4. Education and labour market training

Education, upskilling, and labour market training are considered core instruments when it comes to several policy outcomes, including the employability of the individual. In the Nordic countries, ordinary education is not only used to prepare young people for the labour market but also as a part of ALMPs to help individuals into the labour market by improving their human capital and thereby their employability. 

Lack of human capital constitutes a central employment barrier among vulnerable groups in the Nordic countries. Previously in this project, we found that lack of education, lack of skills, and lack of labour market experience constitute central employment barriers in the Nordic countries. For example, 31 pct. of the individuals outside the labour market in the Nordic countries lack education, 15 pct. experience lack of skills, 53 pct. lack recent labour market experience, and 12 pct. have never worked (Højbjerre et al., 2023b). This points to education and upskilling being important instruments in overcoming central barriers to employment among vulnerable individuals in the Nordic countries.

The chapter is separated into the following sections, each presenting the most recent Nordic literature on the topic:

Each of these sections is separated into three subsections. First, the instrument is described. Then, we present the literature from the systematic literature review. Finally, we present some key considerations regarding the instrument, including identified heterogeneous treatment effects from the literature and timing of the instruments when individuals face several barriers.

Lastly, we present evidence from caseworker interviews in section 4.4. and end the chapter with some concluding remarks in section 4.5. The literature from the systematic review is summarised in Table 4.1 at the end of the chapter.

Guidance and counselling encompass a range of supportive measures aimed at enhancing the employability and career prospects of the individual. These instruments include services such as CV and job search, all of which are taking place at the PES rather than at conventional educational institutions. Further, it typically has a shorter duration than ordinary education. 

These services are distinct from ordinary education in that they specifically target individuals seeking to enter or re-enter the workforce, offering tailored support to match their skills with current market demands. Through guidance and counselling, individuals can receive personalised advice and resources to navigate the job market effectively, improve their resumes, and acquire the necessary skills to pursue and secure employment opportunities.

The identified literature on the employment effects of guidance and counselling covers young people, immigrants, and refugees. 

Hall et al. (2022b) investigate the effects of a Swedish reform aimed at helping unemployed young people into employment (The Youth Guarantee Program). The programme involves activation that starts 90 days after a person has registered as an unemployed jobseeker at the public employment service, and it involves all unemployed individuals between 18 and 25 years old. The activation is mandatory and includes, among other things, counselling and job-seeking activities with coaching. The Swedish study finds no evidence to support effects on employment from participating in the programme, both in the short run and in the long run. However, the study finds significant and positive short-term effects on employment just before the 90-days cut-off, meaning just before the programme begins, which is referred to as the threat effect. The results indicate that the threat effect is mainly observed among groups with a more advantageous position in the labour market, and the authors find no statistically significant effects for the group with the weakest labour market prospects.

In the systematic review, several studies concerning different introduction and mentoring programmes targeting immigrants and refugees in Sweden and Norway were examined. Månsson & Delander (2017) investigate the Swedish mentoring programme that began in 2010 and finished in 2012. The programme was targeted at newly arrived refugees, and the aim was to help unemployed refugees establish themselves in the labour market or start a business. The research period is relatively short, extending to one year after the intervention. The mentoring programme has a positive effect on the income of the target group, but not across gender. Specifically, the results are only positive for men. 

Ugreninov & Turner (2021) and Qi et al. (2021) investigate programmes aimed at providing basic insights into the Norwegian and Swedish societies, respectively. The evaluations of the programmes show positive labour market outcomes in the long run, measured as either income or employment. However, these programmes also include elements such as language training and different labour market activities, and it is not possible to disentangle the effect from the courses related to insights into the Norwegian and Swedish societies and the other elements of the programme. These findings correspond to evidence from a similar integration policy measure previously implemented in Finland and Sweden (Sarvimäki & Hämäläinen, 2011; Andersson Joona & Nekby, 2012).

Looking beyond the literature included in the systematic review – whether due to its origins in non-Nordic countries, it being published prior to 2017, or because it does not concern any of the traditional target groups – the evidence on how various guidance and counselling programmes affect labour market outcomes appears rather mixed. Older reports from Denmark present both insignificant and positive results regarding two similar Danish initiatives (Hurtigt i gang and Alle i gang) aimed at, among other things, assisting jobless individuals in their job search (Graversen, Damgaard & Rosdahl, 2017; Rosholm & Svarer, 2009). The differences in outcomes can be attributed to variations in target groups; it appears that positive effects are observed among individuals closer to the labour market, whereas effects are insignificant for those farther away from the labour market. Such heterogeneous effects between individuals close to and individuals farther away from the labour market are also found in older Swedish research, where a reform which offered counselling to unemployed youth is analysed (Hägglund, 2009). Further, a large Danish literature review on the employment effects of, among other things, job search courses demonstrates negative effects in a meta-regression. However, when the job search courses are combined with very short upskilling courses (like a short IT or hygiene course), the coefficient in the meta-regression is positive (Rosholm & Svarer, 2020).

On the contrary, literature from outside the Nordic countries suggests the opposite relationship, where comparatively disadvantaged welfare recipients benefit somewhat more from various, however less comprehensive, interventions (Altmann, Falk, Jäger & Zimmermann, 2018; Bolhaar, Ketel & van der Klaauw, 2020). For example, a large-scale field experiment in Germany, where jobseekers were provided with an informational brochure which outlined job search strategies and consequences of unemployment, demonstrated positive effects (4 pct.) among the individuals who exhibited an increased risk of long-term unemployment (Altmann, Falk, Jäger & Zimmermann, 2018).

Literature from Denmark and Sweden suggests that individuals farther away from the labour market benefit less from guidance and counselling in relation to job search combined with intensive contact with caseworkers (Graversen, Damgaard & Rosdahl, 2017; Rosholm & Svarer, 2009; Hägglund, 2009). On the other hand, evidence from outside the Nordic countries demonstrates that more disadvantaged welfare recipients benefit more from various, less comprehensive interventions, such as a brochure outlining different job search strategies (Altmann, Falk, Jäger & Zimmermann, 2018).

Compared to other types of activation programmes, such as ordinary education, job search interventions seem to produce beneficial reemployment effects, especially in the short term. One explanation is that job search interventions produce smaller lock-in effects than traditional ALMPs (Malmberg-Heimonen, West & Vuori, 2019). Further, the literature demonstrates positive employment effects from various low-cost interventions, such as informational brochures outlining job search strategies (Altmann, Falk, Jäger & Zimmermann, 2018) or a combined info-clip and reflective survey (Kalleitner, Steiber & Kittel, 2021). Interestingly, these interventions seem to be more effective for individuals with the highest risk of long-term unemployment.

Labour market training is another type of ALMP and refers to instruments where the individual gets the opportunity to obtain work experience in actual workplaces. This includes various company internships where individuals with little work experience are offered internships at private or public workplaces. The internships may also help to clarify the individual’s competences and job goals. The internships are an important element in the Danish job-first approach JobFirst. This approach is based on the place, then train principle: that the best way for the individual to gain a foothold in the labour market is to get started in a workplace. According to this principle, working is seen not merely as the end goal but both the means and the end. The internship is possibly supplemented with other interventions, such as social efforts and health efforts.

Opposed to ordinary education, the aim of this type of instrument is primarily to overcome an important employment barrier, namely lack of work experience (see, e.g., Oslo Economics (2023)), which constitutes a highly prevalent employment barrier among vulnerable groups in the Nordic countries, as we have demonstrated previously in this project (Højbjerre et al., 2023b).

In the systematic review of the employment effects of labour market training in the Nordic countries, we have identified literature covering immigrants, refugees, and young people with disabilities.

The evidence from the systematic review regarding how labour market training affects the employment of immigrants and refugees is mixed. On the one hand, one article demonstrates positive employment effects of some specific efforts. For example, a recent Danish working paper evaluates the causal effect of the Industry Packages programme for non-Western immigrants with poor labour market prospects. In short, the programme entails a structured sequence of job training internships that provides participants with skills relevant for local industries with labour shortages. Results indicate that the Industry Packages programme has a small positive effect on employment of non-Western immigrants, mainly driven by increased female employment (Rotger & Thuesen, 2023).

On the other hand, Arendt & Bolvig (2023a) demonstrate that job-first strategies emphasising on-the-job training only have zero-to-marginally-significant employment effects for refugees and immigrants in Denmark in the medium run. The employment effect among refugees is positive two years after arrival, but the effect disappears during the third and fourth year. Further, job-first strategies are negatively related to time spent in language courses, the level of completed language courses, and the grade point average for refugees attending the language course exam. Similarly, Arendt & Bolvig (2023b) suggest that the intensive on-the-job training programme produces a negative societal net benefit among long-term unemployed immigrants in Denmark due to a combination of intensive support and minimal employment effects.

Place, then train and train, then place are two central concepts in the ALMPs in the Nordic countries.

Place, then train involves placing jobseekers in a job first, then providing on-the-job training. This method focuses on immediate integration into the workforce, with training and support provided as needed. The main benefits of this strategy are rapid employment for jobseekers and real-world experience. However, it requires close collaboration between employers and support services and may need significant initial support to ensure job retention and skill acquisition.

On the other hand, train, then place involves providing jobseekers with training first, then assisting them in finding employment. This approach focuses on equipping jobseekers with the necessary skills and qualifications before they enter the workforce. The benefits of train, then place include jobseekers entering the workforce with relevant skills, a potentially higher job retention due to better preparation, and employers receiving employees who are already trained. However, it requires a longer period before the jobseeker achieves employment, and a central risk is that the training is not aligned with current job market demands.

Hall et al. (2022) perform a comparative analysis of Sweden and Norway, which differ regarding policy mix to enhance the employability of young disabled individuals. The authors investigate the effects of train (i.e., education) and place (i.e., labour market training). Despite cross-country differences in the programmes, there are surprisingly small differences in impact. In general, the effects are positive for both place and train, but effects are substantially larger for place. There are lock-in effects in both programmes, but the lock-in effects tend to be larger in the train programme.

Looking beyond the literature identified in the systematic review, Danish research supports the positive results of labour market training (JobFirst) across age, gender, and ethnicity (Rambøll & Metrica, 2018; STAR, 2023). However, it is worth mentioning that the labour market training was combined with intensive mentoring support, frequent follow-up, and handling the challenges beyond unemployment in parallel initiatives. These results are further supported by Card et al. (2018), who conclude that work-first programmes tend to have larger short-term effects compared to programmes focusing on human capital accumulation, such as ordinary education. 

In Norway, historically, on-the-job training (Arbeidspraksis på overgang til arbeid) has consistently performed poorly among almost all participants (von Simson, 2023; Oslo Economics, 2023). Based on this observation, several changes were made, including a requirement for clarification of purpose and closer follow-up of the participants along the way. This new programme is called Arbeidstrening and has been evaluated both qualitatively and quantitatively. The qualitative results show that the participants have generally taken longer to settle into the workplace, but it has worked well after a while, subsequently resulting in permanent positions. However, some employers have bad experience with the programme, which is partly caused by lack of language skills, making training and communication with the programme participants difficult. Further, some participants have physical health issues that are not compatible with the work tasks. This highlights that, to ensure a good job match, it is particularly important that the PES (in this case, NAV) are familiar with both the employer and the participant (Oslo Economics, 2023). The quantitative results demonstrate positive employment effects from Arbeidstrening, and the effect seems to be greatest among participants with low formal qualifications and no work experience, whereas it seems to have no significant effect on older participants with a lot of work experience (Oslo Economics, 2024a).

The identified literature suggests that a good match between employer and employee is crucial for the success of labour market training. For example, the Industry Packages programme is a good case. First, a central part of this scheme is that it only concerns employers with labour shortages, which creates a good starting point for a good match. Further, the programme entails a structured sequence of job training internships that provides participants with skills. In other words, the participant tries different workplaces in different sectors, which also creates a breeding ground for a good job match. Further, such an arrangement can contribute to overcoming barriers related to employers, namely the risk related to hiring employees, which we have identified previously in this project as an employment barrier that hinders vulnerable groups from entering the labour market.

The literature demonstrates that the intensive labour market training among immigrants crowds out language training, which can be an explanation of why the positive employment effect disappears three years after programme participation (Arendt & Bolvig, 2023a). Further, as will be demonstrated in section 4.3, the literature finds positive long-run effects of language training, which indicates that it is important to consider the sequence of overcoming barriers related to lack of language skills and barriers related to lack of labour market experience among immigrants. The literature seems to suggest that it is important to provide immigrants with basic language skills before providing them with labour market experience in the longer run.

Typically, individuals who are seeking employment in the Nordic countries are allocated to an ALMP after consultation with a caseworker. The ALMP is comprised of a variety of different activities, including ordinary education. This, among other things, refers to upper secondary education (e.g., general or technical high school), vocationally oriented education (e.g., plumber, electrician), college degrees, as well as adult vocational training and general adult education (referred to as AMU courses in a Nordic context), and language training (targeted at immigrants). The specific educational measure is based on current qualifications, interests, etc., and determined by the caseworker and the recipient. 

Note that we have included language training in this category of instruments, since language training is a special type of education targeted at immigrants.

In the systematic review, we focus on literature uncovering the causal employment effects of ordinary education. The identified literature is relatively scarce and primarily concerns refugees and young people with disabilities. 

Holm et al. (2017), von Simson & Hardoy (2020), and Hall et al. (2022) investigate how ordinary education may affect the probability of disabled people going into (non-subsidised) employment. Holm et al. (2017) exploit over-time variation in the use of ALMPs (including ordinary education) among sick-listed workers in 98 job centres in Denmark to identify causal treatment effects of ordinary education. The sick-listed workers treated with ordinary education are 29 years old on average, which is around 10 years younger than the group of sick-listed workers treated with other ALMPs. Ordinary education is shown to have a positive effect on employment duration but no effect on the transition into employment. This is a result of two opposing effects: a large positive effect of having completed education and a large negative lock-in effect with low re-employment chances during programme participation. Von Simson & Hardoy (2020) confirm these findings in a Norwegian study, where they investigate how ordinary education and various courses affect the probability of obtaining work. They show that education and training programmes increase the probability of employment. Similar effects are found by Hall et al. (2022), who uncover positive employment effects of education. However, lock-in effects are observed in the short run.

The systematic review also contains literature on how language training affects the employment prospects among refugees and immigrants in the Nordic countries. Arendt et al. (2021) find significant positive and permanent effects on employment from a Danish reform (from 1999) focused on improving language training among refugees aged 18 years or older. The effect emerged after completion of language classes and was accompanied by additional schooling. This highlights the potential of a very specific form of education, namely language training, as an instrument to increase labour market participation among immigrants.

Foged & van der Werf (2023) somewhat confirm these findings in a Danish study, which uses the opening, closing, and gradual expansion of local language training centres, as well as the quasi-random assignment of the refugees to locations with varying proximity to a language training centre, as their identification strategy. The study demonstrates that this increases the participation of refugees in language training. Further, it significantly increased their participation in ordinary education, but it did not increase their labour market participation five years after the language training, which can be partially explained by lock-in effects due to increased enrolment in ordinary education. The investigated group of refugees were quite young at an average age of 30 years. Increased participation in education is also identified as a positive outcome of language training in a publication from the Danish Ministry of Immigration and Integration, whereas the impact on employment outcomes is more ambiguous (Ministry of Immigration and Integration, 2023).

The findings from the systematic review are generally supported by similar reviews and studies investigating the employment effects of ordinary education. In this literature, a general finding is that human capital policies (such as ordinary education) have negative effects in the short run (due to lock-in effects), but these policies may prove more beneficial in the longer run (von Simson, 2023; Kluve, 2016; Card et al., 2018; OECD, 2022).

Previously in this project, we uncovered that a central combination of barriers among vulnerable individuals is lack of education and physical or mental health issues. 33 pct. of vulnerable individuals in the Nordic countries with either physical or mental health issues also lack qualifying education (Højbjerre et al., 2023b). The literature demonstrates positive effects of ordinary education on the employment prospects of individuals with health issues (Holm et al., 2017; von Simson & Hardoy, 2020). However, it seems to be crucial to distinguish between physical and mental health issues when designing policies towards this group. This is demonstrated in older Norwegian studies, where it is suggested that educational and training measures work relatively better for people with physical health issues, whereas individuals with mental health issues seem to benefit more from participating in work-oriented measures (Børing, 2002; Møller, 2005). 

The identified literature demonstrates that policies aimed at increasing the human capital of the individual through ordinary education are beneficial to their employment chances in the longer run. However, one should note that participation in ordinary education (and programme participation in general) increases the likelihood of lock-in effects on the probability of transitioning to regular employment (see, e.g., Hall et al. (2022)). This is especially the case when considering ordinary education, as this type of employment instrument typically lasts for a longer period compared to, for example, labour market training.

It has been shown that there are heterogeneous treatment effects among refugees with varying language roots. Refugees speaking languages very different from Danish experienced stronger employment and earnings benefits from increased language training, which emphasises a central hypothesis in this project, namely that the traditional target groups (including immigrants) are highly heterogeneous. Such heterogeneities are important to uncover and recognise when designing employment policies (Arendt et al., 2021).

The following section provides an overview of which tools in the education and labour market training caseworkers across the five Nordic countries use and how they perceive their effectiveness in terms of assisting unemployed individuals with more or less complex sets of barriers in finding employment. As a preliminary remark to what follows, it is worth mentioning that some of the tools that we have categorised as belonging to this instrument category are among the most commonly used across Nordic countries. In all five countries, some form of guidance in the public employment service – no matter how it is organised or who it targets – is integral to all efforts at guiding unemployed (vulnerable) citizens towards either a job, short-term training or a course, or longer-term education of some type. Some form of counselling is also very common in relation to all target groups (if the citizens involved are motivated, and the courses are not too costly), as are various types of work try-out or testing and labour market training.

As already mentioned in chapter 2, it is also important to note that almost all interviewed caseworkers stress the importance of getting to know the person that needs assistance, i.e., this specific person’s background, barriers, potentials, (lack of) motivation, and (potential) aspirations, especially when it comes to vulnerable unemployed jobseekers. Without an adequate understanding of the person sitting in front of the caseworker, providing adequate assistance becomes difficult. From the analysis of the interviews, it seems to be almost a condition, or at least a rule of thumb, that the more complex the problems confronting the citizen in terms of becoming ready for the labour market and finding a job, the better the caseworker needs to understand the citizen to be able to help her/him. This is also where the work of the caseworker in the employment services across the Nordic countries often becomes dependent on the work of others. These others can be the municipal social services department, where other caseworkers have a better understanding of the vulnerable situation of the whole family that the citizen belongs to, which is a situation that may impede efforts to make the person more prepared for the labour market. They can also be psychiatrists at a regional hospital who have not yet had the time to make a potential diagnosis (e.g., ADHD, anxiety, CPTSD) that the caseworker may suspects but which needs to be documented before the caseworker is able to design the best possible plan, given national legislation and the available resources. We return to these issues pertaining to collaboration and coordination later in the report (chapter 5, chapter 6, and especially in chapter 8).

Guidance and counselling are used in the employment services in all the Nordic countries, and this is typically where employment assistance starts after the caseworker has spent some time familiarising him or herself with background information about the citizen (age, education, language skills, work experience, origin, type of residency permit, potentially relevant health information, criminal record, etc.). However, the amount and depth of guidance that the caseworkers are able to provide to the citizens clearly also vary with the caseload of the caseworkers. Some of the caseworkers we have interviewed in this study have a caseload of up to 200 cases, and two caseworkers in Northern Finland working with vulnerable youth said they had 120-160 cases.

These numbers may appear high, but they are not unusual in the Nordic countries. For a period, the municipality of Copenhagen ran a project where they lowered the caseload among certain caseworkers from the usual average of 220 cases to 100 cases (Madsen, 2020). Caseworkers from Copenhagen have not been interviewed for this project. 

Others do not really work with labour market guidance in a narrow sense at all but rather at the intersection of employment services and social services, with rehabilitation of persons sick-listed because of stress, depression, or some other serious health problem, which was the case with an interviewed occupational therapist from mid-Sweden with very few clients.

Is guidance effective as a tool in itself? Most of the interviewed caseworkers use and provide guidance as part of their job, but they typically do not perceive it as an effective tool on its own in relation to most of the vulnerable groups we focus on in this project, since members of these groups often have more barriers to overcome on their way to employment than what can be overcome during one, two, or three guidance meetings in the public employment service. Still, guidance on employment options in the local (or wider) labour market and guidance on how to write a CV are integral to the effort to help unemployed persons find a job. This is especially true for individuals who may have faint knowledge of employment possibilities in the labour market and its cultural codes, such as many newly arrived immigrants, or who have never or only in a remote past drafted a CV and a job application, such as some seniors who have become unemployed after a long, uninterrupted work life. A caseworker from mid-Norway working with unemployed seniors said that some persons in this group have “an old-fashioned style when they apply for jobs”, that they do not know the (implicit) rules governing many trades today, and that they may think that “knocking on the door and having a firm handgrip is enough to get a job”. Unfortunately, this is often not the case. In relation to such groups, job search and labour market guidance are important, although some form of retraining or re-education is often also required.

Moreover, guidance in the form of supporting seniors’ belief in the chances of finding a new job is also important, because unemployed seniors, with or without vocational or other education, very often experience difficulties in finding a new job once they become unemployed. Of course, some do not if they are flexible and there is a demand for the skills they possess, e.g., a carpenter who cannot work as such any longer but who manages to find a job in a DIY centre. An Icelandic caseworker described how unemployed seniors, often with some education, who cannot find a job using their education in the specific sector where they used to work, subsequently reorient their job search and use their qualifications in a job within the tourism sector, where employment prospects are good in Iceland if a person speaks a little or some English. Still, several caseworkers from Iceland, Norway, and Finland working with unemployed seniors report what they perceive as employers negatively discriminating against senior jobseekers. One caseworker from Iceland working with seniors expressed the view that women above 45 years and men above 50–55 years experienced an age-related negative bias among employers when applying for jobs. Caseworkers from Norway generally found that national employment policies in Norway focused to an insufficient degree on assisting seniors and that too few resources were allocated to this group, e.g., for retraining and re-education, in contrast to vulnerable youth receiving much more attention.

The use of labour market training is relatively closely connected to upskilling and is used in all Nordic countries to some or a high extent. Iceland appears to be an exception from the Nordic normal in this field, since Icelandic caseworkers report that unpaid internship in workplaces is very uncommon, unless very short-term with a job clarification aim, while the use of wage-subsidised jobs in order to help persons on the margins of the labour market integrate into a particular workplace or trade is very common (see chapter 7 on economic incentives). In other Nordic countries, labour market training often takes place as unpaid short or medium-term internships in public or private workplaces, and it can be used for a variety of purposes, such as job clarification, as part of rehabilitation, getting to know a new trade, gaining new network or retraining, and keeping up skills that may otherwise wither away.

Finnish caseworkers working in one of the newly established Finnish one-stop-shops targeting young people say that they often meet young people with no education beyond primary school who do not know what they want to do with their life. They are weary of school, and a substantial number suffer from anxiety and have spent a long time at home – gaming or simply being passive – without contact with other people. The caseworkers report that they use labour market training in the form of internships in a public or private workplace with a job clarification aim, seeking to build on the wishes and interests of these young people. They try to help them gain an idea of a job path they might pursue, for example through an internship in a car workshop with the prospect of choosing a relevant vocational education leading to a job as a mechanic. Hence, the aim of such labour market training is often not simply a job in a short-term perspective but also a means to foster motivation among young people to enrol in some type of education that may later benefit their chances of finding and keeping a job. Such labour training might also be a means to help such young persons (re-)integrate in society through training in a workplace after periods of isolation with no contact to schools or ordinary work life. However, interviews with both Finnish and other Nordic caseworkers indicate that there is no quick fix to integrate vulnerable youth into the labour market, either through job training or ordinary education, given the vast variety and complexity of psychological and social problems that may affect many of these persons. Nonetheless, some form of job training is an often-used tool in relation to young people who need to test different types of jobs. According to the caseworkers, it can – if used with care – often help young people in job or education clarification as well as in psychological growth processes.

Often, labour market training is also used with other purposes, such as providing knowledge and skills relevant for a particular job in a particular trade. As such, it is used for unemployed seniors, immigrants, and persons with disabilities. Denmark is a country where job training as part of a job-first policy targeting newly arrived immigrants plays a prominent role, given that the Integration Act stipulates that the municipalities send a newly arrived immigrant into their first workplace internship within the first two weeks and no later than one month after arrival. Labour market training continues to play an important role as a tool in relation to integration of various individuals on the margins of the labour market. A Danish caseworker working with unemployed immigrant women from outside the EU relates how she often seeks to organise “hybrid workplace internships”, which are hybrid in the sense that the citizen starts out in an unpaid 37-hour internship. At first, the citizen receives public transfer income, then gradually starts to receive a salary from the employer for work hours where ordinary work tasks have been performed. Ordinary salary for ordinary hours is currently a much-pursued aim and much-used tool in Danish employment policy with a purpose to further integration of persons on the labour market. It builds on the idea that an ordinary salary (even if only for a limited number of hours) provides a strong economic incentive to work and also has psychological effects in terms of strengthening self-respect among persons who may lack this due to having been outside work life for a long time.

Recent Danish research has found strong correlations between work hours with ordinary pay and longer-term job likelihood (Rosholm, 2024), but research documenting a causal link between the two is still missing.

Labour market training, primarily as unpaid internships in public or private workplaces, is often used in all the Nordic countries (with the exception of Iceland) as part of the efforts to help persons on the margins of the labour market find a job. However, according to many of the interviewed caseworkers from different parts of the Nordic countries, it is rarely an efficient tool when used on its own. More often, it is used and perceived as efficient if it is part of a larger, well-devised plan or instrument package (like the industry packages described earlier in this chapter), where the right combination of guidance, coaching, upskilling, and job training helps a person belonging to one of the vulnerable groups overcome his or her barriers to employment and find a job. Clearly, some of the tools described in later chapters – like rehabilitation, collaboration with other municipal services, or public health care – are also often required in connection with job training in order for it to be efficient in overcoming complex barriers.

There are many paths to Rome. Ordinary education is, of course, one of the primary paths to finding a job, also among persons on the margins of the labour market and for persons who may end up permanently outside the labour market. A Norwegian youth counsellor we interviewed said that “if there is a little motivation for education, I will always try to pursue that path”. However, this path can unfold in many ways, and another Norwegian caseworker, interestingly, stressed that education in a school is not for everyone and that other ways may lead to a certificate of apprenticeship (fagbrev/svennebrev). One is by primarily being an apprentice and receiving training in a particular workplace before a final exam.

A Danish caseworker relates that providing education for persons belonging to vulnerable groups, who may be very weary of schools, sometimes depends on flexibility and creativity in the job centre, the educational system, and among the employers (and especially on to what extent the latter are short of workers):

Sweden and Norway are two Nordic countries where ordinary education is important for enhancing the human capital, hence the employment chances for everybody on the margins of the labour market, not just the young. Several Swedish caseworkers that we interviewed stressed that providing education for newly arrived immigrants is an important part of the integration efforts. Such education is not only language training but potentially a period of more basic schooling if such immigrants are illiterate. Additionally, it can provide ‘bridging’ (i.e., supplementary courses in a Swedish educational institution), which can help an immigrant use his or her education from the home country on the Swedish labour market. In this field, Sweden and Norway diverge from the policies in Denmark, where there is a stricter job-first focus on newly arrived immigrants. Research indicates that, over a longer term, the enhanced focus of Norway and Sweden on human capital leads to stronger labour market integration among immigrants from countries outside the EU than what is the case in Denmark (Hernes, Bolvig & Liljeberg, 2022; Andersson Joona & Gupta, 2022). Many Swedish caseworkers also point to the usefulness of the many different types of courses available in the Swedish folk schools (Folkhögskolan), which are diverse and flexible enough to accommodate educational needs and wishes among pupils with highly diverse backgrounds. 

Overall, the interviews point to how ordinary education, if sufficiently flexible, may benefit the job prospects of persons with many different characteristics on the margins of the labour market. However, it also requires that they are sufficiently motivated and capable of following the training or courses on offer.

Many persons belonging to vulnerable groups have some education or qualifications relevant for the labour market, e.g., seniors that have received training or education in the past or immigrants that have education from their country of origin. However, many of the persons belonging to these groups have no vocational training or tertiary education, e.g., youth belonging to the NEETs group. Or they may experience that the qualifications acquired through previous training or education are insufficient, unrecognised in a new host country (as many immigrants realise), or obsolete (as some seniors find out). Hence, in all the Nordic countries, different types of upskilling, retraining, and re-education can be part of the assistance offered in the PES or private agencies working on behalf of the PES. Shorter courses with a short-term vocational perspective are often used to assist unemployed unskilled seniors if they are motivated to look for a job in a new industry, e.g., when they cannot continue working in a blue-collar job involving hard physical work that has had a detrimental impact on their health. Caseworkers from Norway relate that the Norwegian PES (NAV) may be able to finance a bus driver license in such cases, since the transport sector harbours good chances of finding a job. A Danish caseworker relays information about the Danish AMU centres, i.e., adult vocational training centres, where an unemployed ex-convict she recently assisted in finding a job had two courses relevant for the forestry industry, which helped him find a job. So many caseworkers share the experience that upskilling and retraining can be an efficient path to a job, provided that the unemployed person is motivated for such upskilling or retraining, and if there is a clear demand for labour within the trades such upskilling targets. The prime example here is a senior who, in principle, does not have any other barrier to employment than a lack of relevant skills and perhaps some limited physical health problem, two barriers that can frequently be circumvented by retraining, making it possible for the individual to take care of a job in a different trade.

In this chapter, we have investigated the employment effects of various labour market instruments related to education and labour market training, such as ordinary education, company internships, and job search efforts.

In general, the findings in this chapter support existing knowledge on the employment effects of these typical ALMPs. First, human capital policies (such as ordinary education or language training) produce negative effects in the short run (due to lock-in effects), but produce positive employment effects overall and in the longer run. For example, the literature demonstrates positive effects of ordinary education on the employment prospects of individuals with health issues (Holm et al., 2017; von Simson & Hardoy, 2020; Hall et al., 2022). On the contrary, labour market training often has positive effects in both the short and longer run. For example, Hall et al. (2022) demonstrate positive employment effects from labour market training among young individuals with disabilities. Similarly, research from Denmark demonstrates that a job-first policy among refugees and immigrants in Denmark produces marginally significant positive results in the short run, but the positive effect vanishes three or four years after the intervention. The authors show that the labour market training crowds out language training, and the authors suggest that this is part of the explanation regarding the insignificant effects in the longer run (Arendt & Bolvig, 2023a). On the other hand, the industry packages produce small positive effects among immigrants, also in the long run (Rotger & Thuesen, 2023). 

Further, we identify various heterogeneous treatment effects among several of the traditional target groups. For example, the literature suggests that educational and training measures work relatively better for people with physical health issues, whereas individuals with mental health issues seem to benefit more from participating in work-oriented measures. Similarly, it is demonstrated in the literature that refugees with language roots very different from Danish experience stronger employment effects from increased language training. 

The caseworkers note that guidance or labour market training may not be effective when applied on their own and stress that the right combination of employment instruments, such as guidance, coaching, upskilling, and job training, increases the effectiveness of the employment assistance. In their experience, upskilling and retraining can efficiently help vulnerable individuals find a job, provided that the unemployed person is motivated and that there is a clear demand for labour within the targeted field.

Table 4.1 Identified literature in the systematic review related to education and labour market training