is undergoing a significant decentralisation process. The responsibilities for designing and implementing ALMPs have been move from the ministry level to municipalities (although the ministry is remaining responsible for the overall system and drafting the related legislation), and the role of the national level support centre is being strengthened to monitor and assess the performance and effectiveness of employment services. While the details of the reform in Denmark are still to be decided, the overall decision to keep the responsibilities for employment services at the municipal level has been announced early on, even if the unemployment insurance funds and private providers will play a more significant role.
Reforms of ALMP systems touching upon organisational set-ups, on-going or announced as of 2024
Note: * The mainstream / first-tier system is mapped, but alternative systems are present. Red labels (Denmark, Finland, Italy) – the reform changes the high-level organisational set-up; arrows to indicate the new model. Blue labels (Australia, France, the Netherlands, Spain, Sweden) – the reform addresses the institutional set-up without high-level changes in the organisational set-up. Green labels (Greece, Iceland, Poland, the United Kingdom) – the main focus of the reform is on the content of ALMP provision, but some aspects of the institutional set-up are also changed. The circled countries – the Nordic countries of the OECD.
Private Employment Services – Private companies and NGOs providing employment services (category 1.1 in the methodology of the OECD Labour Market Policy database, https://doi.org/10.1787/data‑00312‑en: placement and related services).
The changes indicated for the system in Denmark rely on the recommendations made by the dedicated Expert Group. However, no decisions on the reform have been taken by the government as of early 2025.
Source: Updated based on Lauringson and Luske (2021[42]) “Institutional set-up of active labour market policy provision in OECD and EU countries. Organisational set-up, regulation and capacity”, https://doi.org/10.1787/9f2cbaa5-en.
From 2025 onwards, the high-level organisational framework of the ALMP system in Finland will be similar to the current system in Denmark as intended, but also to Chile, Colombia, Spain, Switzerland and the recent framework in Italy. However, many differences exist and will remain between these countries’ institutional set-ups of ALMP provision in finer detail. These differences concern, for example, the exact division of tasks between the ministry, national agency and municipalities, and the role and functions of other actors, such as organisations to implement unemployment insurance, private providers of employment services, social partners, and other sub-national agencies. Nevertheless, some of these differences are likely to enhance or inhibit the performance of the ALMP system. For example, the countries with more decentralised ALMP systems can better ensure access to ALMPs across the country if they are able to implement binding accountability frameworks, agreed minimum service standards and frameworks for sharing innovative solutions and best practices (Lauringson and Lüske, 2021[42]). To fully reap the benefits of being able to better respond to the local needs and encouraging bottom-up innovation, Finland has to simultaneously ensure that national frameworks will be implemented timely to support good services to be available across the country.
Contrary to the Nordic countries, the reform in Italy is likely to have only a minor impact on its labour market. The people who were employed by the Ministry of Labor and Social Policies and the research institute for Public Policy Analysis (INAPP) in 2014 to work in the national PES National Agency for Active Labour Market Policies (ANPAL), have broadly returned to their previous employers after the closure of ANPAL and continue fulfilling similar tasks.
2.4.3. Revisions in the role of private providers of employment services aim for higher efficiency and budget savings
Many of the ongoing reforms of institutional frameworks of ALMP systems are revising the role of and co‑operation with NGOs and private providers in delivering employment services. Nevertheless, the revisions are taking place in opposite directions as some countries are increasing the role of private providers of employment services while others are scaling it down. Although the considerations for customer choice and scalability of services play some role, the considerations for more effective and efficient services are the focus of these revisions. Yet, the countries are taking different paths in these reform processes as the evidence on whether public or private providers can deliver more effective and efficient employment services is ambiguous (Langenbucher and Vodopivec, 2022[44]) and, at the end of the day, the details of the contracting model are instrumental to drive its performance (Vodopivec, 2023[43]).
Cutting costs, in addition to providing jobseekers with the opportunity to choose a suitable service provider and thus increasing client satisfaction, has been the main objective of significantly scaling up the market share of private providers of employment services within the on-going reform in Sweden, (OECD, 2023[13]). By 2024, one‑fourth of all jobseekers in Sweden are supported by private employment services. Yet, the expenditures on PES and administration of ALMPs have remained among the highest among Nordic and OECD countries (Figure 2.6). Furthermore, these expenditures were significantly higher in 2021 and 2022 than in previous years, both in absolute terms and in terms of GDP per capita, although the unemployment rate was decreasing (Annex 2.B). The first evaluations have confirmed that contracting out employment services has become significantly more expensive than delivering the same services in-house (Egebark et al., 2024[15]). Thus, the reform has not yet met its objectives, and further revisions to the contracting-out model will be necessary. For 2025, the government has again slightly reduced the budget for contracting out employment services and aiming to deliver more in-house services. However, this does not necessarily mean reconsidering the new PES model altogether, and the share of contracted-out services will remain high.
Cutting the expenditures of the ALMP system is also one of the main objectives of the reform being designed in Denmark, as Denmark spends more on PES and administration than most other OECD countries, and its expenditures on ALMP measures are far beyond other countries. One of the main tools to achieve the savings will be revisions in administrative processes. Instead of the local employment offices under the municipalities, the role of the unemployment insurance funds to provide employment services may be further extended, and the public market might be opened to private employment services (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]). Concluding from the Swedish experience, only opening the market for private employment services might not necessarily increase the efficiency and effectiveness of the system, and further changes in driving ALMP content might be relevant.
Also, Finland aims to strengthen the role of private providers of employment services as per the current government programme, and the respective changes are being prepared. The main effects of the reform on employment and cost savings are expected to arise from providing services closer to the people and synergies by providing employment, business and education services all at the local level, and a new incentivising funding model for the municipalities. A tighter co‑operation and better data exchange with private employment services would further strengthen the new ecosystem of employment services. A somewhat similar change regarding the private providers is taking place within the PES reform in France, where the role of and co‑operation with private providers of employment services will be strengthened, and contracting-out models will be improved. Still, also in France this change is not among the key pillars of the reform.
Expenditures on ALMPs in 2022
ALMP: Active Labour Market Policy.
Note: Data refer to 2020 (Italy) and 2021 (Greece, Ireland, Israel).
Y-axis: Publicly funded expenditures on public employment services and administration (ALMP services, category 1) per unemployed person as a percentage of GDP per capita. X-axis: Publicly funded expenditures on ALMP measures (categories 2 to 7: training, employment incentives, supported employment and rehabilitation, direct jobs creation, start-up incentives) per unemployed person as a percentage of GDP per capita. Employment incentives exclude category 4.2 (Employment maintenance incentives) to remove as much as possible measures that are specific to COVID‑19. Expenditures on ALMPs per unemployed as a percentage of GDP per capita are calculated as expenditures on ALMP relative to GDP multiplied by population size over the number of unemployed.
Unemployed according to the International Labour Organization (ILO) definition of unemployment and based on OECD Labour Force Statistics.
For detailed ALMP categories, see www.oecd.org/els/emp/Coverage-and-classification-of-OECD-data-2015.pdf.
Source: OECD calculations based on OECD Data Explorer • Labour Market Programmes and OECD Data Explorer • Employment and unemployment by five‑year age group and sex - levels.
In some respects, contrary to the Nordic countries, Australia has moved in the opposite direction and has decreased the role of private employment services. Instead of a fully contracted-out model, Australia now provides public services online to those closest to the labour market. This saves costs while ensuring the job-ready group receives sufficient and homogenous services across Australia. Further changes in the model to contract out employment services will likely aim at higher service quality and potentially more co‑ordination of service provision (Australian Government, 2024[49]). These changes are similar to those in Sweden; the fully contracted-out model has evidently not encouraged innovation in service delivery, while services to the most vulnerable and co‑operation with employers have suffered (Select Committee on Workforce Australia Employment Services, 2023[50]).
Although the reforms in Denmark, Finland, and Sweden aim to lower budgetary needs, these reforms are designed carefully to maintain the ALMP systems’ overall capacity. These reforms aim for more efficient use of resources and eliminate unnecessary administrative processes (according to the proposals by the expert group in Denmark) or increase the flexibility of budgets at a local level, closer to the jobseekers and employers (Finland and Sweden). Furthermore, Denmark, Finland and Sweden as well as Australia and France, that also revise their co‑operation models with private providers of employment services are increasingly conscious that opting for in-house or contracted-out provision does not determine the effectiveness and efficiency of service provision per se and good performance can only be reached with appropriate accountability frameworks and performance management systems. As such, all of the countries mentioned above are rightly investing a lot in developing accountability frameworks for the providers to ensure effective support to jobseekers and employers.
In addition to the accountability frameworks, other mechanisms must support the systems where employment services are contracted out and/or decentralised, balancing prerequisites for bottom-up innovation and ensuring that all jobseekers and employers access good services. Learning from the experience of Australia, the Nordic countries increasing the role of private providers of employment services need to avoid causing a fragmentation of the service provision. The relevant mechanisms to do so can resemble those used for more centralised in-house service delivery, even if leaving more opportunities to design ALMPs to the stakeholders delivering ALMPs. The Nordic countries should create frameworks encouraging innovation among private employment services and facilitate sharing these new practices with other providers, e.g. benchmarking frameworks accompanied by identifying and sharing best practices. Furthermore, national (digital) systems will be key 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 the bi-directional data exchange between the public system and private partners, establishing an efficient data exchange will likely also become crucial for the new ALMP delivery model in Denmark.
2.4.4. Several other OECD countries are revising the co‑ordination models rather than shifting responsibilities around
Several Nordic countries are shifting the responsibilities for ALMP implementation across government levels and stakeholders. To support the new organisational set-ups, the duties for co‑ordination are being shifted, redesigned and strengthened.
Instead of dismantling the organisations involved in ALMP delivery and reconsidering their roles, several other OECD countries aim to make their ALMP systems more efficient and effective by strengthening the co‑ordination between the existing stakeholders. Indeed, regardless of the specific set-up of a PES, co‑operation, co‑ordination, and involvement of all relevant stakeholders have been identified as critical enablers for successfully adjusting the ALMP provision (OECD, 2021[47]; OECD, 2021[48]). As such, successful implementation of the on-going reforms has the potential to make many of the ALMP systems better prepared for future labour market shocks.
Particularly, the reforms in France, the Netherlands and Spain are centred around the co‑ordination and co‑operation between the stakeholders, including strengthening data exchange between them:
The reform in France is the most extensive, aiming to implement a shared IT infrastructure to exchange data, a joint accountability framework and tight interaction between the national and sub-national providers of ALMPs. The reform also foresees many common approaches to improve the content of ALMP provision, such as preventing unemployment, providing comprehensive support to jobseekers and engaging with employers (OECD, 2024[30]; Gouvernement de la République française, 2023[31]; Ministère du Travail, 2023[32]).
The changes in the Netherlands aim to put in place one‑stop shops across the country for jobseekers regardless of whether they are receiving benefits from the PES or municipalities, or do not receive benefits at all (Rijksoverheid, 2024[51]; UWV, 2024[52]). The new Regional Work Centres operated jointly by the PES and the municipalities will tackle the current complicated system where the point of contact is tied to benefit entitlements. In addition, other partners, such as educational institutions and private partners are part of the Regional Work Centres as relevant in each of the 35 labour market regions.
Spain established a Network of Public Employment Services in 2023 that includes the national agency (SEPE) and regional PES. The new institutional set-up is expected to enable even greater co‑operation and co‑ordination, such as identifying best practices of ALMP provision across Spain and sharing these within the new network.
Contrary to the countries listed above, Italy still needs to consider how to encourage co‑operation in its yet again revised organisational set-up. Without a binding accountability framework, its previous model could not create sufficient co‑operation between the decentralised service providers, regardless of having a dedicated agency with a primary task to co‑ordinate ALMPs and encourage co‑operation. 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 the reforms.
Some of the on-going reforms also shift and adjust the tasks for ALMP design. Although high-level policy design remains, as a rule, the responsibility of the ministry in charge of labour policy, changes concern the devolution of more detailed ALMP design and the range of stakeholders involved in or co‑ordinated within the policy design process.
In the context of involving all relevant stakeholders in policy design, the involvement of the social partners was identified as one of the key enablers by the labour authorities of the OECD countries to design effective and agile responses to the labour market needs during the COVID‑19 pandemic (OECD, 2021[47]; OECD, 2021[48]). Almost all OECD and European Union (EU) countries involve the social partners in their ALMP systems, whether assigning them an official supervisory (e.g. tripartite PES management) or advisory role or involving the social partners informally in the discussions. Furthermore, the involvement of the social partners in designing labour policies has been traditionally particularly strong in the Nordic countries (OECD, 2023[2]).
Nevertheless, the current reforms of the institutional set-ups are not further increasing the role of the social partners in the Nordic or other OECD countries. Within the Greek PES (DYPA) reform, its supervisory body (Board of Directors) remains tripartite. Still, the number of representatives was scaled down to make decision-making processes more efficient and agile (OECD, 2024[34]). Although this change was met with scepticism and even protests by the social partners, DYPA has progressed in its modernisation pathway. The ALMP system in Denmark might scale down the numerous advisory and supervisory bodies in the system as per the recommendations by the dedicated expert group (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]), including the tripartite body supervising the national PES agency (Board of Supervisors) and the regional advisory bodies (Regional Labour Councils). Even if these changes will take place, the role of the social partners will remain strong in the Danish system as they will still have a formal advisory role to the Minister of Employment and various informal engagements on the national, regional, and local levels.
In addition to major reforms in ALMP systems making extensive revisions in the set-up and content of ALMPs requiring the involvement of a wide range of stakeholders and political will, many smaller adjustments are made in ALMP provision continuously. Such continuous improvement processes can ensure that ALMP provision meets the labour market needs constantly. Contrary to the other Nordic countries that are currently going through major reforms, Norway is aiming to adjust its ALMP provision to match the labour market needs using the continuous improvement process, proposing a range of adjustments to its ALMP services and measures and adjusting PES approaches in the government’s white paper (Regjeringen, 2024[53]).
A 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. This process also helps to swiftly incorporate best practices from peer organisations and adjust PES service provision to the newest evidence available. Continuous improvement processes still need sufficient PES capacity and stakeholder engagement to design and implement change, but generally do not require major political push and can thus be managed in a more agile way.
A continuously updated change agenda can maximise PES performance without major disruptions, particularly if a continuous improvement process is becoming well-rooted in the PES organisational culture. Such continuous improvement processes can be successfully implemented by adopting appropriate change management and quality management approaches, e.g. following a Plan-Do-Check-Act framework for all PES processes. In this case, all PES activities are thoughtfully planned before implementation, and monitoring and evaluation activities take place to adjust implementation if necessary (acted upon).
2.5.1. Reforms in ALMP delivery are needed when continuous improvements do not suffice
Sometimes, more than continuous improvement processes are needed to modernise ALMP delivery, and significant revisions in ALMP systems are necessary to close the gap between current and potential performance. Although the drivers and objectives of continuous improvement processes and major reforms in ALMP systems can be similar, it is particularly relevant to consider launching a reform of the system in certain situations.
Some ALMP reforms are triggered by megatrends, new knowledge, and ideologies that create a need for more permanent and significant shifts in frameworks and concepts of service provision across policy areas. For example, labour shortages in many OECD countries have pushed governments to boost their efforts to support people in inactivity to enter the labour force. One of the critical labour reserves in some countries has been people with disabilities who have not been sufficiently accessing support to integrate into the labour market and society. More and more OECD countries are changing the systems traditionally focussing on benefits and limited essential services to empowering people with disabilities, providing them with comprehensive support structures, and re‑arranging the organisational set-ups of service provision, incentive systems and ALMP packages. Among the Nordic countries, such a reform is being launched in Iceland in 2025. Another OECD country, Estonia, implemented such a reform successfully in 2016‑21.
Reforms in ALMP systems are also required when continuous improvement processes have not been sufficiently implemented in PES processes and organisation. Low funding and insufficient political priorities can make the capacity of PES inadequate and its operating model outdated. A strong political will and stakeholder agreements are needed to overhaul such systems. While the Nordic countries have been generally fortunate not to suffer from inadequate PES funding in the past years, a few other OECD countries have acknowledged that significant investments are now in order. Such a thorough reform is currently being implemented in Greece, where the PES has fundamentally changed its governance, business and operating model, its resources for core services have been increased, and it is moving towards evidence‑based services supported by efficient administrative processes (OECD, 2024[34]). The operating model and administrative processes are also being revised in Bulgaria’s PES (OECD, 2023[54]), an OECD accession country. Still, without substantial additional funding and political prioritisation, the modernisation process will likely only occur gradually there. The Latvian PES faces similar challenges and aims at gradual improvement rather than a reform using funding from the EU facilities (OECD, 2024[55]).
Revisions in ALMP systems can also be relevant when evidence shows that a previous reform or the chosen path has not been successful. For example, the system of ALMP provision in Australia opted for a fully contracted-out model of employment services in 1998 (Vodopivec, 2023[43]). In 2022, Australia launched online public employment services for those closest to the labour market (OECD, 2023[56]). In 2024, the Australian Government acknowledged that an even larger reform of the ALMP system is needed to establish a responsive system of employment services that actively supports meaningful participation in ALMPs, leads to secure and sustainable employment of people, and meets the workforce needs of employers and industry (Australian Government, 2024[49]). The need for reform is underpinned by inquiries into the system indicating severe shortcomings (Select Committee on Workforce Australia Employment Services, 2023[50]). Among the Nordic countries, data indicating low client satisfaction with PES services have been some of the arguments for a recent reform of the ALMP system in Sweden (OECD, 2022[57]) and an upcoming reform in Denmark (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]).
Although major reforms in ALMP systems are sometimes necessary to successfully and sufficiently improve system performance, frequent overhauls can be more damaging than beneficial. Dismantling existing organisations, frameworks, and approaches is likely to disrupt for several years ahead, considerable investments might be required for the initial years of the reform, and the true benefits might emerge only over the longer term. Policymakers must be mindful of the trade‑offs between these disruptions and the expected benefits when launching a reform, keeping the effects on jobseekers, people at risk of job loss and employers at the heart of the reform.
2.5.2. ALMPs and their delivery models change continuously in the Nordic and OECD countries
Besides the occasional major reforms, ALMP services, measures, and the organisation of ALMP delivery are going through a continuous improvement process in all OECD countries. Although the pace of this process differs across countries, ALMPs are constantly adjusted to better align with the labour market needs and policy priorities, and new ALMPs are designed to tackle newly identified challenges.
Labour market shocks trigger quicker and more widespread revisions in ALMPs. For example, the content and delivery channels of ALMPs were quickly revised across all Nordic and OECD countries during the outbreak of COVID‑19 in 2020, and regulatory processes were sped up to implement innovative solutions for jobseekers and people working reduced hours (OECD, 2021[47]; OECD, 2020[58]; OECD, 2021[48]; OECD, 2023[2]). Dedicated solutions to identify suitable job opportunities, provide labour market information and learn essential level of local languages were swiftly emerging in 2022 to help the refugees from Ukraine and integrate them into the labour markets of the destination countries (European Commission, 2023[59]). And even further improvements in supporting refugees have been triggered by these changes. For example, the PES of Iceland has made additional support measures available for refugees in 2024. Denmark set an objective to increase the economic autonomy of refugees and other migrants in 2023 (Jakubowska et al., 2024[60]).
Responses of ALMP systems to megatrends are more sluggish but still emerging steadily. As of 2024:
Half of OECD countries are providing ALMPs that are designed to explicitly support the green transition – supporting the green transition is (one of) the objectives of these ALMPs and prominent in their features of design and implementation, such as the labour market groups and industries these ALMPs support. The Swedish PES has developed one of the most extensive approaches among Nordic and OECD countries to support the green transition (Box 2.2).
Reaching out to people at risk of job loss and vulnerable workers has significantly increased over the past decade, including better support for displaced workers due to digital and technological transformation and the green transition. In 2024, 81% of PES in the EEA/EU countries engage with employees at risk of job loss and their employers (Jakubowska et al., 2024[60]), above all to provide career counselling, job mediation, upskilling and reskilling. Although such unemployment prevention measures mostly focus on large‑scale redundancies, more and more comprehensive approaches to unemployment prevention have emerged over the past few years across OECD countries, including e.g. Norway.
Supporting active ageing has been less prominent in PES agendas. Targeted ALMPs for older workers in pre‑retirement age exist in most OECD countries, particularly as employment incentives for employers (Jakubowska et al., 2024[60]) and to some extent other interventions like training or job fairs (OECD, 2023[61]). However, comprehensive ALMPs for people of retirement age to support job retention or re‑integration into the labour market are still uncommon (for example, available in Estonia and likely from 2025 onwards in Poland (Kancelaria Prezesa Rady Ministrów, 2024[29])). Also, ALMPs for older workers are often less prioritised than for some other groups, such as youth (e.g. comprehensive approaches in the EU countries under Youth Guarantee).
PES operating models and processes to deliver ALMPs go through continuous improvements to respond better to clients’ needs and increase efficiency as well. Administrative tasks are being streamlined to increase PES capacity and reallocate more resources to support jobseekers, people at risk of job loss and employers. Digitalisation in PES is going hand in hand with digitalisation in society at large, making bigger leaps when new technologies become widely available (such as tools using large language models in 2023) or, exceptionally in 2020 when the COVID‑19 pandemic made face‑to-face service provision impossible (OECD, 2021[47]; OECD, 2020[58]; OECD, 2021[48]), see also Chapter 3.
Half of OECD countries have adapted existing ALMPs or introduced new green initiatives to assist jobseekers, workers, and employers through the green transition. Most ALMPs related to the green transition focus on training, employment incentives for employers and jobseekers, and job counselling and mediation services. Many programmes aim to support the green transition comprehensively and combine different ALMPs to achieve that. For example, several programmes provide job counselling and employment incentives alongside training opportunities to ensure that the training is relevant to the needs of jobseekers and incentivise a transition to green jobs. These new or adapted ALMPs are emerging in addition to the “traditional” ALMPs that encourage mobility across economic sectors, occupations and geographic areas and support responding to different changes and trends in the labour market, including those incurred by the green transition.
The Swedish PES, Arbetsförmedlingen, has invested considerable efforts in supporting the green transition over the past years, setting an excellent example for the other Nordic and OECD countries. Arbetsförmedlingen drives the development of taxonomies relevant to effectively support the green transition in the EU (see Chapter 3), addresses supporting the green transition in its strategic documents, has dedicated ALMPs for jobseekers and employers and invests in the skills of its staff and IT infrastructure to implement the strategic objectives and ALMPs related to greening.
Furthermore, Arbetsförmedlingen has established a dedicated green transition office in Skellefteå, tasked explicitly with recruiting workers to emerging green industries in this northern region. Actions have included trialling employment incentives and vocational training schemes, raising awareness of job opportunities in the north through advertising on their webpage, organising job fairs with employers, and providing information to all PES employees through their internal website and site visits. The office in Skellefteå collaborates closely with a wide range of stakeholders, such as other governmental agencies, municipalities, regional agencies and employers, to better facilitate recruiting workers to green industries. Furthermore, the Skellefteå office is constantly developing new ways to improve its support as the labour needs in this region’s emerging green industries are still beyond the supply. A crucial lesson from Skellefteå’s experience underlines that ALMPs alone are insufficient to attract people to move to their region for greener jobs, and other public services need to be sufficiently available (e.g. childcare, public transport and health services).
Source: Lauringson, Pantelaiou and Westlake (forthcoming[62]), “The pivotal role of active labour market policies and public employment services in the green transition”.
All in all, the changes in ALMP system are often broadly going in a similar direction as the OECD countries are affected by many of the same labour market trends and challenges. Furthermore, the trends in the OECD countries are similar regardless of whether these take place as reforms or more gradually, as the high-level objectives of all changes are above all improving the performance of ALMP systems and modernising PES.
In particular, PES are taking more proactive approaches to reach out to and 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. Co‑operation between support providers is being strengthened particularly considering the needs of the most vulnerable. Digital infrastructure for ALMP provision is being modernised and administrative processes are being streamlined for more efficient, effective and user-friendly services. Governance and accountability frameworks are being reinforced for public and private providers of employment services, and policy design and implementation are becoming more evidence‑driven. Only the organisational set-ups of ALMP provision have remained different across countries and are not converging.
2.5.3. Continuous improvement processes in the Nordic countries should pay particular attention to the content of support
The changes in the Nordic ALMP systems are generally aligned with those in other OECD countries. The reforms in the ALMP systems are for example strengthening co‑ordination, governance and accountability frameworks. In addition, the Nordic countries are adjusting their ALMP packages to provide more comprehensive and individualised support to vulnerable jobseekers and engage with employers:
Iceland is improving ALMP support to the most vulnerable groups. In 2023, Iceland implemented an evidence‑based approach called Individual Placement Service (IPS) to support better the labour market integration of young people with special needs.8 This is a comprehensive service that is increasingly popular internationally due to its effectiveness in helping people with severe mental disabilities (OECD, 2021[63]). In the same year, Iceland also implemented a two‑tier counselling model to focus on job search support for jobseekers close to the labour market and enable more intensive counselling and case management for those at risk of long-term unemployment.
Also, Sweden is adjusting ALMPs to those furthest from the labour market. Over 2022‑24, employment incentives were adjusted for newly arrived immigrants and people who have been unemployed for over two years. In the case of such “entry jobs”, a wage subsidy is paid directly to the individual instead of reimbursing part of the salary to the employer. In such a framework, the subsidy is expected to incentivise both the jobseeker and the employer.
Denmark aims to relieve skill mismatches and shortages, particularly regarding vocational skills. A scheme that enables better access to vocational education for those over 30 and educational gaps was rolled out in 2024. The scheme was previously trialled and evaluated positively.
Finland has strengthened its support delivered to employers by the PES in 2022‑23 (although not part of the ALMP package, as the services are not targeted at hiring jobseekers, inactive or people at risk of job loss). The new services have helped sole entrepreneurs to hire appropriate staff and develop their skills.
In Norway, the government published a white paper on ALMP provision in September 2024, aiming to increase employment rate by adjusting a wide range of ALMP services and measures, as well as PES approaches, in addition to making other changes in economic, employment and welfare policies (Regjeringen, 2024[53]). The white paper proposes to increase investments into ALMPs and PES, adjust training to meet better the skill needs, provide more individualised support to address the different employment barriers with appropriate pathways of ALMPs, better support jobseekers and workers with health limitations, strengthen employment support to youths, and provide follow-up support for sustainable employment. The paper also highlights the importance of PES engaging with employers, and co‑operating with municipalities, heath care providers and educational institutions to provide more comprehensive support. Furthermore, the government aims to strengthen the role of evidence in ALMP implementation. Three newly proposed ALMPs are planned to be implemented first as trials to collect sufficient evidence (a comprehensive work-oriented support package for youths, a four‑year wage subsidy for vulnerable youths, and a wage subsidy programme to be implemented by municipalities).
In addition, Denmark, Finland and Sweden are adjusting the activation criteria for jobseekers and unemployment benefit recipients and their mutual responsibilities with the PES. Finland strengthened the activation criteria in 2022, learning from the framework used in Denmark. At the same time, Denmark has revised the activation criteria for unemployment benefit recipients to enforce work obligations for the particularly long-term unemployed (in the form of community service, internships, and small jobs) and rights for a reassessment of support needs. Sweden plans to redesign its unemployment insurance altogether in 2025 to make it more fit for purpose, incentivise employment and simplify administrative processes.
Taking the main on-going and planned changes via reforms and continuous improvement processes together, the focus of the changes is currently slightly more on ALMP organisation than ALMP content in several of the Nordic countries (Table 2.1). Many changes in the Nordic systems concern the organisational landscape, accountability frameworks and financing models, and digital transformation of PES (Chapter 3). At least the main changes are somewhat limited regarding the actual content of support provided to jobseekers, people at risk of job loss or employers – for example, on reaching out to those who need support, providing comprehensive individualised support or making sure that ALMP support is in line with the current and future labour market needs. Nevertheless, the changes in the content of support are in the main focus for example within the revisions in ALMP delivery currently taking place in Norway and within the planned reform in Iceland.
Main recent and upcoming changes in the Nordic ALMP systems, either via reforms or continuous improvement processes
As the ALMP reforms above all drive the changes in the organisation of ALMP delivery in several of the Nordic countries, these countries need to ensure that the content of ALMPs will be subject to continuous improvement processes. Even if ALMP content does not need to be fundamentally reformed, minor adjustments are always relevant to keep the ALMP provision up to date with current labour market needs and the newest evidence.
2.5.4. Continuous improvements should consider potential benefits for the common Nordic labour market
Promoting the common Nordic labour market is not part of the ongoing and planned reforms in the Nordic ALMP systems or revisions to ALMP packages. The reforms are launched considering the internal political priorities and aim to address issues identified in each country. Furthermore, cross-border labour mobility is facilitated instead by local-level initiatives or at the EU level beyond the Nordic labour market (see Chapter 4) rather than a subject of national-level changes.
Nevertheless, the ALMP reforms will still impact the common labour market, as these reforms will likely affect the labour market situation and institutions in individual countries. The expected changes in the performance of the ALMP systems are likely to influence the success of addressing short-term labour market shocks, as well as megatrends like digitalisation, greening and ageing. The capability to absorb shocks and respond to megatrends in some Nordic countries worse than others can put pressure on the common Nordic labour market. While the common labour market concept should facilitate labour mobility across the Nordic countries when some of them experience labour market deterioration, absorbing additional labour force in others will be limited in the short-term, and more significant outflows of labour will damage the economy of the origin country in the long-term.
Thus, to best support the common Nordic labour market, all Nordic countries need to have functioning institutional set-ups and ALMP packages to address the specific challenges in their countries. Reforms and continuous improvements in ALMP provision that enhance labour market outcomes for citizens and skill supply for employers in individual countries, will also benefit the functioning of the common Nordic labour market. Such goals are more explicit in some of the reforms in the Nordic countries (particularly Iceland) and many of the recent improvements in ALMP packages but less so in changes that aim at cutting ALMP costs and shifting ALMP responsibilities driven by political decisions rather than evidence. A shift towards more citizen-centric and evidence‑driven improvement processes would enhance the labour market prospects of the individual Nordic countries, as well as the common Nordic labour market.
As the functioning of the common Nordic labour market is underpinned by the functioning of the individual labour markets, supporting each other’s efforts to design ALMP reforms and improvements can bear fruits for the whole region. Inter-governmental co‑operation and exchange of good practices and knowledge, such as co‑operation between the Nordic PES and ministries of labour (see Chapter 4) 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 affect achieving an inclusive labour market for the Nordic citizens, as well as attracting talent from beyond the region. Hence, there might be scope for more joint action to address the common labour market challenges, such as those associated with labour and skills shortages. The joint actions do not need to be part of the ALMP reform agendas and can be undertaken alongside the major reforms.
For example, the Nordic countries and their PES could co‑operate on recruiting talent from third countries to take advantage of scale in their outreach efforts.9 Agencies with the mandate to attract talent – whether the PES or another body – can co‑operate in organizing information campaigns, virtual and in-person job fairs, and agreements and operating principles with institutional partners in origin countries. Co‑ordinating Memorandums of Understanding with origin countries can help Nordic countries ensure that standards for fair recruitment practices are respected. Even in the absence of structured collaboration with origin countries, co‑ordinated talent attraction campaigns would allow the Nordic countries to share knowledge and resources for maximum effect.
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 (European Migration Network, 2022[64]). Developing training in origin countries through co‑operation agreements between the Nordic countries before engagement with the origin countries would allow for SMPs to scale up more easily.
2.6.1. Evidence instead of political motivation to launch reforms
High-level political will helps overcome resistance to large‑scale reforms. Political will is needed to reach agreements for major changes in legislation and policy implementation that can simultaneously concern various stakeholders of the ALMP system and different policy areas. For example, the governments or ministers in charge of employment and social policies have announced the need for reforms in Denmark, Finland, Iceland and Sweden.10
While political will is desirable to push for change, the decision to launch a reform in the first place and the direction that the reform should take should rely on evidence. Many of the on-going ALMP reforms in the OECD and Nordic countries have gone through a thorough evidence‑collection phase to guide reform design or even the decision to undertake reform. An increase in the evidence on what works and for whom has made evidence‑based ALMP reforms ever more feasible and widespread across countries.
In Australia, the decision that a reform of the ALMP system was needed, was based on evidence. The House Select Committee on Workforce Australia Employment Service (Select Committee) was established in August 2022 to review the ALMP system in Australia (Australian Government, 2024[49]). Within two years, the Select Committee delivered interim and final reports to the Australian Government that relied on extensive evidence, collecting these through engagement with the OECD experts on ALMPs, and learning from good practices from over ten other OECD countries, among other activities. In response to these reports, the Australian Government has deemed that a reform in the ALMP system is indeed necessary.
In Denmark, as well as France, a need for reform was announced on a political level, assigning high-level objectives for the reforms. Nevertheless, a thorough collection of evidence was conducted in both countries before the reforms were designed. In France, a thorough consultation and evidence collection was launched in September 2023 by the Minister of Labour. Among other stakeholders, the process involved consultations with the OECD experts on ALMPs and top researchers and experts from other OECD countries, enabling the High Commissioner for Employment and Business Engagement to propose a comprehensive and cohesive evidence‑based reform plan in April 2023 (Guilluy, 2023[65]). The Government of Denmark initiated an expert group consisting of researchers and local-level stakeholders in May 2023 to design a reform of the ALMP system that would save costs but not decrease service quality for job seekers and employers (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]). Similarly to the consultation processes conducted in Australia and France, the expert group met with a wide range of stakeholders and researchers, including the OECD experts, to put forward the reform plan a year later (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]).
The on-going reforms in the ALMP systems in Finland and Sweden have not had as thorough evidence collection in the early design phase of the reforms but have nevertheless included a substantial piloting or trialling phase to collect the necessary evidence before full-scale implementation of the new systems. To move towards large‑scale contracting out of employment services as declared by the Swedish Government in 2019, a trial of a new contracting model, called rusta och matcha, was launched in March 2020. The early results of this trial, as well as support from the OECD and the Directorate General for Structural Reform Support of the European Commission11 helped Sweden to fine‑tune the concept of contracting out one‑fourth of employment services, relying on performance, fair competition, availability of services at the local level and a free choice of providers for jobseekers (OECD, 2023[13]). The results of the evaluation of the first few years of the new contracting-out model conducted jointly by the Swedish PES and the Institute for Evaluation of Labour Market and Education Policy (IFAU) are further used to improve the system design (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[11]). Finland initiated a pilot to test the decentralised set-up of employment services in March 2021, with a foreseen end date in June 2023. Nevertheless, the political decision to move forward with the reform was taken already in September 2021 before waiting for the results of the pilot (OECD, 2023[12]), while the pilot end-date has been extended until the end of 2024.
While evidence has guided the on-going ALMP reforms in the Nordic countries and plays a more significant role than ever, political motivation remains the main driver for launching reform. Launching ALMP reforms in the Nordic countries in the future should be preceded by evidence collection, such as recently done in Australia. Furthermore, ideally, combining evidence collection for the design of the reform with pilots for fine‑tuning the new design should be considered to be the best practice in the future. For example, France combines the thorough evidence collection conducted to design the reform with extensive piloting throughout the country to fine‑tune the details of the reform further (Guilluy, 2023[65]).
2.6.2. Peer learning to support continuous improvements and reforms
During the design phase of ALMP reforms, the OECD countries increasingly seek evidence and good practice examples from other countries. Evidence from different countries was systematically reviewed in the reform preparation phases in Denmark, as well as Australia and France. With the help of the OECD and the European Commission, international good practices also guided the reform design in Sweden. In other cases, the consultations have taken place ad hoc bilaterally with other countries and using the frameworks for best practice exchange of the OECD and the European Commission (such as the EU PES Network).
Learning from peers has been particularly strong in the Nordic countries. The current institutional set-up of Denmark has inspired the ongoing reform in Finland to decentralise ALMP provision. The Swedish system inspired Finland to revise its jobseeker activation criteria in May 2022. The officials and experts from Finland, Denmark and Sweden have visited each others’ countries in the reform design phases, as the good practices are believed to be more transferable across the Nordic societies due to similarities in their broader institutions (like the importance of the social partners), the social and economic situation, and shared values. Although Norway is not currently reforming its ALMP system, study-visits to other Nordic countries are taking place regularly on political and administrative level to mutually exchange on good practices.
Some countries have established even more formalised and systematic frameworks for mutual learning than the Nordic countries. For example, the PES in the Baltic states have held regular meetings since 2016 to learn from each other on different aspects related to services for job seekers, workers, and employers. They have also implemented each other’s best practices over the years. An Ibero-American Network of Public Employment Services involving Brazil, Chile, Colombia, Costa Rica, Cuba, Ecuador, Mexico, Panama, Portugal, Spain and Uruguay was established in 2023 (WAPES, 2023[66]). The PES of Austria, Flanders (Belgium), Liechtenstein, Luxembourg, the Netherlands, Germany, South Tyrol (Alto Adige, Italy) and Switzerland are exchanging on topical issues for the PES on the management level and have had mutual exchanges on good practices on previous years as the network of German-speaking PES.
In the future, it will be important for the Nordic countries to ensure that good practices regarding the organisation and provision of ALMPs within the region will be shared. On the example of more systematic mutual learning frameworks in other countries, the Nordic PES could consider 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 collaboration within the region should not lead to isolation from the rest of the world. The Nordic labour market must remain interconnected with other countries to alleviate labour shortages. For example, the labour authorities and PES need to be readily available to discuss any issues arising with those countries that contribute particularly to the Nordic labour supply. In addition, a mutual exchange of good practices of ALMP provision with countries beyond the Nordic region enriches the evidence available for continuous improvement processes and reforms.
2.6.3. Reforms and changes need to be evaluated systematically
To provide lessons on good (and bad) practices for peer learning and future reforms and improvements for the countries internally, the on-going and planned reforms and changes should be thoroughly monitored and evaluated. Following the evidence collection for the design of reform, 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. A good understanding of the challenges of the ALMP system and knowledge of what it takes to address them is essential for legitimate, evidence‑based policy making. Such evidence‑based policy making ensures support for the changes from the stakeholders and the public and improves labour market outcomes for jobseekers and employers.
Crucially, more evidence on the performance of different institutional set-ups of ALMP provision undergoing particularly comprehensive reforms in the Nordic countries could lead to more informed reforms in the future. The availability of such evidence would enable the Nordic countries to move further from politically-driven reforms to evidence‑driven reforms.
Sweden has started with the evidence‑generation process for its on-going reform. The gradual roll-out of this reform has enabled the Swedish PES and IFAU to evaluate the reform using the gold standard of impact evaluation, a Randomised Controlled Trial framework. Nevertheless, even in this case, the monitoring and evaluation framework could have been designed earlier. Denmark and Iceland are currently in the early stages of the reform design and, thus, have yet to start to develop a monitoring and evaluation framework for their upcoming changes. The fundamentally reformed ALMP system was rolled out in Finland on 1 January 2025, but the monitoring and evaluation framework had not been fully designed by that time. Furthermore, Finland’s capacity to evaluate ALMPs and changes in ALMP design and provision has decreased in recent years. The already limited research budget of MEAE has been cut, and the cross-ministerial joint research instrument VN-TEAS was abolished at the end of 2023 (Valtioneuvoston Viestintäosasto, 2023[67]). The joint research instrument facilitated strategic research across policy fields to support evidence‑based policies and was a good practice example for other OECD countries (OECD, 2023[12]). More positive developments are taking place in Norway, where the government published a white paper on ALMP provision in 2024, referring to the need to conduct systematic evaluations on ALMPs and move towards evidence‑driven policies (Regjeringen, 2024[53]).
The Nordic countries must strengthen their efforts to design monitoring and evaluation frameworks already during the design phase of the change agendas (e.g. decide how to measure the fulfilment of the objectives of the changes and data collection needed for that). Additionally, Finland should restore the funding of ALMP evaluation and cross-policy research to at least the levels of 2023. Good examples for approaching evidence generation systematically are available to learn from in other OECD countries. For example, a scientific committee consisting of ten well-established French economists and sociologists was set up in France in 2024 to evaluate the on-going reform and its labour market effects, together with the public research organisation assisting the ministry responsible for employment policy (Direction de l’animation de la recherche, des études et des statistiques, DARES) (Ministère du Travail, de la Santé et des Solidarités, 2024[68]).
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Note: ALMP – active labour market policy. PES – Public Employment Service. UB – unemployment benefit. Only national reforms strongly affecting ALMPs provision or PES indicated, excluding other functions that some of the PES fulfil. For example, many PES are also responsible for unemployment benefits, but reforms in benefits are not indicated. Furthermore, many OECD countries have revised activation criteria for unemployment benefit recipients over the past years, which are also not marked as ALMP reforms in the table. Reforms in ALMP systems that only touch upon digital transformation are not included.
Note: ALMP: Active labour market policy. PES: public employment service. GDP: gross domestic product. OECD is an unweighted of 33 member countries for which data are available over the time period shown. The ALMP expenditures for Iceland are available in the OECD Database from 2018 onwards. Employment incentives exclude category 4.2 (Employment maintenance incentives), to remove as much as possible measures that are specific to COVID‑19.
← 1. Categories 1 to 7 in the methodology of the OECD Labour Market Policy database https://doi.org/10.1787/data‑00312‑en: public employment services and administration, training, employment incentives, supported employment and rehabilitation, direct jobs creation, start-up incentives.
← 2. Public employment service – throughout this report referred to as a public body whose main responsibility is to actively facilitate the integration of jobseekers into the labour market and which implements employment services (providing placement and related services as defined by category 1.1 in the methodology of the OECD Labour Market Policy database, https://doi.org/10.1787/data‑00312‑en: services that facilitate the integration of jobseekers in the labour market or which assist employers in recruiting and selecting staff, including the provision of self-service facilities such as on-line job-banks), potentially in addition to other active labour market policies (training, employment incentives, sheltered and supported employment and rehabilitation, direct job creation, start-up incentives), and which optionally fulfils additional public functions (such as administering unemployment benefits).
← 3. This report and particularly this chapter uses the term “ALMP reforms” rather than “PES reforms” when generally discussing major changes in the systems of ALMP provision, as these reforms often revise the responsibilities and roles of the stakeholders beyond PES, such as ministries, sub-national governments and private providers of employment services.
← 4. Employment services as defined in category 1.1 in the methodology of the OECD Labour Market Policy database, https://doi.org/10.1787/data‑00312‑en: services that facilitate the integration of jobseekers in the labour market or which assist employers in recruiting and selecting staff, including the provision of self-service facilities such as on-line job-banks. Employment services are part of active labour market policies.
← 5. Latent class analysis (LCA) is a statistical technique used to identify distinct subgroups (or latent classes) within populations that may share similar observable characteristics.
← 6. In the new model, all jobseekers have an initial contact with the Arbetsförmedlingen where an action plan is drawn up that indicates any needs for additional support by ALMPs, and is revised regularly (Egebark et al., 2024[15]). Those jobseeker that are very close to the labour market are referred to the digital support systems of the Arbetsförmedlingen, and those very far from the labour market receive intensive support from Arbetsförmedlingen (e.g. training, including using private training providers). Those jobseekers that are in between these two groups in terms of their labour market integration prospects are referred to the private providers of employment services to get supported by individual job placement and job brokerage services. The private providers have considerable freedom to design these support services themselves as long as these are compatible with the labour market policy regulations. Thorough overviews of the reformed system in Sweden are available e.g. in OECD (2023[14]; 2022[46]), Egebark et al. (2024[15]) and Arbetsförmedlingen (2021[70]; 2021[69]).
← 7. Smaller municipalities need to co‑operate to have sufficient client base and capacity. Employment services are now implemented by 45 employment areas (municipalities or municipal co‑operation areas).
← 8. IPS is already used for example in Norway.
← 9. There are already examples within the Nordic area of regions co‑operating to target skilled potential migrants in third countries (e.g. Copenhagen Capacity for the Greater Copenhagen Region).
← 10. Some of the recent and on-going reforms in other OECD countries have been launched on an even higher political level. The current reform of the ALMP system in France was announced by President Emmanuel Macron during his re‑election campaign in March 2022, and the preparations quickly started in his second term. Prime Minister Matteo Renzi launched the reform to centralise the responsibilities of ALMPs in Italy in 2014. However, the negative result of the referendum on the necessary change of the constitution in 2016 prevented the full implementation of the planned changes (OECD, 2019[35]).
← 11. The OECD and the European Commission’s Directorate‑General for Structural Reform Support (DG Reform) were providing support to Arbetsförmedlingen from July 2021 until March 2023 through the Technical Support Instrument of the European Commission: https://web-archive.oecd.org/temp/2023-03-16/621887-reforming-swedish-pes.htm