1. Executive summary

The Nordic Council of Ministers aims to make the Nordic region the most socially sustainable and competitive region in the world by, among other things, improving the employment prospects of vulnerable groups in the entire region. This is essential for a well-functioning labour market and the socio-economic well-being of individuals (The Nordic Council of Ministers, 2022b). To achieve this goal, a stronger knowledge base is needed to understand the employment barriers faced by these vulnerable groups and how to overcome them.

This report is the second report in a large research project examining how to increase labour market participation among vulnerable groups in the Nordic countries. In the series of reports issuing from this research project, we focus on four groups traditionally considered vulnerable in the Nordic labour markets, and therefore typically having been the target groups for work-oriented policy measures. These groups include young people, seniors, immigrants, and persons with disabilities.

These groups are also the prioritized vulnerable groups in The Nordic Council of Ministers’ action plan for Vision 2030 (see https://www.norden.org/en/information/action-plan-vision-2030)

In the first report, we shed light on the labour force participation among these vulnerable groups in the Nordic countries. We showed that the Nordic countries in general perform well when it comes to inclusion of these groups in the Nordic labour markets. There is, howev-er, still room for improvement.

See https://pub.norden.org/temanord2023-501/

In this second report, we dig deeper into this complex area related to the labour force participation among vulnerable groups in the Nordic countries. More specifically, we develop a framework over employment barriers that vulnerable groups face in the Nordic countries. In developing this framework, we have benefitted from our research network of Nordic experts, who possess extensive knowledge regarding the vulnerable groups and the barriers they face. Their work has resulted in a targeted literature review covering more than 80 papers, which all relate to barriers to employment for vulnerable groups. Drawing on this literature, we have developed a framework with 24 specific employment barriers relating to either individual characteristics (BIC), economic incentives and motivation (BIM), the employer and labour market structures (BEL), or public services (BPS). The framework is presented in the figure below.

BIC₁: Mental health issues

BIC₂: Physical health issues

BIC₃: Lack of relevant education
BIC₄: Joint retirement

BIC₅: Lack of language skills

BIC₆: Lack of knowledge about the labour market
BIC₇: Lack of work experience and skills
BIC₈: Care responsibilities

BPS

BPS₁: Low effectiveness of public services

BPS₂: Collision between public services

BPS₃: Lack of participation in public employment services

BPS₄: Insufficient support for groups to overcome other barriers

BPS₅: Lack of resources
BPS₆: Regional differences in service provision and access to services

BIM

BIM₁: Insufficient economic incentive to find education/ employment

BIM₂: Retirement and pension benefits, incl. early retirement and sick pay

BIM₃: Mismatch between job content and personal values

BIM₄: Lack of motivation

BEL

BEL₁: Costs associated with low productivity

BEL₂: Information gaps and risks related to hiring employees

BEL₃: Discrimination
BEL₄: Working econditions

BEL₅: Lack of local employment opportunitites
BEL6: State of the economy

The framework provides an overview of the barriers that vulnerable groups in the Nordic countries face based on the most recent research on this topic. This comprehensive approach to employment barriers is, to our knowledge, the first of its kind in the Nordic countries. The purpose of the framework is twofold. First, we hope it can be a tool for practitioners to identify and address the broad range of barriers to employment that vulnerable groups potentially face. Second, the framework will be useful in future phases of this project, when we will operationalise and measure the prevalence of the barriers among vulnerable groups in the Nordic countries (depending on the possibilities in the available data) and analyse relevant and promising policies to help individuals with certain set of barriers.

In addition to conducting an extensive targeted literature review and developing a framework, we have also endeavoured to draw analytical conclusions based on the insights from our national experts and the developed framework. To achieve this, we have analysed the presence of the 24 unique barriers for each target group in the Nordic countries, resulting in a barrier matrix that generated several interesting findings. It should be noted, however, that these analytical results are constrained by the nature of the targeted literature review and, thus, should be regarded as indications rather than definitive conclusions. 

Several of the identified employment barriers are not unique to one of the traditional target groups but are shared among at least two of the traditional target groups. Specifically, 12 of the employment barriers are shared among at least two of the traditional target groups. For example, young people, immigrants, and persons with disabilities all face barriers related to lacking work experience and skills whereas discrimination and societal prejudice constitute an employment barrier for seniors, immigrants, and persons with disabilities. Moreover, among these 12 employment barriers, 4 are identified as a barrier for all the traditional target groups. These barriers pertain primarily to individual characteristics such as mental health issues, physical health issues, and a lack of relevant education, but also encompass one barrier related to economic incentives and motivation, namely the barrier ‘insufficient economic incentive to find education or employment’.

While several employment barriers are shared among the traditional target groups, we identified 12 barriers that are only identified for specific target groups. Some of these barriers may also affect other groups but are only described in the included literature for a single group. Other barriers are unique to a particular group, highlighting the distinct challenges each group faces in securing and maintaining employment. For example, joint retirement decisions can pose a significant barrier for seniors, as they may need to coordinate their re-tirement plans with a spouse or partner (Nivalainen, 2022). For immigrants, research from several of the Nor-dic countries demonstrate that lacking skills in the host country's language can be a barrier to finding and re-taining employment (Eriksson & Rooth, 2022; Jakobsen et al., 2021; Kristjánsdóttir & Christiansen, 2019; Christiansen & Kristjánsdóttir, 2016).

Some barriers are shared among several of the traditional target groups. For instance, the Nordic literature to a large degree have documented discrimination against immigrants in the hiring process (Ahmad, 2020; Wollscheid et al., 2022; Dahl & Krog, 2018; Kristjánsson & Sigurðardóttir, 2019). Further, persons with some form of mobility disability are less likely to be hired compared to persons with the same qualifications but no disability (Bjørnshagen & Ugreninov, 2021; Bjørnshagan, 2022; Hardonk & Ingvarsdóttir, 2020). Lastly, there also exist examples of discrimination against seniors in the Nordic literature (Jensen, 2022).

Some of the identified barriers recur for all the traditional target groups. Lack of relevant education is one of these employment barriers. Young people who have no or little education have a higher risk of experiencing labour market exclusion (Engdahl & Forslund, 2015; Harkko et al., 2016). Whereas seniors’ educational level are shown to affect their retirement decision in Finland (Nivalainen, 2022). Among immigrants, it can be difficult to utilize their educational qualifications acquired before immigration, i.e. lack of recognized education is also an employment barrier to this group (Arendt et al., 2016; Schultz-Nielsen & Skaksen, 2017). Lastly, lack of relevant education among persons with disabilities decrease their employment chances (Bredgaard & Shamshiri-Pedersen, 2018).

Beside these conclusions, our work also confirms existing knowledge about the complex and intertwined na-ture of the barriers that vulnerable groups face in entering employment. As Frøyland et al. (2022) demon-strate, vulnerable young people do not typically face a single barrier to employment, but rather a complex set of interrelated barriers that must be addressed to effectively support their employment outcomes.

Similarly, a wide range of factors influence seniors' decisions to stay in the labour market, all of which interact with each other in complex ways (see the box). These examples highlight that this is a highly complex policy area with no simple solutions.

These analytical results demonstrate that there is no free lunch when it comes to increasing the labour force participation among vulnerable groups in the Nordic countries. Further, the many common barriers across several of the traditional target groups support the underlying hypothesis in this entire research project, which is that the traditional target groups to a large degree face similar employment barriers even though they seem heterogeneous at first sight. Hence, policymakers might benefit from shifting the focus away from the tradition-al vulnerable groups to a barrier-centric focus. This emphasizes the necessity of conducting more in-depth investigations into the issue to determine whether active labour market policies (ALMPs) can be designed more effectively to address the barriers faced by individuals, rather than primarily relying on readily observable characteristics such as age or immigration status.

In future phases of this project, inspired by OECD’s Faces of Joblessness-project, we will further investigate the potential of shifting the focus away from the traditional vulnerable groups to a more barrier-centric focus. We will do so by using the developed framework, large quantitative survey data from Eurostat, and unsupervised machine learning techniques. Our objective is to identify and group individuals according to the barriers they face rather than solely on their observable characteristics. Subsequently, we will assess how current activation and labour support policies in the Nordic countries suit the identified groups of individuals. This evaluation will be achieved through a combination of extensive literature reviews and qualitative research, including interviews with relevant practitioners, with the ultimate aim of presenting concrete evidence-based policy recommendations to enhance labour force participation among vulnerable groups in the Nordic countries.

Senior citizens’ decisions about retirement exemplify how barriers may interact since such decisions are often influenced by both individual characteristics (e.g. education, health, etc.), familial situation (partners job situations and retirement wishes) and characteristics pertaining to workplaces and the labour market (demands in current job and unemployment rate). The factors influencing the retirement decision is typically divided into push (factors that push individuals out of the labour market) and pull factors (factors outside the labour market that make it more attractive to retire). Not all pull factors can be considered as a barrier (e.g. being able to retire because having reached the pension age is not in itself a barrier). The literature show that both pull and push factors influence the retirement age (Larsen & Amilon, 2019; Andersen et al., 2019; Meng et al., 2020; Qvist, 2021).