Labour demand

For a long time now there has been a shift of employment in Sweden, as in other industrial countries, from sectors producing goods to those producing services. Public activities are expanding rapidly in modern industrial societies, where an increasingly large share of resources is being utilized for tasks determined by the community.

This expansion is most noticeable in the services sector which, being labour intensive, is marked by a comparatively slow growth of productivity.

The strength of the structural changes in the economy vary with the level of business activity. But every change has consequences for the labour market and the labour force. The decline of employment has been most noticeable in agriculture, forestry and, for some time now, building and construction, while the largest increase has been noted in the public sector, chiefly for education and health services. The shift in industry from labour-intensive to capital-intensive production is reflected in changes in the structure of demand. The forecasts indicate that development will continue along these lines.

When the current long-term survey was updated in 1973, it was assumed that the growth of productivity in the economy will slow down during the rest of the Seventies, one reason being that employment is expected to go on shifting to sectors where the growth of productivity is relatively slow. Another is that the structural changes in industry which have boosted productivity have also involved problems of adjustment that make it unlikely that the process will be able to continue at the same high rate as in the Sixties. It is also argued that the work of rationalization will have to

be undertaken in future with greater consideration for the working environment.

Persons employed in the services sector exceeded the number in industry around the mid-Sixties. The estimated growth of productivity in industry is expected, according to the long-term survey, to result in a further decline of industrial employment despite a substantial growth of output. An expansion of employment is foreseen, however, in some branches such as the basic metal industries and parts of engineering. Industry will continue to play a key part in the Swedish economy. An effective production of goods can be seen in general terms as a factor for creating resources in that it constitutes a basis for the expansion of other, more labour-intensive branches of the economy.

Regional balance is greatly affected by this development. As the concentration of the population to built-up areas continues, job opportunities become more and more scarce in sparsely-populated areas. And even in expansionary areas where the supply of work is excessively narrow, substantial parts of the population are faced with problems of under-employment.

These continuous shifts in the structure of the economy have considerable effects on the labour market. Some firms and production units are wound up while new ones are started. Mergers and the introduction of new technology cause production to be moved and often involve considerable changes in working tasks and conditions. The skills and knowledge demanded of personnel also change radically. The heavy strains on the labour force and the need to adjust persist, along with the risk of unemployment.

The difficulties of certain groups of employees in adjusting to these changes seem to account for a substantial part of the tendency for unemployment to be higher during the most recent business cycles. The

hardest hit are those whose working capacity is limited in some way or other, for instance by physical, mental or social handicaps, lack of education or occupational skills, home ties etc.

The Board considers that increasing attention must be paid to preventive measures so that this tendency does not result in a division of the labour market into one part with "good jobs and good labour" and another with "pour jobs and poor labour", which increases the risk of being excluded. A return to working life is often a difficult and costly process for the individual as well as for society and length unemployment heightens the risk of being rejected for good. The instruments of labour market policy must be used to a greater extent than at present before the risk of being laid-off is acute. Important experience along these lines has been obtained, for instance, via the adjustment groups and a further development of this activity is called for.

One of the primary tasks of labour market policy is to facilitate adjustments on the labour market and assist the unemployed in their search for new work. This is an urgent task not only for the economy but also to a large extent from the social and psychological points of view.

In order to counteract regional imbalances, further efforts must be made to widen the supply of work in regions outside the major built-up areas. The aim should be to establish diffentiated labour markets in each region, with a quality of services that corresponds to the wishes and needs of the labour force. One of the prerequisites for such a balance is a further drive on behalf of the regional sub-centers, to which a growing share of the inevitable migration can go instead of to the metropolitan areas. The location of, say, an industry

or public activity, besides having direct effects on employment, influences the supply of jobs in other sectors, too.

Labour supply

The interaction of supply and demand on the labour market is, of course, a matter of changes in both parameters. On the supply side, increasingly large parts of the population have been activated, partly as a result of the major extension of labour market policy, and it has become possible for new groups, particularly housewives, to start looking for employment One illustration of this development is that in the ten years to the end of 1973 the activity rate for women with children under 7 years of age rose from 35.4 to 53.5 per cent.

Young persons who have completed a secondary education are now displaying an interest in working for a certain length of time before deciding whether to embark on tertiary education. Since a wider experience of working life is of value when it comes to selecting a form of higher education, this would seem to be a proper development. But the growing tendency for young people to refrain from an upper secondary education immediately after their compulsory schooling is more debatable in view of the difficulty of finding suitable work at the age of 16.

The various measures that are designed to facilitate a first entry or a return to working life exemplify branches of labour market policy which have a wider aim than the essential task of combatting unemployment. In this respect labour market policy has an active foundation in the goal that all those who are willing and able to work should be offered the assistance of society in achieving this aim.

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A growing proportion of job-seekers are persons who can accept employment only under special conditions, e.g. concerning the nature, hours or location of the job etc. A central task, in the opinion of the Board, is to enable all these groups to have their terms of employment satisfied within reasonable limits. But in many cases the chances of this are restricted by factors outside the framework of labour market policy. One example is the common problem of arranging for the supervision of children, which presupposes an expansion of the local government service. In many cases. however, the instruments of labour market policy can play a decivise part, not least concerning information to employees as well as to employers.

There has been a substantial net immigration of foreign labour to Sweden in the postwar era but the labour market difficulties associated with the latest recession resulted in a sharp drop of immigration in the early years of the Seventies. This was particularly true of immigration from Finland, with the result that there was a net outflow from Sweden to Finland for the first time in the modern era. Even when economic conditions are more favourable, the increased emphasis on regional policy in Finland will no doubt result in a much more subdued immigration from that country. In 1969-70 immigrants from Finland accounted for as much as 55 per cent of all immigrants to Sweden. The prospects of persistently low immigration to Sweden means that the rising demand for labour will have to be met by utilizing and further activating potential domestic

resources.

The Employment Service

In view of the development outlined above it is necessary to pay particular attention to the role of the Employment Service in a properly functioning labour

market. The changeable nature of the labour market means that there are continuous, large flows of labour and vacancies which call for various processes of adjustment. These processes are complicated because job-seekers naturally have special requirements, demands and qualifications and the vacancies are likewise unique, plus the fact that the labour market consists of a large number of sub-markets. This changeability and division means that both time and resources are needed to match job-seekers and vacancies. In the case of certain applicants and vacancies, moreover, the conditions may have to be modified, e g. by training. removal, altered methods of production and so on in order to produce a result that is acceptable to both parties.

The difficulties of job-seekers in surveying the entire supply of job opportunities, coupled with the difficulties of employers in assessing the total supply of labour, involves a considerable element of uncertainty and chance in the matching of applicants and vacancies. Wrong decisions based on insufficient information may have unsatisfactory results for the individual as well as for society. Inadequate information may mean, for instance, that applicants take longer to find a job, which for those without a job amounts to a longer period of unemployment. It is worth noting in this context that a large part of the increase in unemployment since the mid-Sixties is attributable to a longer duration of unemployment. Similarly, inadequate information for employers may result in unfilled "wrongly" filled vacancies and hence a loss of production and increased costs.

There is thus a great need for a properly functioning information system on the labour market. It is needed by those looking for work-job-seekers outside the labour force, the unemployed and those seeking to change jobs-as well as by employers. The work load

on placement services has increased greatly since 1970, partly as a result of the recession but also because a growing proportion of the unemployed are utilizing these services-77 per cent did so during 1973 according to the labour force surveys, compared with just under 60 per cent in the early Sixties. This rising tendency has been accentuated by the introduction of a general cash benefit for the unemployed.

The total number of job-seekers, including those who are not unemployed, is known to be very large but only a limited number make use of the information and referral activities provided by the Employment Service. Its coverage should be extended to include more than the 400,000 or so persons who at present look for work via the Service during the course of a year.

An improved placement service for job-changers, employers and others, besides facilitating the search processes of these categories, would provide better opportunities of solving the employment problems of the unemployed. It should be emphasized in this context that a wider coverage by the Employment Service should not be seen as an end in itself. The true aim is to make search processes and information systems in general more effective.

A growing number of job-seekers and the new tasks allotted to the Service have already generated an accumulative need for personal referral activities which can be catered for only by increasing the staff. But it is also mportant to relate the tasks of the Service's staff to the development of the labour market as outlined above. It is not enough for the staff to be well-informed about the local labour market. They must also know where in the whole of Sweden a particular occupational category is in demand and where a particular category of labour is available.

If the Employment Service is to function effectively as a link between supply and demand on the labour market, it must have access to labour market information of a somewhat different character than that available at present. Labour market statistics must provide a more detailed and characteristic picture of job-seekers and vacancies than is provided by the present mid-monthly counts. A truly meaningful comparison between data on applicants and vacancies cannot be made without statistics on the conditions, requirements and limitations of the job-seekers together with the conditions and demands attached to the registered vacancies. As the pratical work of referral aims at matching the total flows of applicants and vacancies over a longer period of time, there is a need of flow statistics. Measures of labour market policy and the information which the general public and the authorities receive must likewise be based upon facts about the flow of job-seekers who apply to the employment offices. The introduction of a new system of statistics which can meet these requirements was started on 1 July 1974.

The vast amount of information required by the Employment Service in the fulfillment of its tasks as a link between supply and demand calls for adequate aids. The use of ADP is essential if the referral information is to have the necessary topicality, extent, structure and quality. The computerized production of vacancy lists has been started on a trial basis in the metropolitan areas. Several enquiries now being conducted in the field of labour market policy will also place increasingly heavy demands on the processing of statistical information.

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