State of the Nordic Region 2020 is out!

Iceland has seen the largest relative population growth in the Nordic Region, Swedish regions have the highest share of foreign-born inhabitants, and Finland and Denmark have the most ambitious climate goals. Fertility rates are the lowest ever recorded in Finland, Norway and Iceland, and income inequality has increased rapidly in Sweden. Oslo tops this year’s Regional Potential Index, while the Faroe Islands have the strongest Nordic labour market. These are just a few of the facts and figures from State of the Nordic Region 2020.

Unique source of data about Nordic regions and municipalities

The Nordic Council of Ministers just published State of the Nordic Region 2020, a bi-annual report produced by Nordregio, providing a wealth of up-to-date statistics and analysis of socio-economic trends in Nordic regions and municipalities.

“State of the Nordic Region is full of interesting narratives about demographic development, labour market and economic development in all regions and municipalities in the Nordic Region, including Åland, the Faroe Islands and Greenland,” says Kjell Nilsson, Director of Nordregio. “It provides a unique overview for those developing regional and municipal strategies in the Nordic countries.”

This year, State of the Nordic Region devotes two chapters to looking “Beyond GDP”, focusing on the wellbeing of the population and energy pathways toward carbon neutrality. The report draws on what can be described as Nordregio’s speciality, which is visualisation of complex data in maps.

“The maps are a powerful tool to visualise socio-economic trends on the regional and municipal levels, as well as the status of each indicator across borders,” says Julien Grunfelder, Head of Nordregio’s GIS department. “State of the Nordic Region broadens the context for decision-makers in Nordic regions and municipalities. It might be more relevant for municipalities in northern Norway to compare themselves to similar municipalities in Sweden and Finland, rather than basing their decisions on comparisons with Oslo or other regions in Norway.”

Different challenges from place to place

Perhaps not surprisingly, the report indicates that most Nordic regions follow some of the overall global demographic trends, with declining fertility, outmigration of young people and an ageing population. The report highlights that the Nordic populations are the most mobile in Europe, which contributes to the ongoing rapid urbanisation in the Nordic countries.

“From a regional perspective, the combination of the two trends of urbanisation and ageing is particularly interesting,” says Research Fellow Linda Randall. “Our research shows that there are regions and municipalities that are dealing with these challenges much more acutely than others.”

One of the more striking conclusions concerns the decline in fertility. The current fertility rates in Finland, Norway and Iceland are the lowest ever recorded, and, apart from the Faroe Islands, none of the Nordic populations has fertility rates above replacement levels.

“It should be food for thought that in spite of our highly favourable family policies, fertility rates are declining all across the region,” says Anna Karlsdóttir, Senior Research Fellow at Nordregio. “What’s surprising to us is that some of the countries that have traditionally had high fertility rates are falling behind. There’s no clear explanation of why this is happening, although one contributing factor is that women today give birth to their first child at a later age.”

Asked about the ageing of the population in rural areas, Karlsdóttir doesn’t hesitate to label the depopulation of young people as a megatrend, although there are interesting exceptions. Some rural regions, notably those in commuting distance to larger urban centres, saw a significant increase in the age group 20-29 between 2000 and 2019. In Sweden, the increase was mainly due to immigration, while the growth in tourism is part of the explanation in rural regions in Iceland.

“We see examples of young people with a desire to live rurally, and we’ve not devoted enough attention to this group. We need to understand what motivates them to go against the trend.”

Changes ahead in the Nordic labour markets

According to the report, 72% of all Nordic municipalities, especially those in rural areas, are expected to experience a decrease in the size of their working-age population by 2040. According to Kjell Nilsson, the balance between the working-age population and those not active in the labour market is a key issue for the future of the Nordic welfare societies.

“If this relationship becomes unbalanced, it could shake the foundations of the Nordic welfare model. Demographically, there are two trends that are affecting this, one is the rapid decrease in fertility rates and the other is that people today live much longer than earlier generations.”

Another labour market issue explored in the report is the share of jobs that could potentially be automated with further advances in digitalisation technology, robotics and artificial intelligence. Around one-third of all Nordic jobs are considered at high risk of being automated by 2040. Randall explains that the discussion about automation has been prominent for several years.

“What’s been missing is the way in which different regions and municipalities will be impacted,” she says. “We found that rural regions are likely to have a larger percentage of jobs at high risk of automation than urban regions, and also that the risk is higher in the private sector than in the public sector. However, it’s important to keep in mind that increased automation does not have to lead to the loss of jobs. Historically, we’ve seen that while some jobs will disappear, others will be created, so the overall amount of labour required in the market could very well remain stable.”

Growing income inequality in Nordic regions

The report shows that while income inequality increased at a faster pace in Denmark and Sweden than the OECD-average between 2000 and 2015, inequality in the Nordic Region a whole remains well below average. According to Grunfelder, the trends are different across the Nordic countries.

“Iceland was hit hard by the 2008 financial crisis and Finland went through a prolonged recession in the early 2010s. As a consequence, income inequality has remained stable in Iceland and actually decreased in most parts of Finland, largely due to outmigration from rural regions and more unemployment. At the same time, income inequality grew in most parts of Denmark, Norway and in particular Sweden, which is where the income disparity increased the most in the period.”

Oslo tops the Regional Potential Index

As part of State of the Nordic Region, Nordregio has developed the Regional Potential Index (RPI), which ranks all 66 regions in the Nordic countries based on their performance on a range of demographic, labour market and economy indicators. Oslo takes the top spot in this third edition of the RPI ahead of the other Nordic capital regions, achieving the highest scores on indicators such as productivity, tertiary education and the share of the population living in urban areas.

“Part of the explanation is that Oslo is smaller in size and population than Stockholm and the Capital Region of Denmark,” Grunfelder explains. “A large portion of Norway’s jobs, tertiary education and financial services are concentrated in Oslo, which, in combination with the region’s relatively small population size, contributes to an exceptionally high GRP per capita.”

Placed sixth in the overall ranking, Uppsala is the highest-ranked intermediate region, while four regions in Iceland top the list of rural regions. In general, the economic dimension is a clear strength in Nordic urban regions, while the intermediate regions have the lowest average GRP per capita of all three types of regions. The main strengths of the rural regions are a strong labour market, with the Faroe Islands having the highest employment rate in the Nordic Region.

State of the Nordic Region 2020 was published on 4 February 2020. The full report can be downloaded HERE.

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