4. Barriers to employment for the traditional target groups across the Nordic countries

In this chapter we describe the literature from across the Nordic countries for each of the four traditional target groups.

 

This chapter summarises the findings of the targeted literature reviews for each traditional target group. Each section summarizes the identified literature for each of the four target groups and, for each of the overall groups of barriers (i.e., barriers related to individual characteristics, economic incentives and motivation, employers and labour market structures and public services). In relation to each barrier, we list the country-specific description of the barrier provided to us by our country-experts.

It is important to note that this chapter is not and cannot be an exhaustive study of all barriers potentially confronting each target group in each country; something that would require a lengthy comparative study surpassing the aims of this report.

In appendix A, each of the studies included in the review are described further.

Sweden: In terms of individual characteristics, a central barrier for young people in Sweden is lack of educational qualifications. Youth with incomplete compulsory education or without an upper-secondary school degree have difficulties finding employment. Engdahl and Forslund (2015) find this group to have markedly greater difficulties than youth who have completed upper-secondary school, something tied to both the characteristics of the group and the fact that they lack a degree. Regarding their characteristics, Engdahl and Forslund find that youth with disabilities and other health issues are overrepresented among those without an upper-secondary degree, as are youth who recently immigrated to Sweden.

Denmark: Concerning barriers relating to individual characteristics, a large quantitative Danish study by Andersen (2017) focused on young people aged 18-29 years who have neither been in education nor had a job for two consecutive years during the period 2000-2013 (in the study termed “disconnected youth”). Andersen finds that these young people engage in different types of risk behaviour (criminal activities, drug abuse, and early parenthood) to various degrees, and some have mental health problems. The study finds that the largest group of vulnerable male youth engage in one or several of these three types of risk behaviour, while a number of even more vulnerable male young persons also have mental health problems. Concerning females aged 18-29 years, one group of vulnerable youth are primarily characterised by mental health problems, while another group struggle with drug addiction in particular (while also having some of the other problems). Other risk factors identified by other Danish research (Bolvig et al., 2019) include a high absence rate from primary or secondary school, bad test results, early sexual debut, and being placed in out-of-home foster care.

Finland: Concerning individual characteristics, studies identify some groups as having a higher risk of being excluded from the labour market. Specifically, Harkko et al. (2016) find that youth with low educational attainment who take psychotropic medication, who receive work incapacity benefits, or who have a history of foster care had a lower labour market attachment compared to other young people. In addition, Ylistö (2018) finds that young people who are long-term unemployed face several barriers when seeking employment. These include lack of knowledge, job content vs. own values, and emotional barriers (e.g., search for employment may involve mental stress or arouse intense negative emotions). Emotional barriers are connected with experiences of disappointment as well as difficult life situations that must be overcome before it is possible for them to engage in job search. 

In looking at a cohort from age 18 to age 26, Saloniemi et al. (2020) also identify some individual barriers in a study focusing on diverse trajectories among young people’s transition to early adulthood. They find that 11% of young women and men follow one of three “straying paths”: Unemployed (predominantly unemployed), Outsiders (hardly appearing in any of the statuses indicating educational or labour market attachment) and Disabled (depending on social security due to permanent work disability). Among the paths of disabled, the nature of their health problems excluded them from the “ordinary labour market logic”. For outsiders, the main barrier among women relates to care responsibilities, while the barriers among men are a low educational level and an overall weak connection to the educational system. As discussed by Saloniemi et al., the yoyo logic in transitions was formerly more tolerated in Nordic societies, while employment and education standards strongly emphasise a direct and linear transition to the labour market nowadays. Thus, the policies are aimed at “speeding up” the labour market entry of young people.

Norway: At the individual level, a low education level is an important risk factor for NEET status. In Norway, more than half of all NEETs have not completed upper-secondary education. Dropout from upper secondary education relates to low grades from compulsory school and for those in the vocational track also to lack of apprenticeships (OECD, 2018a). Other important risk factors are foreign background and poor mental health (OECD, 2018a; Frøyland et al., 2022). Norway as well as the other Nordic countries have seen an increase in poor well-being and mental health among young people (Frøyland et al., 2022). More specifically, the number of young disabled has more than doubled over the last two decades.

Iceland: At the level of individual characteristics, primarily mental health issues appear to hinder the labour market participation of uneducated young people in Iceland (Anvik & Waldahl, 2017; Eydal & Vilhelmsdóttir, 2019). Thus, there is evidence of young people in the country being out of work and education and developing serious mental health issues before these issues are recognised and treated by the social/health care system (Anvik & Waldahl, 2017). There is also evidence of young Icelanders in the NEET category themselves perceiving mental health issues (including ADHD) as a hindrance to their entrance into the labour market (Eydal & Vilhelmsdóttir, 2019). Lack of financial support to enhance their labour market possibilities (e.g., by education) is another labour market barrier for young people in the NEET category that has been identified in Iceland (Eydal & Vilhelmsdóttir, 2019).

Sweden: In Sweden barriers related to economic incentives and motivation has not been a major topic in the literature on youth labour market marginalisation. Incentives are usually of the financial kind, and – if anything – the relative wages of youth (e.g., minimum wages) have been rising (see the section about barriers related to the employer and labour market structure below). Nor have there been changes to other incentives (e.g., study allowances or sick pay) that could have tempted youth to avoid entering the labour market.

Denmark: Concerning economic incentives and motivation as barriers, Danish research does not indicate the existence of major barriers to vulnerable young people’s employment or enrolment in education. Still, a ministerial report analysing the effects from a reform in 2013 of the Danish cash benefits system finds that economic incentives matter - also to the behaviour of vulnerable youth (Børne- og Socialministeriet, 2016). The reform lowered the cash benefits for all young people aged 25-29 years who earlier received such benefits (apart from the most vulnerable group, categorised as “activity-ready”). The findings indicate that, even among vulnerable youth, more persons chose to exit from the cash benefits system in favour of either enrolment in education or employment. Still, our knowledge on exactly which types of young people in the category ‘vulnerable youth’ respond to economic incentives is limited.

Finland: The role of economic incentives and motivation in young people’s employment situations has not been considered a major question in the literature. However, van Gerven et al. (2022) find that, compared to other groups considered vulnerable in the labour market (such as long-term unemployed individuals and single parents), NEET youth had relatively high incentives to work considering the eligibility for social benefits and working hours. The study was based on micro-simulation models.

Norway: Moral hazard related to economic incentives and motivation in the benefit system has been a topic for research in the Norwegian context. Some evidence points to increased use of activation and work requirements – which the young welfare recipients have to comply with to receive benefits – seemingly having some effect, especially for women and those in the lower part of the income distribution (Hernaes, 2020).

Another study using newer data and a reform in 2017, where activation of welfare recipients below 30 became mandatory by law, do not find any effect of increased use of activation. However, the authors point out that the zero effect may be due to the new law only impacting the participation of recipients with low expected gain from activation (Dahl & Hernaes, 2022).

Iceland: No literature related to young people and economic incentives and motivation has been found.

Sweden: Regarding the employer and labour market structures, wages (or employer contributions) which are too high relative to the expected level of production reduce the likelihood of employment. However, Swedish research conclude that, although this effect has been relatively well established, there is little evidence indicating that this is a very important factor (Engdahl & Forslund, 2015). This finding basically corresponds to the results in Saez et al. (2019), in which a 16% payroll tax cut led to a 2-3% employment increase, i.e., a large tax cut leads merely to a limited rise in employment. In contrast, the overall business cycle, as well as regional and local differences in industrial structures, very clearly affects the employment rates of youth. Employment rates among different youth cohorts vary systematically with the business cycle at the time of graduation, and youth employment is lower in regions characterised by relatively few jobs in industries traditionally employing young people, e.g., hotels and restaurants, wholesale and retail trade, and business services, including temporary employment agencies (Engdahl & Forslund, 2015). 

Denmark: We have not found Danish research on barriers related to the employer or labour market structures, but a Danish intervention project aims at making Danish workplaces more inclusive to vulnerable youth.

The project named NExTWORK is funded by the Danish Rockwool Foundation (see https://www.rockwoolfonden.dk/en/projects/nextwork/).

Finland: As regards the employer and labour market structures, young people tend to be disproportionally harmed during an economic downturn. This was particularly the case during the Covid-19 crisis, when employment dropped more steeply among young people than among other age groups (Statistics Finland, 2021).

Norway: Changes in the demand side of the labour market affects young people in Norway in different ways. Bensnes and Strøm (2019) show (using a demand shift for retail workers due to changes in allowed openings hour) that an increase in the demand for unskilled workers has a negative effect on the probability that young people complete an upper secondary education and thereby may have negative effects on these young people’s future labour market prospect. Furthermore, individual-level characteristics interact with long-term changes in labour market structures. Thus, a changing labour market requiring more formal qualifications combined with access to generous health related benefits, has led to challenging labour market prospects for those lacking formal educational qualifications. Accordingly, Vogt, Lorentzen, and Hansen (2020) show that there has been an increased labour market exclusion for recent cohorts of early school leavers.

Iceland: No literature related to the employers and labour market structures has been found.

Sweden: With respect to young people and barriers related to public services in Sweden, this primarily involves insufficient support to youth to help them attain a degree. The crucial importance of completed education implies that youth who fail to attain a degree for some reason run high risks of labour market marginalisation. Engdahl and Forslund (2015) point out that early intervention during primary school and lower-secondary school aiming to prevent school dropout will likely have high rewards. Once dropout has taken place, other measures may be needed, such as internships, intensified job search assistance, or wage subsidies.

Denmark: Concerning barriers in public services, a study by researchers from VIVE identifies a number of challenges pertaining to the municipal youth services department and the job centres which are the two main institutions in Denmark responsible for counselling and guiding vulnerable youth aged 18-29 years towards either education or a job (Bolvig et al., 2019). Overall, the study identifies problems in the municipal youth services relating to a lack of coherence and coordination among the many different institutions and actors involved in assisting vulnerable youth. A second problem is that different IT systems pertaining to different parts of the municipal administration are insufficiently integrated, implying that caseworkers find it difficult to achieve sufficient oversight of the life situation of vulnerable young citizens as well as to coordinate efficiently. Concerning timely interventions, a third problem consists in the need among youth guidance caseworkers for early warnings from the schools if a pupil risks dropout. Nonetheless, the school typically does not advise the caseworkers before the young person has already dropped out. Lastly, a fourth problem concerning youth above 18 years relates to an often-occurring collision between the health professionals prioritising psychiatric treatment above employment and caseworkers in the job centre prioritising either education or employment.

Finland: Some Finnish studies focus on the public services targeting young people. Following the ideas of activation, several policies and programmes have been put in place (such as the Youth Guarantee programme) to offer young people outside employment and education training and services with the aim of either preventing social exclusion or of integrating young people in education and work. As demonstrated in the study by Haikkola (2019), the complexity of the benefit and service system acts as a barrier itself for many young people when seeking education or looking for employment. Haikkola shows how the services provided by the public employment system or the tools that the frontline workers have to help the young people often do not respond to the needs of the young people seeking the services.

Norway: Bråten and Sten-Gahmberg (2022) identify at least three possible explanations for the increase in youth disability, where the first explanation is related to increased morbidity in the population. The second explanation is related to lowered threshold for becoming disabled. This is in line with explanations emphasizing increased requirements for efficiency and productivity in the workforce (Fevang, 2020). Thus, along these lines, an increasing number of young disabled can be seen as a medicalization process. The third explanation is related to a transfer of family responsibilities to the state and to public employment services (Bråten & Sten-Gahmberg, 2022). Thus, persons that previously would have been provided for by the family are now provided for by state-subsidized disability pension. Still, given that the sharp increase in young disability beneficiaries has taken place over a relatively short time, the latter explanation is not very plausible.

Iceland: Research from Iceland regarding barriers related to public services and young people shows that a lack of overall organisation of and cooperation between the services that hold the obligations to support young people in the NEET group hinders the improvement of their situation. The services exist in specialised and isolated organisations, and the collaboration between them is limited. Such silo organisations have restricted ability to attend to the complexity of the problems characterising young people out of work and education (Anvik & Waldahl, 2017).

Our findings relating to seniors highlight that often it is relevant to distinguish between barriers (factors) affecting entry into the labour market and barriers (factors) affecting exit from the labour market. Often studies pertaining to senior’s employment barriers focus on the latter type, while many studies relevant to the other three target groups focus on barriers to labour market entry.

Notice that no literature related to barriers for seniors in the Icelandic labour market has been found.  Iceland has a strong culture of work, and the country has the highest employment rates among older workers of any OECD country (Martin, 2018). This may explain the paucity of research on barriers to their labour market participation.

Sweden: Individual characteristics working as barriers to employment among senior workers are largely related to health issues. Jonsson (2021) finds that a host of indicators related to physical ill-health increase the risk of exiting employment, as these make continued employment more difficult. Psychological ill-health does not seem to be related to employment exit to the same extent as physical ill-health, although it may be of importance in certain occupations (e.g., burnout).

Denmark: Larsen & Amilon (2019) find that poor health is an important push factor for seniors in Denmark. Thus, poor health is an important barrier restraining employment among seniors. Note that most of the studies we have found that examine barriers for seniors’ participation in the labour market focus on retirement and not unemployment. This may be due to the fact that retirement from the labour market is the main explanation for relatively low employment rates for seniors. Seniors do not have a higher unemployment rate than other groups in the labour market, but the share of long-term unemployed among the unemployed is higher for seniors than for the total labour force (Seniortænketanken, 2018, 2019). Still, Epinion and DISCUS (2021) have studied the barriers confronting unemployed seniors. They find that unemployed seniors often experience their own age as a barrier for obtaining employment, and that these negative expectations may lower the intensity of the job search. Furthermore, many of the unemployed seniors have been in the same job for several years and may find it difficult to express in writing in a job application their informal and personal competencies. They may also have very job-specific qualifications, which will make a change of occupation/industry difficult. For some unemployed seniors, a change of occupation/industry is important for their chances of finding a job, because of their previous job are phased out or because of health problems (Epinion & Discus 2021).

Finland: Research from Finland demonstrates that for seniors, individual characteristics such as health, work ability, employment situation, educational level, and family relations all potentially influence senior workers’ actual retirement age (Nivalainen, 2022). According to the study, those who plan to retire early also tend to retire early, and intended retirement age is the strongest predictor of actual retirement age. Good health and better work ability both relate to late retirement, while poor health (sickness absence) is conducive to early retirement. A high education relates to actual late retirement, while unemployment relates to early exit from work. In addition, married persons are less likely to retire early, and they end up retiring later than they intended. 

Norway: In the Norwegian setting, and related to individual level barriers, seniors are considered less adaptable to restructuring processes than younger workers (Underthun, 2021). This is a push mechanism, but there also seems to be pull mechanisms at play when it comes to keeping seniors in the workforce.

Iceland: No literature related to individual characteristics has been found among seniors in Iceland.

Sweden: Economic incentives and motivation have been discussed extensively in relation to seniors. These discussions have centred around the different social insurance schemes, such as disability pensions, sick pay, early retirement benefits, and pensions. Reforms have here been introduced to limit the use of benefits and extend the working life of senior employees, with mixed effects. Nilsson et al. (2016), for instance, find that the curtailment of possibilities of receiving sick pay and disability pensions led to a reduced take-up of these benefits, but this was to some extent counteracted by an increased take-up of early retirement benefits and pensions.

Denmark: Concerning economic incentives and motivation, research from Denmark shows that such incentives are important for seniors’ retirement decisions. A study by Larsen and Amilon (2019), examining push and pull factors and based on self-reported reasons for retirement, finds that the possibilities of receiving early retirement benefits or pension increase the probability of retirement from the labour market. Bingley et al. (2021) corroborate this finding in a study using register data by showing a strong relationship between simulated economic incentives and employment. Furthermore, a literature review focusing on empirical studies that quantify the effects of the organisation of the retirement and pension system on the retirement decision also finds that economic incentives are important for the retirement decisions (Højbjerre Brauer Schultz, 2019).

Finland: Economic incentives and motivation may also be important for the retirement decisions. Kyyrä and Pensola (2020) argue that the incentives for senior workers to continue work are low when they are eligible for an extension of unemployment benefits until the earliest age for drawing old-age pension.

Please notice that this extension of unemployment benefits among senior in Finland has been abolished in 2023. See https://stm.fi/sv/vanliga-fragor-och-svar-om-slopandet-av-tillaggsdagarna-inom-utkomstskyddet-for-arbetslosa-och-om-omstallningsskyddet.

The age at which an individual becomes eligible for extended unemployment benefits has a substantial impact on labour market outcomes over the last years of the working career. According to the results of the study, a two-year rise in eligibility age increased employment by seven months without significant effects on mortality or disability and sickness benefits within 10 years.

Norway: In Norway, some companies utilize financial incentives to prevent early retirement by offering 20,000 NOK retaining bonuses. Thus, economic compensation, however modest, is used to motivate workers to stay longer in work. Such bonuses are found to have a significant but modest effect on postponing retirement decisions (Hermansen & Midtsundstad, 2018). Companies offering such bonuses reduce the probability of early retirement by an average of 5.7%. They do, however, seem to be more efficient for men than for women (Hermansen & Midtsundstad, 2018). The results of Vigtel (2018) indicate that decreasing the minimum legal retirement age (LRA) (among other things) may have a positive effect on the firm’s propensity to hire senior workers. The analyses support that risk-averse firms become more inclined to hire “risky” senior workers when the potential risk of doing so decline (and it declines when LRA decreases).

Iceland: No literature related to the employers and labour market structures has been found among seniors in Iceland.

Sweden: Regarding the employers and labour market structures among seniors in Sweden, discussions have revolved around, among other things, work organisation and task characteristics as barriers to work. Nilsson (2020) reports that characteristics of the work environment (being in a physically or mentally demanding work environment) increased the risk of workforce exit. The same held for low work satisfaction, all pointing to the importance of work design and work organisation for the prolongation of working lives.

Denmark: Concerning barriers related to employers and labour market structures, Amilon and Larsen (2019) have taken a closer look at the influence of work-related factors on the planned retirement age. For the unskilled/skilled workers physically demanding work and stressful work reduce the planned retirement age. For the white-collar workers/civil servants, customs/norms regarding retirement age, dissatisfaction with working hours, stressful work and influence on work situation are all some of most important factors for the retirement age.

Concerning employer preferences relating to the age of applicants, Jensen (2022) shows – using a vignette study – that workplaces prefer employing a 40-year-old job applicant rather than a 63-year-old. There may be objective reasons for such preferences, for example that unemployed seniors are close to retirement age. However, the result underline that (high) age can be a barrier in the labour market. Furthermore, a survey among employers shows that a smaller part of the workplaces deliberately has no seniors among their employees and use non-objective arguments for this choice—a finding indicative of age discrimination on some workplaces (Jensen, 2022).

Finland: Concerning the employer and labour market structures, Nivalainen (2022) found employer-related barriers to retaining senior workers in employment. She finds that senior workers react to negative signals coming from their employer’s actions in ways that can indirectly advance earlier retirement. In addition, Järnefelt et. al. (2022) show that employers experience certain risks when hiring seniors, which can create employment barriers for this group. The risks related to hiring over-55-years-olds, as experienced by employers, are especially connected to health problems, outdated knowledge and skills, and low productivity compared to salary (Järnefelt et al., 2022). Furthermore, almost half of the employers considered the risk of sickness absence or costs of disability retirement to be at least somewhat of an obstacle to recruiting a senior worker.

Norway: Regarding the employer and labour market structures, as employment barriers among seniors in Norway, part-time work has been conveyed as a possible solution to prevent early retirement. Several businesses now offer part-time work for senior workers. Midtsundstad (2018) shows that the share of businesses offering part-time work for senior workers is lower in industries with a high number of workers with low education. Furthermore, the share is lower in male-dominated industries. This is unfortunate since such industries are particularly exposed to high rates of early retirement (Midtsundstad, 2018). The occurrence of special age limits at workplaces, which imply an obligation to resign from the position at a certain age limit, also contributes to many people leaving the workforce in a relative early age (NOU, 2021).

Iceland: No literature related to the employers and labour market structures has been found among seniors in Iceland.

Sweden: No study related to public services and seniors has been found.

Denmark: We have not found any research on public services as an employment barrier for seniors in Denmark. Nonetheless, Seniortænketanken (2018) finds that the participation in active labour market programmes is slightly lower for seniors than for other age groups among unemployment benefit recipients, while this is not the case for social assistance recipients.

Finland: In Finland, research has shown that the ageing unemployed persons participated less in public services, as well as in activation measures, than the other groups (Aho et al., 2018). Moreover, the ageing unemployed persons participated more in services that have a low impact on later employment, such as subsidised jobs in the public sector or rehabilitative work activity.

Norway: Welfare state reform and public services (e.g., NAV) play an important role by providing services and benefits for seniors. An important welfare state innovation came with the amalgamation of three separate health-related benefits into the Work Assessment Allowance in 2010. WAA is distinguished from its predecessors by relatively liberal eligibility criteria. Its goal was to promote rehabilitation of persons at risk of permanent health-related exit from the labour force. In the wake of the 2010 reform, Hansen and Lorentzen (2019) find that rather than solving the problem of health-related exclusion through disability, the reform has created a new problem by steering people into a temporary and less secure income source from the welfare state.

Iceland: No literature related to the employers and labour market structures has been found among seniors in Iceland.

Sweden: Individual level factors that act as employment barriers for immigrants are multiple. One of the most prominent ones relates to language skills, which repeatedly has found to be of great importance. Eriksson and Rooth (2022), for instance, report that language skills are rated as important by almost all employers, irrespective of sector and type of work. This is the case even in occupations and jobs that would not appear to require very strong language skills, such as e.g., working as a janitor. It is the single most important barrier that human resource managers see when it comes to hiring immigrants. At the same time, many immigrants lack language skills at the required levels, making it difficult for them to find work. This applies in particular to immigrants born outside of Western Europe and North America.

Denmark: Concerning barriers related to individual characteristics, a study based on an internet-survey to managers and employees in Danish municipal jobcentres, who work professionally with immigrants, sheds light on this topic (Jakobsen et al., 2021). The study finds that the main barriers facing both immigrant men and women are insufficient Danish proficiency, lack of professional qualifications as compared to the demand in the labour market, and lack of knowledge on the Danish labour market. However, the respondents also identify a number of other barriers mentioned in the survey as important obstacles to this target group’s employment: Insufficient coping with everyday life challenges, lack of motivation to find a job, ill health or insufficient health coping, and social control. For some immigrant women, especially those who recently have arrived in Denmark, lack of job motivation is one important barrier. Such lacking motivation may stem from growing up in a different culture with different gender roles, where working outside the home and supporting oneself is neither a woman's role nor responsibility (Jakobsen et al., 2021).

Several other studies confirm that lack of educational qualifications is a barrier (e.g., Schultz-Nielsen & Skaksen 2017). Moreover, it is difficult for immigrants to utilize foreign education in the Danish labour market, and the educational qualifications acquired before immigration has a less positive influence on the employment probabilities than educational qualifications acquired in Denmark (Arendt et al., 2016; Schultz-Nielsen & Skaksen, 2017).  Other studies also confirm that poor Danish skills is a barrier for participation in the labour market (Jakobsen et al., 2014; Arendt et al., 2016).

Finland: Immigrants face several barriers related to individual characteristics when seeking employment or advancement in their careers. For instance, lack of proficiency in the host country language and lack of working experience are barriers to employment. For some immigrant women, care responsibilities for children also constitute a barrier to participation in the labour market (see Busk & Jauhiainen, 2021, and Tervola, 2018 & 2020).

Norway: Individual characteristics related to lack of higher education in the immigrant population might pose future challenges for the labour market. Extrapolations for the future predict a massive growth in the number of older immigrants, and the strongest growth will come from non-Western immigrants (Tønnessen & Syse, 2021). Due to low education in this group, it is expected that the future labour market participation of immigrants, particularly non-Western immigrants, will pose challenges for the labour market. Due to gender differences in education, women are expected to have higher labour market participation rates than men (Tønnessen & Syse, 2021). Lack of labour market experience also lower the probability of entering work from unemployment (Kann et al., 2009).

Iceland: At the level of individual characteristics, lack of skills in the Icelandic language has been identified as an employment barrier to the promotion of highly skilled immigrants from both the Philippines (Kristjánsdóttir & Christiansen, 2019) and from Europe (Christiansen & Kristjánsdóttir, 2016). Still, further barriers to promotion vary between the two groups of highly skilled immigrants. Highly skilled immigrants from the Philippines experience prejudice and misunderstanding due to cultural differences, and their loyalty to their supervisor can also hinder them from seeking promotion (Kristjánsdóttir & Christiansen, 2019). However, highly skilled European immigrants felt that their employer and co-workers belittled their contribution to the workplace and devalued their knowledge, experience, and education (Christiansen & Kristjánsdóttir, 2016).

Sweden: Among immigrants, issues relating to economic incentives and motivation have primarily been raised in relation to social assistance. Friedrich et al. (2021) find that there is a close link between immigrants’ earnings and labour market attachment and various social transfers. In the recovery from the deep recession of the early 1990s, many social benefits were scaled back, and access became more difficult for immigrants. As access and usage declined, many low-income workers experienced more stable income growth.

Denmark: Several studies examine whether economic incentives and motivation are a barrier to immigrants’ participation in employment. The studies show that reforms increasing the economic incentives to find employment through a reduction of welfare benefits have a positive effect on the employment rate of refugees (at least for male refugees) in the short run (Huynh et al., 2007; Andersen et al., 2019; Arendt 2020). However, Andersen et al. (2019) also find that the effects on employment are short lived, and that there are some unintended effects of the examined START aid reform from 2002: the reform induced female labour force exits, and caused a large decrease in disposable income, which led to a sharp increase in property crime for both males and females. 

Finland: No studies related to economic incentives and motivation and immigrants have been found.

Norway: Immigrants have been shown to be particularly responsive to economic incentives and benefit generosity. In particular, immigrants from low-income countries have shown greater responsiveness to benefit generosity than persons from the majority population (Bratsberg, Raaum, & Roed, 2020). The most likely explanation for this greater benefit responsiveness is that replacement ratios within social insurance programmed most often are larger for individuals with bleak labour market opportunities. Thus, work incentives are potentially relatively small for immigrant groups with weak labour market prospects (given relatively generous unemployment benefits). Flaatten (2015) examines the employment effects of a Norwegian reform from 1998, which introduced a financial subsidy of up to 3,000 Norwegian kroner per month for either not at all, or to a lesser extent, using publicly subsidized childcare for children aged 1-3 years. They find negative effects of this reform on non-Western women's wage income beyond the period during which the support lasts. This suggests that employment does not increase again immediately after the support period ends.

Iceland: No studies related to economic incentives and motivation and immigrants have been found.

Sweden: A study by Engdahl and Liljeberg (2022) illustrates that the employer and labour market structures can be an important barrier for immigrants. They find that the differences in labour demand and the employment structure of the local labour markets in Stockholm, Gothenburg, and Malmö contribute to the differences in the native-refugee employment gap in the three biggest Swedish cities. This relates in part to the local level of unemployment, where higher unemployment makes it less likely that immigrants are employed. Moreover, the local employment structure can act as a barrier. For instance, compared to natives, immigrants are particularly likely to work in the hotel and restaurant sector and in the health care sector and less likely to be employed in manufacturing, construction, and public administration.

Denmark: Employer related barriers for immigrants in Denmark include discrimination in the recruitment process. A field experiment conducted in the Danish labour market finds evidence of ethnic discrimination in the recruitment process (Dahl & Krog, 2018). The study shows that applicants with Middle Eastern-sounding names on average have to apply for 1.52 more jobs to receive the same number of call-backs as applicants with Danish-sounding names. Especially male ethnic minorities experience ethnic discrimination (Dahl & Krog, 2018). Another Danish study based on another type of field experiment also find evidence for discriminatory behaviour in the labour market (Hedegaard & Tyran, 2011).

Finland: Finnish research also identifies barriers related to the employer and labour market structures. Compared to the Finnish-born population, immigrants are more likely to work in jobs that do not match their qualifications. Additionally, their skills are not recognised, and they have problems in progressing in their work career (Toivanen et al., 2018; Statistics Finland, 2021). Employers’ prejudices towards persons with migrant background are often so deeply rooted that, even with the same work experience, their possibilities to succeed in job application processes are significantly lower than among those with Finnish background (Ahmad, 2020). Busk and Jauhiainen (2021) find that the social and economic conditions of the country during the time that the person immigrates affect their employment trajectories. The cohorts migrating to Finland in the mid-1990s experienced longer unemployment spells compared to those migrating in the early and mid-2000s. In addition, changes in employment policies and improvements in integration measures contribute to the employment differences between cohorts. The timing of the immigration is crucial, as having no or only little work experience makes it difficult to advance further in a working career. Note that differences in care responsibilities as well as the economic conditions of the host country at the time of immigration also contribute to explain differences in labour market integration between the different admission categories (asylum refugees, resettled refugees, and their reunited family members) for those seeking residency in Finland (Tervola, 2020).

Norway: Several studies identify how immigrants face barriers related to the employer and labour market structures, resulting in immigrants often ending up in occupations with low language requirements (Hoen, 2020). It has been shown that immigrant concentration might have detrimental effects on wages in sectors that are affected (Hoen, 2020), and might lead to labour market exclusion of less efficient and productive workers in the last resort (Fevang, 2020). Hoen (2020) finds that natives working in occupations without advanced Norwegian language requirements experience a substantial earnings loss with increased migrant competition. Furthermore, increased inflow to health-related disability benefits was identified within occupations exposed to increased competition from immigrants from the 12 countries that entered the European Union with the enlargements in 2004 and 2007 (Hoen, 2020). Increased language skills among immigrants might expand available sectors of work and could potentially lead to less pressure on sectors currently exposed to these effects. Research indicates that immigrants are met with discrimination in the hiring process in the Norwegian labour market (Wollscheid et al., 2022). For example, a field experiment shows that Pakistani applicants receive significantly fewer positive responses from employers than applicants from the majority group (Larsen and Stasio, 2019). 

Iceland: At the level of the employer and labour market structures, devaluation of work experience acquired outside the host country was recognised as an important labour market barrier of immigrants in Iceland (Loftsdóttir, Sigurðardóttir & Kristinsson, 2016; Stangej, Minelgaite, Kristinsson & Sigurðardóttir, 2019). Thus, signals of social integration, such as qualifications acquired in the host country through education, counter prejudice against Polish immigrants (Stangej et al., 2019). When hiring a bookkeeper, for example, HR managers focused on whether former work experience was gained in Iceland while placing much less importance on experience gained elsewhere.

Moreover, at the level of the employer, research has found that prejudice against applicants with Muslim background is a barrier. Such prejudice reduces employers’ willingness to hire a person with a Muslim name, as well as to pay the employee fairly if hired. Additionally, employers are more willing to hire a male rather than a female Muslim (Kristjánsson & Sigurðardóttir, 2019).

Sweden: Public services do not always assist immigrants to an adequate extent, mainly because they are not sufficiently used to this target group. Many ‘traditional’ measures seem to be fairly effective and should be used more often. Eriksson and Rooth (2022) note, among other things, that there appears to be an underprovision of quality language training for individuals lacking in language skills. Engdahl and Forslund (2015) likewise note that the wage subsidies or reductions in employer contributions for at-risk groups appear effective, as does intensified job search support.

Denmark: It has not been possible to find much literature focusing on public services and immigrants. The literature we have found is mainly based on qualitative interviews and describes the immigrants’ experiences with caseworkers in the job centres and their participation in active labour market programs (Ali et al., 2019; Rytter & Ghandchi, 2020; Jakobsen et al., 2021). Some of the immigrants have positive experiences from their meeting with the caseworkers and emphasise that the activities organised by the Danish job centres improve their chances of obtaining employment. However, the studies also show that many of the interviewed immigrants had experienced that the caseworkers in the job centre did not have faith in them, were not open-minded to their wishes and goals, and did not recognise their competencies. These experiences had - according to the immigrants - a negative impact on their otherwise strong work identity and on their desire to start education (Ali et al., 2019). Several of the women also told about experiences of meaningless trainee periods in private and public enterprises (internships). Internships – that according to them – were without clear goals and balancing of expectations in advance of the trainee periods (Ali et al., 2019; Rytter & Ghandchi, 2020).

Finland: Concerning public services and immigrants, Krivonos (2018) finds some barriers related to public services. Hence, the study finds that there is often a mismatch between the skills or expectations of migrant jobseekers and the expectations of both the public employment services and the employers. For example, in the case of Russian speaking youth, women are often automatically steered towards care and service sector jobs while men are offered manual work, regardless of their own preferences (Krivonos, 2018).

Norway: No study related to public services and immigrant has been found.

Iceland: No study related to public services and immigrants has been found.

Sweden: Among people with disabilities and other health issues, individual characteristics related to the type and severity of the disability are of obvious importance to their labour market participation. Furthermore, Arvidsson (2016) shows that family background (parental education) affected the likelihood that young people with disabilities would enter employment, presumably through the parental resources and aspirations. Likewise, gender and place of residence also affected employment, presumably through the local employment opportunities as well as the alternative activities available locally.

Denmark: Concerning barriers related to individual characteristics and persons with disabilities, a Danish meta-analysis by Bredgaard and Shamshiri-Pedersen (2018) identifies a number of obstacles to the employment of persons with disabilities. First, a set of barriers relates to severity of disability (fewer persons with major disabilities are employed than persons with minor or no disabilities) and type of disability (persons with mental illnesses have the lowest employment rates among persons with disabilities). Second, age plays a role; older persons with disabilities have lower employment rates than younger persons with disabilities. Third, education also plays a major role in relation to the employment prospects among persons with disabilities. Even though the level of education has risen among persons with disabilities during the latest 10 years in Denmark, persisting low levels of education among some persons with disabilities constitute a barrier to increasing their employment chances. Fourth, the study finds that self-rated work ability among persons with disabilities correlates positively with their employment degree among persons already employed (i.e., number of hours worked). Moreover, self-rated work ability correlates positively with intensity of job search among unemployed persons with disabilities. Self-confidence also correlates positively with likelihood of employment. Hence, both low self-rated work ability and lack of self-confidence may constitute barriers to employment among persons with disabilities.

Finland: In the group of persons with disabilities or health issues, barriers related to individual characteristics were, as expected, related to health. In most of the selected studies, especially mental health problems emerge as a barrier that hinders employment. People with mental health problems had lower levels of work participation during disability pension and after rehabilitation compared to other sickness groups (Leinonen et al., 2019; Polvinen et al., 2018). In addition, dysfunctional use of health services was more common among people with mood or substance-related disorders than among other long-term unemployed (Nurmela et al., 2020). Moreover, the studies repeatedly reported that individual socioeconomic factors, such as low educational level, were connected to lower levels of work participation among people with health issues (Polvinen et al., 2018; Leinonen et al., 2019; Laaksonen & Blomgren, 2020) 

Norway: Health problems as a barrier to education and subsequent employment can be exacerbated by a strong focus on health from an early age. Markussen and Røed (2020) argue that a strong focus on health treatment for mental health problems can be seen in Norway already at an early school age. According to Markussen and Røed (2020), who exploited variations in diagnostics and treatment practices in different Norwegian municipalities in a quasi-experimental design, this focus on early health problems is likely to contribute to lower school grades, which subsequently lowers the job probability and increases the risk of receiving social benefits. Still, the authors do not rule out that other factors may also play a role, e.g., that substantial mental health problems in fact may, at least in relation to some children, impede their learning abilities and lead to lower grades. 

Concerningly, health-related welfare dependency has increased for young people in the latest two decades (Markussen & Røed, 2020). To facilitate a better understanding of this development, it is important to scrutinise deteriorating health in interaction with corresponding developments in the labour market entailing increasing requirements for formal academic qualifications, as well as incentives coming from generous health-related benefits.

Iceland: At the level of individual characteristics, Einarsdóttir & Gísladóttir find that poor health is the most important reason for disabled people not undertaking paid work. 71% of disabled people in Iceland report that bad health is the main reason that they are not in employment (Einarsdóttir & Gísladóttir, 2021).

Sweden: No study related to economic incentives and motivation among persons with disabilities has been found.

Denmark: Concerning barriers relating to economic incentives and motivation affecting persons with disabilities, our knowledge based on Danish research is rather limited. Nonetheless, a Danish report evaluating a reform of Danish so-called flex jobs from 2013 sheds some light on this topic (Holt et al., 2015). In Denmark, a flex job is a governmentally supported job for persons with a permanent and substantial reduction in their work ability. Persons granted a flex job have to find a job in the ordinary labour market with a public or private employer, and they receive a salary from the employer according to the number of hours they work and their work intensity. For example, if they work 16 hours a week with an intensity of 50%, the employer has to pay them for 8 hours of work. For the rest of the hours up to 37 a week, which is the standard for weekly working hours in the Danish labour market, they receive a supplementary subsidy from the state. Typically, the salary they receive for working ‘ordinary work hours’ exceeds the subsidy from the state. Hence, they have an economic incentive to increase the number of hours they work. Providing persons in a flex job with an economic incentive to increase their weekly number of work hours was a key element in the 2013 reform. However, a survey conducted on persons with a flex job, which was part of the evaluation by Holt et al. (2015), showed that merely 17% of persons working in a flex job with few hours (i.e., up to 10 hours a week) expected to increase their working hours over the next three years. 6-9% of persons in a flex job with more than 10 hours stated that they expected to increase work hours. Given that the reform aimed at providing persons working few hours with an incentive to increase their number of work hours, one may argue that the goal to create an economic incentive to substitute hours on transfer income with work hours was successful to a limited degree. However, the analysis by Holt et al. is not causal; therefore, we cannot know whether the true barrier to raising work hours was a lacking economic incentive or, e.g., an underlying bad health condition making increasing work hours an ambition that was difficult to realise.

Finland: Regarding economic incentives and motivation, existing earnings limits in disability pension may affect the probability of working. Polvinen et al. (2018) find that partial disability pensioners with average disability pension seemed to work more often than those with high pension (Polvinen et al., 2018). This suggests that higher earnings may restrict working while on a disability pension if the earnings exceed the earnings limits for working on a disability pension. According to the authors, one way to increase work among disability pensioners is to support the recently retired in working longer, as recent timing of disability pension was associated with working for both partial and full disability pensioners.

Norway: Related to the interaction between economic incentives and employers and the labour market, a general characteristic for health-related labour market exclusion is the ambiguous line between health-related benefits and unemployment problems. In Norway, and especially after the introduction of work assessment allowance in 2010, several studies point at the potential “medicalization” of unemployment problems. On the one side, this development is seen as a result of incentives created by generous health-related benefits combined with less generous unemployment benefits (Fevang, 2020). On the other side, this development is often seen as a result of labour market changes focusing on efficiency and productivity (Fevang, 2020). Thus, health in the latter perspective must be seen as relative to the functional requirements of the labour market.

Iceland: Similarly, at the level of barriers related to economic incentives and motivation, it is recognised that only a minority of disabled people in Iceland do not participate in paid work because of weak (financial) incentives. As such, only a fifth of disabled people in Iceland report that they do not participate in paid work as it would not pay off because of resulting reduced disability benefits, and only 15% report that they feared such reduction or other demands from the authorities (Einarsdóttir & Gísladóttir, 2021). Still, Júlíusdóttir et al. find that the system of disability benefits in Iceland hinders disabled people from trying out whether a job suits them or not since to accept a job means that one loses the right to a disability benefit and must start the application process again if the job terminates (Júlíusdóttir et al., 2022).

Sweden: The employer and labour market structures also matter through employers’ perceptions of disabled individuals’ work capacity relative to their wage. Angelov and Eliason (2018) report that a programme with wage subsidies resulted in benefit recipients finding subsidised but not regular employment. The subsidy – i.e., the wage cost – thus appears to have been crucial for the likelihood of employment.

Denmark: Regarding barriers relating to employers and labour market structures, we know from different Danish reports and other publications that employers have highly varying propensities to hire persons with disabilities. Some employers are committed to hiring workers with disabilities while other employers are sceptical and tend to reject applicants with known disabilities (Bredgaard, 2018). A Danish study on employers’ propensities to hire job applicants with a disability using a survey experiment (Shamshiri-Petersen & Krogh, 2020) shows that many employers are likely to deselect this type of applicants. Hence, negative differential treatment of persons with disabilities, is likely to be a barrier to the employment chances among such persons in the Danish labour market. 

Finland: In Finland, employers face information gaps concerning the workforce with partial work ability (Ala-Kauhaluoma et al., 2017). According to the study, the employers need information about where to find jobseekers with partial work ability. They also want realistic information about the characteristics, productivity, and restrictions of people with partial work ability to support their decisions in the recruitment process. Furthermore, they also needed basic information about recruitment and related support. The main reasons for not hiring people with partial work ability were that the companies had not detected such people in their recruitment processes or that there was no suitable work available. At the same time, companies with experience in hiring people with partial work ability knew how to organise and design work so that partial work ability was not an obstacle.

Norway: As described in the former section on barriers related to economic incentives, an increased focus on efficiency and productivity in the labour market may have negative consequences for the participation of people with disabilities in the labour market. Moreover, there is evidence of discrimination of persons with disabilities in the Norwegian labour market. Bjørnshagen and Ugreninov (2021) and Bjørnshagan (2022) find evidence of discrimination of wheelchair users and of people with a history of mental health problems. 

Iceland: At the level of the employer and labour market structures, Icelandic research has identified ableism as a primary barrier to the labour market participation of disabled people in Iceland. Ableism has both internal and external facets and is strongly connected to the idea that disabled people are not competent workers and do not fit with the notion of ‘the ideal worker’ (Hardonk & Ingvarsdóttir, 2020; Júlíusdóttir et al., 2022). As such, internal ableism has been identified as a fear among disabled people themselves that they will not live up to expectations and demands at the workplace (Júlíusdóttir et al., 2022; Hardonk & Ingvarsdóttir, 2020). Regarding external ableism, it has been shown that such ableism hinders the acceptance of people with intellectual disability as competent workers (Hardonk & Ingvarsdóttir, 2020) and that it surfaces in the hesitation of managers to hire people with immobility. Moreover, it has been identified that external ableism leads to employers and managers lacking both the knowledge of and the resources for this group of workers. Furthermore, standardised tools that may support organisations who employ disabled people are lacking (Júlíusdóttir et al., 2022). Further, the demands for profit and low operating costs in the organisation have also been identified as labour market barriers for disabled people in Iceland. Such demand has been recognised as an obstacle if managers are to employ individuals with so-called reduced work capacity, together with fear of increased pressure on co-workers because of the reduced work capacity, as well as specific and strict rules at the workplace that only allow employers to hire a worker in reduced work for a limited period.

Sweden: Public services are of great importance, when it comes to the labour market participation among persons with disabilities since for example the size and condition of wage subsidies will affect the work opportunities of persons with disabilities (Angelov and Eliason, 2018). However, from the perspective of the employer, persons with disabilities may not only have a reduced work capacity but also be associated with different types of uncertainties. Wage subsidies may compensate for the first issue, but not for the uncertainties. These may instead be overcome by caseworkers supporting the employee and the employer during the hiring and employment period. Fogelgren et al. (2021) find that this type of support was very effective, raising the employment rate with approx. 10 percentage points.

Denmark: Concerning barriers relating to public services, Danish research by Amby (2020) shows that only a minority of Danish job centres have a strategy to improve the employment chances of persons with disabilities. In roughly half of Danish job centres, persons with disabilities are a low priority. Second, it shows that merely around 25% of job centres systematically screen unemployed for disabilities or practice other types of identification. Third, only a minority of job centres seek to evaluate whether unemployed belong to the target group for receiving compensatory measures. Fourth, only a minority of Danish job centres have special job counselling or job search courses for persons with disabilities. Fifth, a survey experiment shows that case workers’ faith in the employment chances of persons with disabilities is much weaker than the similar faith concerning non-disabled persons. Given that previous Danish research indicates that the case workers’ belief in the employment chances of unemployed persons itself affects the likelihood that unemployed persons find a job (Rosholm, Sørensen & Skipper, 2017), this lack of belief is a barrier in itself.

Finland: Research from Finland has identified some barriers related to public services. The lack of early identification of work ability problems, as well as lack of services to support work ability, can create a barrier to employment. Laaksonen and Blomgren (2020) find that the level of unemployment is elevated already several years before disability retirement, thus suggesting that work ability problems among the unemployed should be tackled in the earlier stages. Nurmela et al. (2020) argue that the dysfunctional use of health services among unemployed people might hinder early detection of illness, consequently delaying rehabilitation measures, prolonging unemployment, and increasing the risk of disability pensions. The dysfunctional use of health services included attendance styles characterised by, e.g., cancelling or missing several appointments, terminating treatment periods, or not receiving the medical aid needed. According to Hästbacka and Nygård (2019), the disabled working-age people saw the rigidity and bureaucracy of the disability service system, e.g., the lack of flexibility and understanding from professionals, as one of the main barriers to societal participation. Employment was often offered primarily through special arrangements, involving only a symbolic wage on top of the employee’s disability pension. They experienced such offers as discriminating and as having a hampering effect on equal employment opportunities.

Norway: Individual Placement and Support (IPS) is an evidence-based vocational rehabilitation approach offered by public services that helps individuals with moderate to severe mental illness. The programme is based on a ‘place-and-train’ approach, where participants are placed directly into a job. IPS has been shown to be effective in promoting work and self-sufficiency. However, within the public employment services, conflicts between available caseworker resources and welfare service ambitions related to the implementation of a ‘high-input’ IPS practice – i.e., IPS with a high success rate – can potentially lead to creaming of clients. Another reason for this creaming of clients is the risk of exhausting available resources at the employer side by placing clients with insufficient working capacity in ordinary work (Bråthen, 2020). Thus, only clients that the caseworkers found to have a sufficient working capacity were selected for placement positions in the work force. Paradoxically, those with the best labour market prospects were therefore selected for the most effective programmes.

Iceland: At the level of public services, the demand for profit has been identified as a labour market barrier for disabled people in Iceland. Research indicates that job counsellors at The Directorate of Labour in Iceland primarily focus on their role as ‘matchmakers’ and, rather than pursue a good job and a career in accordance with the preference of the client, attempt to place people with a disability in employment without doubting the profit-based premises of the employers (Hardonk & Halldórsdóttir, 2021).