Many countries are experiencing a record high labour shortage, and Sweden is no exception. The number of available jobs is around 50 percent higher than it was before the pandemic, and around 200 percent higher than in the years following the 2008 financial crisis.

“Despite the economy slowing down and unemployment rising, the labour shortage is a growing problem,” wrote Lund University associate professor Martin Nordin, one of the authors behind the study.

There are multiple reasons for this, including a demographic shift as elderly people leave the workforce, as well as a lack of key skills and an inability to correctly match immigrants’ skills with the needs of the labour market.

“Immigration is often considered to be a solution to a labour shortage,” Nordin said. “But the wave of refugees has probably resulted in a poorer match [of skills to jobs] on the labour market.”

He added that this may change as this group becomes integrated into society and onto the labour market.

“For the most part, it’s about learning the language, but it could also be about getting a professional licence, in nursing for example. This already seems to be happening in the health and social care sector,” he said, adding that immigrants’ skills could be an asset in the long-term.

The solution is not for people to move from one part of the country to another, he said, as all areas of Sweden are experiencing a labour shortage.

“The shortage is not yet obviously larger in Norrland than in the rest of Sweden,” Nordin said. That could change due to ongoing industrialisation in the north of the country, he added, but in that case this would be at the expense of other parts of Sweden.

There are benefits to a labour shortage, he added. As skilled workers move to more productive sectors which can offer higher salaries and better working conditions, growth increases.

“But the wage adjustment which we should be seeing alongside a labour shortage is not happening,” Nordin added. 

“This isn’t a Swedish phenomenon, rather the lack of wage adjustment seen since the financial crisis has been described as a global mystery.”

This could be due to weak competition on the labour market, he added.

The government’s decision to tighten up labour migration by raising the minimum salary could increase salaries across the labour market in the long-term, as foreign workers are forced to leave and competition on the labour market increases, but it may also have the knock-on effect that some sectors which cannot offer higher wages, like healthcare, will need more assistance from the government.

“Targeted wage initiatives may be needed for regions and municipalities outside of the ordinary wage negotiations,” Nordin said.

Foreign workers’ skills are also more well matched to the labour market in the healthcare sector, so pushing these workers out through harsher labour migration rules could worsen the labour shortage in this sector.