Welcome back to part 4 of our elections blog.

Sweden’s economy faces a strange labour market dilemma. On the one hand, Swedish employers are crying out for more labour. According to survey’s there are over 100,000 positions in Sweden which are vacant because the employer can not find someone to fill them. On the other hand, there is a similar number of immigrants in Sweden who can not find work. This labour market mismatch, as economist call it, is starting to have real consequences. The next government needs to fix the problem. But which way will it turn? Will it invite in international talent, already skilled in IT and life sciences, or will it deny industry the ability to grow? And how will it fix the fact that, by and large the refugee wave does not have the skills to fit Sweden’s high-tech economy?

A recent report by the Stockholm Chamber of Commerce shows that the city has passed the peak of the economic cycle, and that growth is the weakest in five years. According to Andreas Hatzigeorgiou, Chief Economist for the Chamber, Stockholm accounts for 40% of Sweden’s growth, and when the Stockholm economy struggles, it will be hard for the country. Hatzigeorgiou suspects the weakness “is due to the lack of labor, which is extremely short right now. Companies scream for labor. I think politicians must prioritise  … the lack of skills … by investing in education, but not just education because it takes too long… we need to invest more in global talent, such as computer programmers from India and other countries. Plus, we need to stop the expulsion of talent. There are people, often very highly qualified, who have jobs and are expelled because of trivial mistakes” Hatzigeorgiou concludes that if Stockholm continues to have a significantly weaker growth in the future, companies may slow down their investments, and cease to hire people. This problem has been around for a number of years, as this 2016 article shows, and is concentrated in the public sector in professions such as healthcare and education.

At present, Sweden has a labour market policy that in theory, accommodates foreigners to move to Sweden. This is why many of you now reading this blog are here. EU nationals of course have freedom of movement, and those from outside the EU are able to get visas. However, there are pragmatic reasons why insufficient numbers choose to move. As we have already discussed, the housing market and tax rates are barriers that get in the way. In addition, as Hatzigeorgiou refers to, Sweden has an incredible policy of expelling foreigners for trivial failures of their visa conditions. Frequently such failures are not even the fault of the expat – it rests with the Swedish employer. The case was made famous by business lobby groups and the media after Sweden’s Migration Court expelled a Pakistani programmer called Tayyab Shabab, in 2016. This compelled politicians to act, but the solutions proposed were not comprehensive, and in practice the Migration Agency and Migration Court are still serious problems. According to Jessica Stark, the CEO of the Stockholm Board of Directors, “the Migration Board must find a more flexible way of handling the law. They are stubborn and their expulsions are made on strange and incomprehensible grounds”. Mundus covered this comprehensively in April. Bottom-line, if you are a non-EU national in Sweden on a working visa, there is still significant risk around your ability to stay, and that puts many people off.

While both sides of politics decry the hard, legal interpretation of the migration court and agency, and feel, not unjustifiably that it is difficult for the politicians to override the courts, their overall attitudes and policies are quite different. Earlier this year, the Minister for Integration, Ylva Johansson (S), announced that the Social Democrats want to introduce a new policy after the election. The idea is to introduce a permitting system so that unskilled labour migrants do not move to Sweden. The proposed mechanism is to determine different categories of job, which would be deemed to be deficit, in balance or surplus of labour. As we said at the time, the problem with this policy is that it tasks the same bureaucracy that is struggling to process the existing rules with an even more complex system. The risks are that if such a system is to be introduced, foreign nationals working in Sweden will have less security than they have today.

The reason that the Social Democrats want such a system is to give refugees a better chance of finding work, without being forced to compete with unskilled labour from other countries. The Alliance parties are strongly against such a system, which they believe introduces unhelpful bureaucracy. The Centre Party has been particularly vocal in its opposition. Centre’s leader, Annie Lööf, argues that instead, Sweden needs to reduce the cost of employing immigrants.

Hence, although the issues of skilled and unskilled labour are quite different, foreign professionals working in Sweden, especially those from non-EU nations, risk being caught up in the same system designed to protect refugees. Should the next government adopt such a policy, the outcome is unknown.