Posted on 12 January 2012
Many high income countries’ labour immigration policies have, over the past few years, become more selective in terms of who they admit – with most countries prioritising skilled over low-skilled labour immigration – and more restrictive in terms of the scale of annual admissions of migrant workers. This is also true for the UK’s policies toward non-EU workers (whose inflow and skill composition the Government can control). Since 2008, Sweden has been going in the opposite direction. Its new policies do not differentiate between low and high skilled immigration and are aimed at increasing the number of migrant workers. What explains this Swedish exceptionalism? The answer suggests some interesting lessons for the UK.
Restrictive admission policies until 2008
With a population of just under nine million, Sweden is the biggest Scandinavian country with one of the world’s most advanced social welfare states. It combines a liberal market economy with an extensive state-run welfare system. Most comparative analyses of social policy consider Sweden the archetypal “social democratic welfare state” that aims at universal coverage and rights and benefit equality. Most wages and employment conditions are determined by collective bargaining and, with most workers in unions, employment conditions generally adhere to industry-wide standards.
Over the past 30 years, labour immigration from outside the common Nordic labour market has been minimal. In 2007, Sweden issued fewer than 5,000 first time work permits and migration for work accounted for less than two percent of permanent-type migration to Sweden in 2007 (OECD). The low numbers of labour migrants from outside the EU were due to a very restrictive labour immigration policy in place in Sweden since the early 1970s. Concerned about “social dumping”, adverse impacts on collectively agreed wages and employment conditions and maintaining the Swedish “economic model” more generally, Sweden’s powerful trade unions have – until very recently – played an important role in opposing and restricting non-EU labour immigration.
The key requirement was that any application for a work permit for a non-EU national needed to be approved by the Swedish Public Employment Service which consulted closely with the unions when deciding whether the work permit should be granted. Reflecting the highly restrictive policy at the time, in the early 2000s the homepage of the Swedish Migration Board’s website made clear that “obtaining a Swedish work permit is no easy matter” (Bucken-Knapp 2009).
Policy Reform in 2008
In late 2008, Sweden’s new centre-right Coalition Government, in power since 2006, introduced significant reforms of its labour immigration policy for workers from outside the EU. In stark contrast to previous governments, the new Government considered a more open and flexible labour immigration policy of vital interest to the Swedish labour market and economy. The new rules made it significantly easier for employers to recruit workers from outside the EU. The longstanding requirement of approval from the Public Employment Service has been eliminated thus significantly weakening the influence of trade unions over migrant worker admissions.
Importantly, Sweden’s new labour immigration policy does not distinguish between workers with different skills. In the words of Tobias Billström, Sweden’s Immigration Minister since 2006:
“Sweden has now decided to re-open the path for those wishing to come to work. In stark contrast to immigration regulations in many other countries, Swedish policy is not based on quotas or aimed exclusively at highly qualified labour. Instead one of the main features of the reform is that it focuses on the employers’ demand for labour, high as well as low skilled workers. In doing so, Sweden is setting an example which hopefully others in Europe will follow.” (Tobias Billström 2008)
Following the introduction of the new policy, the number of work permit issued to employees form outside the EU increased to over 14,000 in both 2009 and 2010, double the figure in 2008 and triple the number for 2007. The numbers are likely to have been larger without the economic downturn. Permits were issued to a wide range of low, medium and high-skilled occupations.
Explaining Swedish exceptionalism: the role of labour market regulation in restricting labour immigration
Although Sweden’s policy appears very open and employer-driven “on paper”, in practice the continuing strict requirement that all workers be employed at collectively agreed wages – an enduring key feature of the ‘Swedish model’ – is likely to act as a strong deterrent for employing large numbers of migrants. Unlike employers in countries with more flexible labour markets such as the UK, Swedish employers cannot easily use non-EU labour immigration to lower wages or moderate wage growth. This is likely to be a major factor in why the number of work permits issued to non-EU nationals remains relatively low, despite significant opening-up of Sweden’s admissions policy three years ago.
Sweden’s high level of labour market regulation also helps explain why Sweden has seen a relatively small number of East European migrants enter and take up employment despite opening up Swedish labour market to A8 workers in May 2004 (under 50,000 EU workers in total – i.e. A8 plus other EU countries- during 2005-2010, see www.migrationsverket.se/info/793_en.html ). Like the UK and Ireland, Sweden decided not to impose any transitional restrictions on the employment of A8 migrants when the A8 countries joined the EU in 2004. More flexible labour markets in the UK and Ireland were associated with significantly greater inflows of A8 workers than the more regulated labour market in Sweden.
The Swedish experience offers a key insight for debates about labour immigration in other countries, including the UK. Labour immigration and employer demand for migrant labour are in practice influenced by a wide range of public policies (labour market regulation, training policies, etc.) that go beyond migrant worker admission policies.
So where there is limited control over the admission of migrant workers (e.g. EU labour immigration in the UK), changes to labour market and other public policies can play an important role in changing the scale and skills composition of labour immigration. Whether countries with flexible market economies such as the UK are able or willing to change their labour market regulations and other public policies in exchange for fewer new migrant workers is another question.
Bucken-Knapp, G (2009) Defending the Swedish Model. Social Democrats, Trade Unions, and Labor Migration Policy Reform, Lexington Books