Future labour market requires new skills

One-third of all Nordic jobs are at risk of being automated. At the same time, new roles are emerging in relation to digitalisation, the green transition, and demographic changes such as ageing and immigration. This transformation calls for new skills and action to minimise the potential mismatch between the skills required by the labour market and those possessed by the workforce. The third digital Nordregio Forum discussed the importance of proactive skills development to match the needs of the different labour markets in Nordic regions and municipalities.

Unbalanced rural labour markets

“The labour markets in many of the Nordic regions are not very balanced, especially not in rural areas,” says Karen Refsgaard, Research Director of Nordregio. “Private sector companies are experiencing difficulties in finding properly skilled labour, and we also see the needs for skilled workers in the health and care sector.”

In her introduction, Refsgaard addressed the major transformations that will happen in society in the coming decades. The labour market will undoubtedly become more digitalised, she said, and the economy must also become greener and more socially inclusive than it is today.

“These transformations will bring along a large variety of new skills and jobs,” Refsgaard says. “The key question is, which skills will be in demand in the future? Will digitalisation mean that more people will be living in rural areas? And where should these new jobs be located to ensure a balanced regional development, which is a precondition for a green and socially inclusive future?”

Automation will transform demand

Cartographer and GIS Analyst Oskar Penje presented some of Nordregio’s signature maps on labour market indicators, illustrating the local unemployment impact of the Covid-19 pandemic and also some of the trends that are shaping the labour market. One important indicator is the size of the working-age population, people aged 15-64, also referred to as the potential labour supply.

“For context, the population in the Nordic Region is projected to grow by approximately 8 per cent by 2040, to 29.5 million people,” Penje explained. “Looking at the working-age population, however, the increase is more modest, or 1.5 per cent. The EU, on the other hand, is expected to see a decrease of 6.5 per cent in the same period.”

Alongside digitalisation, automation is expected to have a profound impact on the demand for labour. According to Nordregio’s analysis, around 32 per cent of all jobs in the Nordic Region are at high risk of being automated within the next two decades. A closer look at the local level reveals that the municipalities with the highest shares are predominantly rural.

“The most notable examples are found in Finland, where up to 58 per cent of all jobs in certain municipalities are at risk of being automated,” Penje says.

Youth is particularly vulnerable

With regards to unemployment, the Covid-19 pandemic has cast its shadow over many areas of the Nordic countries. In April 2020, unemployment registrations were up 71,000 in Sweden, compared to the year before, and 55,000 in Finland. When the size of the population is taken into account, the number of new unemployment registrations was highest in Iceland.

“We’re coming from a relatively good period of declining unemployment and youth unemployment, but now, all of a sudden, we’re facing a crisis due to the pandemic,” says Anna Karlsdóttir, Senior Research Fellow at Nordregio. “Unemployment is on the rise again, and in that regard, we know that young people are the most vulnerable.”

Karlsdóttir referred to the growing group of vulnerable and marginalised youth, including those who are neither in employment nor in education or training (NEET).  This unfortunate development is caused by a variety of personal and societal factors, she said.

“For instance, there’s been a strikingly high rate of school closures in rural areas. While this is an effect of rural demographic development, we also identify it as a contributing factor. We have an obligation to empower these young people to re-enter work or studies. When it comes to the future of the labour market, competences and skills, we must pay particular attention to our youth,” Karlsdóttir concluded.

At the same time, there are opportunities for youth if they manage to obtain vocational education. In Denmark, for instance, there is a dire need for skilled workers while there is an over-supply of youth with certain academic degrees. Here, the challenge is how to make vocational programmes more attractive for the youth.

Matching the needs of the labour market

But how do Nordic regions and municipalities work with skills provision and skills development? Nordregio has studied policies and skills ecosystems in six case study regions in the Nordic countries. The key findings are presented in the report Skills Policies – Building Capacities for Innovative and Resilient Nordic Regions.

“These are issues that have to do with education policy, labour market policy and economic and regional development policy, and each of these policy areas have their own interests,” says Anna Lundgren, Senior Research Fellow at Nordregio, who co-authored the report. She explains that the work on skills development can be divided into three main areas.

“Firstly, you have the skills assessment and anticipation, which addresses the current and future skills need in the community,” says Lundgren. “Then there’s the skills development, which aims to enhance skills provision and address mismatches in the labour market through education and training. The final area is skills governance, which is the cooperation between the many different actors and authorities involved.”

Bringing together all relevant actors is key to matching the skills and the needs of the labour market. One example mentioned at the event is a new education for electricians at Skive College in Denmark, tailored to the needs of the wind and solar industry. The education has been developed in cooperation with the local industry, which also provides opportunities for internships and training.

“It’s very important to acknowledge that the skills development happens in a context which is both cross-sectoral and governed by authorities and institutions on multiple levels,” Lundgren says.

Successful integration of immigrants

The Nordic Tour section of the Forum took us to local realities of skills development, with Åland as an example of how Covid-19 has hurt the economy, but also spurred new skills, distance solutions and green innovation. Värmland in Sweden is a prime example of refining and matching refugees’ skills with the local labour market through integrated language and vocational training, e.g. chefs, car mechanics and hotel staff. All with striking results in terms of employment post-training.

“Our students learn Swedish at the same time as they learn a profession, which has proven very beneficial,” says Maria Edvardsson, Coordinator of the Vocational SFI School in Karlstad. She highlights the close cooperation with the local industry as one of the main reasons behind the success. “Before we start a new education, we always talk to the companies to make sure that there’s a need for workers. Moreover, we carefully select the students to make sure that they have the right prerequisites and motivation to enrol. Out of the first 24 students who finished the programme, 22 found a job afterwards.”

Norway takes the lead

To ensure coherence in the approach to skills development in Norway, the Norwegian Government has established Skills Norway, a national directorate under the Ministry of Education and Research.

“Our role is to strengthen the population’s competence and improve the match between the demand for skills and working life,” says Director of Skills Norway, Sveinung Skule.

Key focus areas include reinforcing the opportunities for informed career choices and life-long learning, as well as supporting competence development in working life. Norwegian research has identified four main macro-trends that affect the future skills’ need.

“Digitalisation and automation affect most occupations and jobs, and create a new need for digital skills, all the way from basic skills for all, to cutting-edge ICT skills,” Skule explains. “Ageing has two interesting effects, it creates an increased demand for skilled labour in health and care and also requires people to work longer before they retire. The green transition is particularly important in light of Norway’s large exports of oil and gas. Finally, immigrants arrive with a wide variety of skills, which is why many of them will need up-skilling and language training in order to find work.”

“All of these trends increase the risk of imbalances and skills mismatches, which also means that they increase the need for life-long learning and skills development in the labour force,” Skule adds. “The need for upgrading skills is already very much a reality.”

Did you miss Nordregio Forum 2020?

You can watch the recordings of the first three sessions here:

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