Labour market outlook, autumn 2017 Outlook for the labour market 2017 2019 Summary
Text Annelie Almérus Håkan Gustavsson Torbjörn Israelsson Andreas Mångs Petra Nyberg Cut-off date for calculations and forecasts was December 5, 2017 Reprint permitted with specification of source. Arbetsförmedlingen, 13 December 2017
Summary Strong growth in the global economy In the last few quarters, the global economy has continued to improve. The fact that economic activity is once more on the rise in several emerging economies in an important piece of the puzzle regarding this trend. The development is clearly synchronised and, for the first time in ten years, all OECD countries are expected to show positive growth. Overall, we anticipate that the global economy will grow by 3.6 per cent this year and by 3.8 per cent in 2018, with the corresponding estimate for 2019 being 3.7 per cent. The Swedish economy continues to thrive Arbetsförmedlingen's (Swedish Public Employment Service) interview survey in the autumn of 2017 indicates that companies' expectations of how demand for goods and services will develop over the coming six months have risen gradually since 2012. In this respect, the interviews indicate the strongest position since autumn 2010. Our interview survey also shows that the employment plans of private employers continue to be clearly positive. The high level of business activity also means that the available staff resources have been increasingly depleted. Now, almost half of the companies indicate that they can only increase activity by as much as 5 per cent with existing staff levels the survey shows that the available capacity of the country's companies is clearly lower than normal. Arbetsförmedlingen's interview survey thus indicate continued high activity and optimism within the business sector. Other forward-looking indicators also demonstrate continued strong demand for labour. In addition, the overall confidence among households has continued to increase. The conditions for a broad and continued positive development of both growth in the economy and employment are therefore deemed favourable. During the forecast period, it is projected that the Swedish economy will continue to thrive. Growth is expected to progress in a steady but somewhat lower pace than before. It is our assessment that GDP will rise by 2.7 per cent this year and by 2.5 per cent in 2018, with the corresponding estimate for 2019 being 2.2 per cent. 130,000 more employed persons in 2018 and 2019 Demand for labour has been very high in 2017, with strong increases in both the number of employed persons and the rate of employment. Arbetsförmedlingen s interviews point to a continued strong demand for labour during the forecast years. The number of employed persons will continue to increase from an already high level, but the strength of the increase will subside over the course of the forecast period. This is due in part to the fact that the current widespread labour shortage is continuing to rise. This year, the number of employed persons is estimated to increase by 97,000 in the age bracket 16-64, signifying an increase of 2.1 per cent compared to 2016. For 2018 and 2019, the number of employed persons is estimated to increase by 74,000 and 56,000 respectively, corresponding to 1.5 and 1.1 per cent. This gives an employment rate of just over 79 per cent in 2019. The rise in employment will primarily apply to foreign-born residents, who will account for more than 8 out of 10 of these new jobs. At the same time, regional disparities in the employment rate will remain considerable. More jobs will be
generated throughout the country, but this growth will be centred around the major metropolitan counties. Recruitment problems are on the rise in all business sectors The private service sector continues to develop strongly and business expectations among these companies remain high. Arbetsförmedlingen estimates that employment in the private service sector will increase by 39,000 and 32,000 people respectively in 2018 and 2019. At the same time, the shortage of skilled labour is an increasing problem within the business sectors. However, there are still major variations between different sub-sectors, and therefore the shortage can still not be described as a general problem for industry as a whole. Within the public services sector, the growth of new jobs also remains strong. Our assessment is that the number of employed persons within the sector will increase by 28,000 and 21,000 respectively in 2018 and 2019. The shortage of skilled labour is already very extensive within the area and many public employers, especially municipalities and county councils, have great difficulty finding qualified staff. An increasingly clear consequence of this is that employers to a greater extent are lowering their recruitment requirements in terms of training and experience. This applies not least to the responsible municipal authorities. The activity within the construction sector remains very strong, and the sentiment among employers is now at record levels. Expansive hiring plans are being established, but at the same time the lack of skilled labour poses a growing problem and is holding back employment growth. In 2018, the number of employed persons is projected to increase by 5,000, and the following year it should grow by 3,000. In the manufacturing industrial sector, many indicators point to a more positive development. This is particularly true of the forward-looking indicators, which point to a clear growth during the forecast years. The number of employed persons is expected to increase overall by 9,000 in 2018 and 2019. Recruitment problems are also increasing within the industrial sector. Small changes in unemployment Unemployment has continued to decrease among both domestic-born and foreign-born residents. Among domestic-born, unemployment is now so low that the available labour resources must be considered highly limited. Thus, there are still very large differences in unemployment between domestic-born and foreign-born residents, as the level is more than three times higher among the foreign-born group. In the third quarter of 2017, the levels were 3.9 and 14.8 per cent. This year, a slight drop in unemployment is noted, from 7.0 to 6.8 per cent. The trend will also continue into next year with a further drop of 6.6 per cent. In 2019, only minor changes in unemployment rate are expected, which is linked to a stronger labour supply among groups that initially will be further from the labour market. In total, 358,000 people are expected to remain unemployed in 2019. The number of registered unemployed persons will decrease in 2018 and 2019 This year there is only a marginal change in the number of registered unemployed persons, with the number landing at 364,000 compared with 363,000 the year before. In 2018 and 2019, the number of unemployed persons is projected to fall to 357,000 and 351,000
respectively. In parallel, the number of foreign-born persons among the registered unemployed will increase. Towards the end of the forecast period, the percentage of registered unemployed foreign-born residents will rise to more than 60 per cent, mainly through more registered unemployed persons who are born outside Europe. Challenges in the labour market In order to improve labour supply in the coming years, it will be extremely important to strengthen the position of unemployed persons in the labour market. Flexibility and mobility within the labour market must be high, and active measures targeted at unemployed persons lacking requisite skills and abilities continue to be important. The challenges facing the labour market over the next few years are described below. Recruitment opportunities for employers Demand for labour will continue to be very strong during the forecast years, and both public and private employers are planning for continued large increases in their workforce. At the same time, it will become increasingly difficult for employers to find the manpower they seek. The number of unemployed persons who have a strong position in the labour market continues to decline, which means that the supply of jobseekers with skills which are in demand is decreasing. This means that the number of unemployed persons who are positioned further from the labour market will continue to rise. The imbalances in the labour market are therefore becoming increasingly clear. Our assessment is that the shortage of skilled labour will rise and affect more than four out of ten private employers towards the end of the forecast period. In parallel, the shortage will remain very high among the country s public employers. To mitigate the workforce shortage problem, it is critical to match unemployed persons to training that can lead to jobs. In this respect, labour market training and regular education programmes will play an important role. How to increase employment among those with limited training and education The trends for both foreign-born and domestic-born residents in the labour market look positive in many respects. Both the labour market participation and the employment rate are steadily increasing, especially among foreign-born residents. Unemployment among foreign-born residents is still high, however, which is partly due to the fact that many newly arrived immigrants continue to enter the labour force. That said, the increased employment does not benefit everyone. For those with limited training and education, employment is generally low and unemployment is significantly higher than for those with a higher level of education. This applies in particular to foreignborn women. The number of registered unemployed foreign-born persons with only primary and lower secondary education is gradually increasing, and today accounts for around 93,000 persons. Over the next few years, this group will continue to increase. Given that the employers almost always require at least an upper secondary school education in today's labour market, it will therefore prove highly challenging for foreign-born jobseekers with limited education to find work. Unemployed persons who lack an upper secondary school education, regardless of their country of birth, will find it very difficult to compete on the labour market.
Risk of long-term unemployment As the number of unemployed persons who have a weak position on the labour market increases, there is a risk of a rise in long-term unemployment. The situation is particularly precarious for registered unemployed persons with limited education and training. Of the current 127,000 people who do not have an upper secondary school education, almost half have been out of work for more than a year. In order for long-term unemployment to decrease, a combination of different measures is required. It is a matter of education and training, as well as subsidised employment. Arbetsförmedlingen also needs to cooperate more closely with other actors, both in terms of different types of organisations and public and private employers. Balance of resources and selected indicators, forecast for 2017-2019 Percentage change Outcome 2016 2017 Forecast 2018 2019 GDP, at market prices 3,2 2,7 2,5 2,2 GDP, calendar-adjusted 3,0 3,0 2,6 2,2 - Household consumption 2,2 2,5 2,4 2,4 - Public consumption 3,1 0,8 0,9 0,8 - Gross fixed capital formation 5,6 8,1 6,2 3,7 - Changes in inventories 1 0,0-0,1-0,1 0,0 - Exports 3,3 3,9 6,1 4,3 - Imports 3,4 5,6 7,4 4,8 CPI, inflation 1,0 1,7 1,6 2,1 CPIF, inflation 1,4 1,9 1,6 1,9 1) Change in percentage of GDP previous year Source: Statistics Sweden (SCB) and Arbetsförmedlingen Key figures, forecast for 2017-2019 Thousands/percent Change, thousands/percentage Outcome Forecast Outcome Forecast 2016 2017 2018 2019 2016 2017 2018 2019 Population (ages 16-64) 6 108 6 178 6 225 6 266 45 70 47 41 Labour force (ages 16-64) 5 084 5 175 5 245 5 313 56 92 70 68 Employed (ages 16-64) 4 728 4 825 4 899 4 955 77 97 74 56 Unemployed (ages 16-64) 356 350 346 358-21 -6-4 12 Unemployment (ages 16-64) 7,0 6,8 6,6 6,7-0,5-0,2-0,2 0,1 Relative labour force rate (16-64) 83,2 83,8 84,3 84,8 0,3 0,5 0,5 0,5 Employment rate (ages 16-64) 77,4 78,1 78,7 79,1 0,7 0,7 0,6 0,4 Population (ages 15-74) 7 323 7 404 7 454 7 491 65 81 50 37 Labour force (ages 15-74) 5 277 5 387 5 472 5 546 53 110 85 74 Employed (ages 15-74) 4 910 5 026 5 115 5 179 73 116 89 64 Unemployed (ages 15-74) 367 361 357 367-20 -6-4 10 Unemployment (ages 15-74) 6,9 6,7 6,5 6,6-0,4-0,2-0,2 0,1 Relative labour force rate (15-74) 72,1 72,8 73,4 74,0 0,1 0,7 0,7 0,6 Employment rate (ages 15-74) 67,1 67,9 68,6 69,1 0,4 0,8 0,7 0,5 Registered unemployed (16-64) 2 363 364 357 351-8 1-6 -6 2) Arbetsförmedlingen's operational statistics Source: Statistics Sweden (SCB) and Arbetsförmedlingen
113 99 Stockholm Telephon 0771-60 00 00 www.arbetsformedlingen.se Arbetsförmedlingen 2017 12. Omslagsbild: Monkey Business Images