3. Policy recommendations

This chapter presents 12 evidence-based policy recommendations derived from the findings summarised in chapter 2. These recommendations are structured into four policy tracks, each addressing a critical aspect of improving labour market participation for vulnerable groups in the Nordic countries. The recommendations are accompanied by concrete examples of signature projects that successfully incorporate key elements of these policies, offering inspiration and practical insights for implementation. The recommendations are cross-Nordic in nature, meaning that some Nordic countries have already implemented certain elements of these recommendations, while others have not.

In the following chapter, we distinguish between three main actors. State actors include institutions such as employment, social, and health ministries, which are responsible for formulating legislation and overarching policies. Local actors refer to those tasked with implementing this legislation; in a Danish context, this typically includes municipalities. Finally, caseworkers are the frontline professionals who interact directly with vulnerable individuals as part of the employment support process.

Table 3.1 – overview of policy tracks and recommendations

	1. A more flexible and barrier-centric system		3. Create results through good relations, confidence, and motivation
1.1	A system that provides greater flexibility in the selection and design of programmes and rewards long-term results	3.1	Improve the interaction between vulnerable individuals and the system – focus on co-creation, peer-to-peer feedback, and autonomy
1.2	Experiment with promising initiatives – systematise approaches, follow-up, and evaluations	3.2	Strengthen relationship-building efforts – empower caseworkers to build continuous and trustful relationships with vulnerable individuals
1.3	Systematic knowledge sharing and development of tools for assessing long-term economic consequences	3.3	Empower caseworkers to exempt vulnerable individuals from requirements and sanctions, and increase economic incentives for progression towards employment
1.4	Initiate a proactive strategy for the use of data models, AI, and new technology
	2. Create flexible programmes for complex challenges		4. Getting companies on board
2.1	Design combined programmes with a focus on the individual’s full set of barriers	4.1	Promote an inclusive labour market through systematic information, employer outreach, and best-practice cases
2.2	Continue efforts with employment-focused initiatives for vulnerable individuals – as close to a real job situation as possible	4.2	Strengthen the match between vulnerable individuals and employers, and simplify employers’ collaboration with local actors
2.3	Prioritise vocational education with qualification certificates

3.1 Policy track 1: A more flexible and barrier-centric system

The Nordic employment systems face challenges in effectively addressing the needs of vulnerable groups, particularly those at high risk of exclusion due to systemic rigidity, limited evidence on the effectiveness of some employment instruments, and underutilisation of new technologies. In response, this set of recommendations outlines paths and proposals for increasing flexibility, fostering evidence-based initiatives, promoting knowledge sharing, and leveraging technology to optimise outcomes for individuals facing significant employment barriers. Each recommendation emphasises a specific pathway towards enhancing the capacity of state and local actors to address these challenges. Further, each recommendation also contains one signature project from one of the Nordic countries to help concretise the recommendation.

Recommendation 1.1

A system that provides greater flexibility in the selection and design of programmes and rewards long-term results

Today, caseworkers are limited in their ability to select and design effective interventions for vulnerable groups within the Nordic employment systems. These systems are too heavily organised around traditional demographic target groups and controlled by centrally determined requirements regarding the scope and nature of employment efforts. As a result, the most vulnerable individuals are often at risk of being neglected from meaningful intervention as they are frequently perceived as difficult cases, requiring costly measures with relatively uncertain outcomes.

We recommend that state actors in the Nordic countries place greater emphasis on providing caseworkers with flexibility in selecting and designing interventions for vulnerable individuals, allowing for individualised efforts that address each person’s unique needs and challenges. This includes that:

State actors in the Nordic countries systematically identify opportunities to provide caseworkers with greater flexibility in designing integrated and holistic interventions – potentially – across employment, social services, and health services in an integrated manner to address the specific circumstances and challenges of each individual. This requires a high level of horizontal coordination between these actors.
State actors should re-evaluate their categorisation of vulnerable individuals into specific demographic target groups, e.g., based on age. Instead of fitting individuals into predefined boxes, which partly characterise the employment systems in the Nordics today, interventions should, to a larger degree, be focused and designed on each individual’s unique challenges, regardless of demographic factors.
State actors should focus more on rewarding long-term outcomes. This includes reducing the use of strict process requirements and instead incentivising local actors to create sustainable employment and establish municipal benchmarks. This encourages a shift in focus from compliance to genuine impact.

This recommendation is aligned with trends in current reforms of the employment efforts in the Nordic countries. One example is the trust reform (Tillitsreformen) in the Norwegian employment services (NAV), which is briefly described in the box below.

However, several points require attention when reducing strict process requirements, increasing caseworker discretion, and putting more emphasis on employment barriers. First, it is crucial to recognise that granting caseworkers more discretion in decision making can increase the risks of parking (neglecting individuals who are harder to assist) and creaming (prioritising those who are easier to help). These concerns could be addressed, for example, through new accountability measures that go beyond simply counting the number of successfully placed individuals, an issue we will briefly touch upon in the next chapter. Second, greater autonomy places higher demands on caseworkers’ expertise, necessitating robust knowledge of effective employment tools and continuous professional development to keep this knowledge up to date. Third, while moving away from rigid demographic categorisations is beneficial, some employment barriers remain specific to traditional demographic groups. Therefore, maintaining some level of targeted intervention can be valuable to ensure comprehensive support.

The trust reform (Tillitsreformen) in the Norwegian employment services (NAV)

The trust reform is ongoing work in the Norwegian employment services (NAV). The purpose of the reform is to provide the employees in NAV the time and trust needed to provide better services. The main goal of the reform is to, among other things:

provide employees in NAV with greater freedom to develop and use their expertise and skills to find the right solution together with the users.
put increased emphasis on performance management, with the purpose of ensuring a good balance between local autonomy and the need for control, quality requirements, equal treatment, and good governance practices.
further develop the trust in the interaction between the NAV employees and the users.

Similar types of reforms have been implemented in Sweden and Denmark.

Source: Arbeids- og velferdsdirektoratet (2023).

Recommendation 1.2

Experiment with promising initiatives – systematise approaches, follow-up, and evaluations

Throughout this project, we have identified a lack of quantified evidence regarding the employment effects of certain employment instruments and ambiguous results regarding others. These gaps in evidence may hinder the initiation of new, impactful initiatives for vulnerable groups. Furthermore, it often takes considerable time for vulnerable individuals to secure employment in the regular labour market, a factor it is crucial to have in mind when evaluating employment interventions.

To address these challenges, we recommend that state actors establish a structured system to encourage pilot projects and test of promising initiatives, even in cases where results are not yet fully documented. This approach should aim to translate pilot projects into scalable, impactful interventions through a methodical and comprehensive approach. To achieve this, state actors should ensure:

A systematic approach to working with promising initiatives and pilot projects. This could be achieved by the development of a framework for evaluating new projects. This framework should include practical tools like checklists for programme design and administrative guidance. Such approaches are already used in Denmark’s specialised social sector, where initiatives are selected for their promising potential, as shown below. This recommendation aligns with the concept of Humble Governance, which is gaining traction in Finland, and which emphasises listening to diverse opinions during policymaking and reassessing one’s actions based on new insights (Demos Helsinki, 2021).
Integrated evaluation plans and follow-up from the outset of the project to collect necessary data for quality assessments. This provides a foundation for high-quality evaluations with the potential to either document successful interventions (which can be scaled up in other regions, for example) or adjust and potentially phase out ineffective ones.
Development of measures and provision of guidance on measuring and assessing progress beyond employment outcomes. Metrics should capture whether vulnerable individuals are moving closer to the labour market, offering a more comprehensive view of progress. It could include a survey-based measure for employability (see, e.g., Jakobsen & Thuesen, 2024).

Promising initiatives (lovende indsatser) – a framework for prioritising instruments

Promising initiatives are practices that, while not yet supported by conclusive evidence, show a high potential for fostering positive social progress. In this framework, an initiative is determined as promising if it fulfils a set of 11 key criteria, grouped into four main categories:

Knowledge Base (theory and knowledge, effectiveness)
Concept (description, goals, transferability, cost-effectiveness)
Dissemination (professional reflection, relational collaboration, individualised planning)
Adaptation (monitoring, follow-up)

As these criteria outline an ideal standard, an initiative can still be considered promising without meeting all elements. Originally developed for social policies, this concept can also be applied to employment policies to identify high-impact interventions.

Source: Jensen et al. (2016) & Social- og Boligstyrelsen (2020).

Recommendation 1.3

Systematic knowledge sharing and development of tools for assessing long-term economic consequences

Greater flexibility and fewer process requirements (see recommendation 1.1) place increased demands on local actors and caseworkers to understand which employment instruments are effective and for whom. Moreover, a lack of evidence regarding long-term effects may lead to insufficient investment in initiatives for vulnerable individuals, as these initiatives require direct economic expenditure and are often not pursued when their outcomes are uncertain.

Therefore, we recommend that state actors launch initiatives to provide local actors with easier access to knowledge about effective interventions for vulnerable groups, as well as tools that facilitate the assessment of the long-term economic impacts of these interventions. This could be achieved through:

Systematic knowledge sharing among local actors and caseworkers via networking groups, employment-related professional environments, and similar platforms where best practices, results from pilot projects, and the latest research can be shared.
Dissemination of the latest research and good cases through online knowledge portals, also across the Nordic countries. This project has demonstrated that the Nordic countries face similar challenges to a significant degree (e.g., a relatively persistent rate of young people not in employment, education or training (NEET)). This supports the idea of sharing knowledge and best practices across Nordic borders; if an intervention is successful in Norway, why should it not also be effective in Sweden?
State actors in the Nordic countries developing and enhancing models and tools for assessing the long-term impacts of employment instruments. While such tools are already in use in several Nordic countries, we encourage state actors to further refine and promote them among local actors and caseworkers. This will reinforce the understanding that employment instruments represent an investment, with returns that may only be realised in the medium to long term. An example of such a model from Sweden is described in the box below.

When developing and disseminating these tools, it is crucial to strike a balance between simplicity and functionality. The tools must be user-friendly while incorporating factors such as indirect effects, the ability to forecast long-term outcomes, and alignment with broader budgetary considerations. Furthermore, the sharing and application of knowledge from other municipalities, regions, or countries should be approached with caution, as transferring insights across different localities or contexts can present challenges. For example, factors such as variations in administrative and national legislative frameworks as well as the rights and responsibilities of different actors may influence the effectiveness of interventions.

Ideas for Life model (Idéer för livet-modellen) – a cost-benefit approach to calculating the net value of interventions in both the short and long run

The Ideas for Life model is a model to calculate the social impacts and economic value of interventions. The model takes into account the cost of the intervention, the number of participants, the employment effect, and the change in benefits as a result of the intervention (e.g., five weeks less on cash benefits). This allows for a direct comparison of the costs and benefits of an intervention, enabling the calculation of its net value.

Additionally, the model can be integrated into budget planning, as it provides the opportunity for long-term comparisons and forecasts of various interventions, considering both impact and cost in the short term (1–2 years), medium term (10 years), and long term (15 years). In this way, the model also helps to promote an investment approach among local actors.

Inspired by the Ideas for Life model, similar models have been developed in Denmark to determine the net value of interventions.

Source: Idéer för livet (2024) & Jacobsen et al. (2018).

Recommendation 1.4

Initiate a proactive strategy for the use of data models, AI, and new technology

General uncertainty and technical and legal complexity surrounding data models, artificial intelligence (AI), and new technologies prevent the Nordic countries – and especially local actors – from reaping the full benefits of these types of technologies.

We recommend that state actors establish a proactive strategy to promote the adoption and effective use of data models, AI, and new technologies. This strategy should focus on both planning and optimising initiatives and enabling the practical application of new technologies in service delivery. Key components of this approach should include:

State actors developing a clear, forward-thinking strategy supported by broad stakeholder involvement, with strong alignment to legal, ethical, and regulatory standards. This strategy should provide a stable framework for technological innovation in the public sector.
State actors creating confidence and assurance around data ethics and personal data challenges for local actors. This can be achieved by offering local actors targeted guidance and training to address challenges related to data ethics and personal data security. Clarifying legal uncertainties will help foster trust and enable the use of data models, AI, and new technology to a larger degree.
State and local actors exploring, developing, and enhancing tools to improve interventions in collaboration with vulnerable groups and their advocacy organisations (e.g., disability organisations). Throughout our project, we identified several tools that can assist caseworkers and vulnerable individuals. These include 1) profiling tools to identify particularly vulnerable individuals and those needing follow-up support in order to prioritise scarce resources in the employment system (see example below from Sweden), 2) mapping tools to track service providers and showcase how emerging technologies, such as remote case management and interpreter assistance, can improve service delivery, and 3) physical and digital aids, such as speech-to-text tools and smart glasses, which can assist individuals with health issues to gain a foothold in the labour market. For an overview of the latest physical and digital aids for individuals with disabilities, see, e.g., Lindberg (2021).

While implementing data models, AI, and new technologies, it is essential to ensure that caseworkers do not lose their professional autonomy. Tools should be designed to support their decision making rather than replace it, allowing them to maintain a sense of ownership and expertise in their work. Equally important is how unemployed individuals are engaged in the process. Care should be taken to avoid overwhelming them with all the identified challenges, ensuring the approach remains empowering rather than discouraging. Further, when developing the AI tools, it is important to avoid situations where AI reproduces mechanisms of exclusion that exist in the labour market. Finally, it is crucial to stress that ethics and the protection of personal data must never be compromised.

Profiling in Sweden – a tool to determine support needs among jobseekers

Sweden’s Public Employment Service (PES), known as Arbetsförmedlingen, has used profiling for over a decade. Recently, a new model was launched to better assess jobseeker support needs. The model uses various factors such as gender, age, education, area of study, birth country, location, disability status, and registration time at PES. This data comes from jobseeker registrations and PES records.

The model predicts how likely someone is to find a job or enter education and suggests one of three support levels: 1) minimal support through digital services, 2) additional help with job search or training (Rusta och Matcha), or 3) in-depth support, which is handled by the municipalities. With an 80% accuracy rate for predicting long-term unemployment, the model’s outputs guide caseworkers, who make final decisions using detailed jobseeker information. Similar tools are used in other Nordic countries. However, to our knowledge, these tools rely on questionnaire data rather than the extensive administrative data available in the Nordic countries.

Source: Helgesson et al. (2023) & Arbetsförmedlingen (2024).

3.2 Policy track 2: Create flexible programmes for complex challenges

Vulnerable individuals face complex challenges that create barriers to their integration into the labour market. This policy track highlights the need for innovative, holistic strategies that address employment barriers simultaneously or in the right sequence, prioritise employment-focused initiatives that closely mirror real job conditions, and emphasise vocational education with transferable certification. These recommendations are supported by concrete examples of successful initiatives from the Nordic countries.

Recommendation 2.1

Design combined programmes with a focus on the individual’s full set of barriers

Vulnerable individuals often face multiple employment barriers, and the initiatives in place today are not effective, because they inadequately address the individual’s actual barriers or because they address them in the wrong order. Therefore, interventions risk becoming ineffective if they fail to take into account the individual’s full set of barriers. Additionally, to some degree, work with vulnerable individuals is carried out with a short-term perspective, which typically works better for individuals closer to the labour market.

We recommend that state and local actors place greater emphasis on designing holistic intervention programmes that address the full range of barriers faced by vulnerable individuals. Designing effective interventions for vulnerable individuals is difficult and requires a comprehensive understanding of all their barriers, often involving a combination of measures across employment, social services, and health services. Therefore, caseworkers should be given greater opportunities to:

Systematically identify the individual’s full range of barriers. This could be achieved using a framework for identifying barriers (such as the one developed in this project) and a comprehensive long-term plan.
Assess and prioritise employment barriers. Not all barriers need to be addressed simultaneously, but practitioners should explicitly consider all barriers. This includes determining the appropriate sequence for addressing the barriers and identifying those that may require simultaneous action.
Regularly follow up and reassess individual intervention programmes, adjusting sequences and content as needed, since the barriers faced by individuals are not static. Additionally, local actors should systematically provide follow-up support for the most vulnerable individuals, both during programme participation and after they have gained employment.

The box below includes findings from the project, identifying specific needs for considering whether to address barriers sequentially or simultaneously, along with examples of interventions that have proven effective in addressing barriers using these approaches.

While holistic interventions that recognise an individual’s full set of barriers are crucial for supporting vulnerable people, it is essential to balance the creation of individual plans with ensuring efficient resource allocation. To avoid over-administration and ineffective processes, interventions should be flexible and proportionate to the individual’s distance from the labour market, meaning that individuals further from the labour market should receive more intensive follow-up and tailored support, while those closer to employment may benefit from lighter-touch interventions to ensure resources are used effectively. For those who are furthest from the labour market, interventions may also need to incorporate comprehensive and sustained efforts, including collaboration across sectors and enhanced coordination among first-line services. It is also important to continually assess whether all barriers need to be directly addressed or if some can be tackled indirectly through employment-focused initiatives.

Insights on addressing barriers – sequential vs simultaneous approaches, and effective interventions

Successfully addressing employment barriers for vulnerable individuals often requires careful consideration of whether barriers should be tackled sequentially or simultaneously. This box highlights key insights from the project, illustrating how different approaches can enhance the effectiveness of labour market interventions, depending on the specific barriers faced by individuals.

Intensive labour market training can crowd out language training

Intensive labour market training for immigrants can crowd out language training, potentially diminishing its long-term employment benefits. Research shows that language training, particularly for immigrants whose native languages differ greatly from Nordic languages, has significant long-term employment effects. This highlights the importance of addressing language barriers sequentially, prioritising language skills over labour market experience.

The local labour demand is important for the success of labour market training and/or upskilling

Our research documents that the local labour demand constitutes a significant employment barrier among vulnerable groups, and this must be taken into account when providing individuals who are lacking labour market experience with labour market training or upskilling. This is an example of a simultaneous approach, where addressing skill development while aligning it with local labour market needs can enhance the effectiveness of employment instruments. We will further turn to this topic in recommendation 2.3, where the Job VEU model from Denmark will briefly be described.

Lack of guarantees for employers limits use of assistive devices

Risk for employers is a key employment barrier for vulnerable individuals, particularly those with health issues. Legislation on work accommodations can exacerbate this risk when assistive devices are granted only after a job contract is signed, creating uncertainty for both jobseekers and employers. This discourages the use of work accommodations, reducing their effectiveness as an employment instrument for individuals with health issues outside the labour market.

Absence of skills regarding everyday life reduces the effect of labour market training

We have documented that the absence of skills regarding everyday life constitutes a central employment barrier among vulnerable groups, limiting the effect of otherwise effective employment instruments. This highlights the importance of a sequential approach, where skills regarding everyday life must first be developed before offering various employment instruments. For instance, a Norwegian study has found positive employment effects from helping young individuals set goals in relation to daily habits.

The effect of monitoring, sanctions, and benefit reductions is reduced by the degree of vulnerability

In general, our research demonstrates that financial incentives, monitoring, and sanctioning work effectively among individuals close to the labour market. However, there is limited evidence of their effectiveness for vulnerable individuals further from the labour market. Literature also demonstrates unintended effects that must be considered (e.g., increased property crime and impacts on children’s educational outcomes). This suggests that a sequential approach is crucial for some vulnerable individuals, carefully timing financial incentives and support systems to avoid adverse effects.

Coordinated and combined employment and health-oriented interventions are effective

Individual placement and support (IPS), an evidence-based model, helps individuals with mental health conditions secure and maintain competitive jobs by combining employment and health interventions. By offering personalised support, rapid job placement, and integrating vocational services with mental health treatment, IPS demonstrates the effectiveness of simultaneous approaches in achieving positive outcomes.

This list is not exhaustive but illustrates the importance of determining the appropriate order or combination of interventions based on specific barriers faced by individuals. Tailored solutions are key to maximising the effectiveness of labour market strategies.

Source: Arendt & Bolvig (2023a), Bjorvatn et al. (2021), Andersen & Arendt (2015), Simonsen & Skipper (2017), Beskæftigelsesministeriet (2024), Dustmann et al. (2023), Andersen et al. (2019). Arendt (2023), Einarsdóttir et al. (2022), Sveinsdottir et al. (2019), Brinchmann et al. (2024) & Fogelgren et al. (2023).

Recommendation 2.2

Continue efforts with employment-focused initiatives for vulnerable individuals – as close to a real job situation as possible

The path to employment often goes through employment-focused initiatives, but there may be a tendency today not to fully reap the benefits of these initiatives, as there is insufficient focus on why such measures are effective. What works are genuine working conditions in a real workplace with real wages.

We recommend that local actors continue to prioritise employment-orientated initiatives highly but focus more than they do today on placing individuals in working conditions that resemble actual employment in a real workplace with real wages – the more real, the better. This includes that state and local actors:

Review company internship programmes (e.g., labour market training programmes) and ensure that these programmes mirror real employment relationships as closely as possible, allowing participants to experience authentic workplace expectations from both employers and colleagues.
Examine whether wage subsidy schemes (including flex jobs) are conducted on terms that are as regular as possible, for instance, ensuring that wages are paid directly by the employer and that the tasks performed are similar to those carried out by colleagues.
Prioritise (even a few) regular paid hours – also for vulnerable individuals. Our literature review reveals promising results of providing vulnerable individuals a few regular paid hours in a genuine employment setting under regular conditions with real expectations and real pay. This can foster the belief that one is capable of functioning in the regular labour market, potentially encouraging the pursuit of additional hours. The approach is further described in the box below.

However, there are several important considerations to keep in mind regarding this recommendation. Firstly, certain schemes, such as wage subsidies, are most effective when used as a final step for individuals facing particularly complex challenges. Second, we recognise that placing individuals in roles that closely replicate real job situations presents significant challenges. This approach is inherently resource-intensive and difficult to scale, as it requires extensive and continuous collaboration with employers to create and maintain suitable opportunities. Employers must be engaged in an ongoing dialogue to ensure that the workplace expectations, tasks, and structures align as closely as possible with regular employment conditions.

Regular paid hours (ordinære løntimer) in Denmark – small steps in the right direction at real workplaces

Regular paid hours is an employment instrument in Denmark, which in initial assessments seems to produce positive employment effects. Basically, the instrument provides cash benefits recipients with a few hours (typically 2-10 hours a week) in the ordinary labour market while still receiving public assistance.

The idea is to bring cash benefits recipients closer to the labour market by providing them with experience, contacts, and increased self-esteem so as to encourage them to work more hours over time. One of the key mechanisms for the success of regular paid hours is that it provides work on ordinary terms at ordinary workplaces with real expectations from employers and colleagues.

An initial descriptive evaluation demonstrates that individuals on regular paid hours fare significantly better than the overall group of activity-ready cash benefits recipients. Two years after the first regular paid hour, more than half of recipients have found a full-time job or are contributing to their own livelihood through regular paid hours. In comparison, only 12 pct. of the total group of activity-ready cash benefits recipients have a full-time job or contribute to their own income after two years.

Source: Rosholm (2024).

Furthermore, it is crucial to provide vulnerable individuals with meaningful financial incentives to participate in and progress through these schemes. Financial disincentives, such as benefit reductions when individuals increase their working hours, can discourage participation and should be carefully addressed. Mechanisms such as the social free pass, as described in the box below, can help ensure that individuals are motivated to take on additional hours without fear of financial penalties. Addressing these challenges will be key to ensuring the long-term success and scalability of these initiatives while maintaining a focus on genuinely improving employment outcomes for vulnerable individuals.

The social free pass (socialt frikort) in Denmark – financial incentives to vulnerable groups

The social free pass allows vulnerable individuals to earn up to DKK 41,000 (EUR 5,470) tax-free per calendar year without this income affecting their public welfare benefits.

This initiative provides vulnerable individuals better opportunities to enter employment, engage in community life, contribute meaningfully, and find value in daily activities. It also encourages companies to take social responsibility by employing vulnerable individuals. The pass can be used for regular, unsupported work with businesses or public authorities without deductions from welfare benefits, housing support, or other income-based public assistance.

The scheme has been descriptively evaluated, and the evaluation demonstrates that over a third of all cases have led to employment. Among individuals who received their pass in 2019, around 75 pct. found employment within six months of allocation. In about 35 pct. of cases, individuals remained employed at the same company for over six months.

Our job centre works hard to secure social free passes for cash benefits recipients, aiding their work experience. However, once used, it’s difficult to motivate them to engage in further activities, despite their importance for future employment prospects.
Danish caseworker on the social free pass

Source: Socialstyrelsen (2022).

Recommendation 2.3

Prioritise vocational education with qualification certificates

Vulnerable individuals often lack formal qualifications and may struggle within the ordinary education system. Moreover, the current arrangements and the relatively short-term perspectives in the employment system create a risk that vulnerable groups are offered numerous small, incoherent courses as part of employment efforts without receiving certification for the skills they acquire.

We recommend increasing the use of flexible vocational education offers (skills training combined with workplace practice) to upskill more vulnerable individuals. Efforts should, as far as possible, ensure that individuals receive formal, transferable certification for their qualifications, enabling them to use these in future job opportunities and securing a longer-lasting impact of the initiatives. These can include initiatives that:

Make upskilling efforts as vocationally oriented as possible. This is best achieved by aligning the content of upskilling efforts with demand in local labour markets, combined with close collaboration with local educational institutions. It requires flexible cooperation between local businesses, educational institutions, and implementing organisations. An example of such efforts in a Danish context is the vocational education and training model (Job-VEU model), which is a structured approach to make upskilling anchored in the labour market and improve job matches.
Ensure flexibility and coherence in translating skills into certifications. The aim is to develop more flexible and integrated solutions for converting individuals’ skills into qualification certificates that are transferable between employers. For example, micro-credentials – certificates that validate the learning outcomes of short-term experiences, such as courses or training – can be a practical solution. Over time, these micro-credentials could be combined to achieve a full, ordinary education.
Create systematic alignment with individuals’ prior learning and experiences. There is a need for more flexible and coherent solutions to convert individuals’ prior learning and experiences into qualification certificates. This can help create coherence between any previous education, courses, and work experience (e.g., through recognition of prior learning experiences). A notable example, which incorporates some of these ideas, comes from Iceland’s lifelong learning centres. This signature project is further described in the box below.

While existing Nordic legislation supports access to education for vulnerable groups, placing a stronger focus on certification can enhance the long-term benefits of these initiatives. Formal qualifications not only improve employability but also motivate individuals to pursue further education and training. However, the effectiveness of this recommendation depends on ensuring accessibility of education for vulnerable groups, which should be separately addressed.

Validation of transversal skills in Iceland – a structured approach to skill validation

Iceland has pioneered the validation of transversal skills to support vulnerable individuals in recognising and leveraging their competencies. Offered in lifelong learning centres, this validation targets people who have not completed upper secondary education. Transversal skills – encompassing communication, ethics, critical thinking, and more – are essential for active participation in the labour market and ongoing learning.

Through structured processes, participants become aware of their abilities gained through life and work, connecting these competencies to general job requirements. The initiative has shown that validation boosts self-confidence, reinforces self-efficacy, and encourages career progression, helping individuals with prior unsuccessful educational experiences to develop positive career trajectories. This case demonstrates how validation can transform individuals’ perceptions of their skills, motivating them to further their education and employment prospects, thus enhancing both personal and professional growth.

Similar positive effects are found in a Swedish project targeting immigrants, particularly women. The programme was designed to offer job search and matching assistance based on the participants’ formal and informal skills.

Source: Jónatansdóttir et al. (2023) & Helgesson et al. (2020).

3.3 Policy track 3: Create results through good relations, confidence, and motivation

For vulnerable individuals, integration into the labour market depends not only on addressing structural employment barriers but also on fostering trust, motivation, and confidence in their meeting with the public employment services. In this policy track, we provide recommendations that highlight the importance of creating inclusive systems that empower individuals and their caseworkers, emphasising relationship building and a supportive framework that motivates vulnerable individuals to engage in employment or education.

Recommendation 3.1

Improve the interaction between vulnerable individuals and the system – focus on co-creation, peer-to-peer feedback, and autonomy

The motivation and willpower of vulnerable individuals are diminished if they feel a lack of control over their own situation and have a lack of understanding of how the system works. This constitutes a barrier to designing effective initiatives since the individual’s motivation is decisive for the success of employment instruments in general.

We recommend that state and local actors work to improve the interactions between the system and the individuals, fostering greater motivation and ownership of their own development. By establishing more meaningful connections and fostering genuine engagement, individuals are more likely to take an active role in their way to the labour market. To ensure well-grounded involvement, advocacy organisations (e.g., disability organisations) can be actively involved in this effort. This includes the following:

Co-creation. Assess how Nordic employment systems engage with vulnerable individuals, and leverage existing knowledge about the impact of involvement, co-creation, communication, dialogue, and user experiences. Use this understanding to enhance the interaction between the system and the vulnerable individuals, and strengthen co-creation between these individuals and caseworkers.
Arenas and alternative meeting forms. Meet individuals in their own environments, and reassess existing meeting formats. Create opportunities for individuals to meet with local actors outside of formal office settings, and incorporate the context of the individual into existing meeting formats to enhance motivation and understanding. These alternative environments can also facilitate interaction between individuals facing similar challenges.
Peer-to-peer feedback. Promote self-help and peer-to-peer feedback. Encourage participants to help and provide feedback to one another, enabling them to reflect on shared experiences. This can lead to a better understanding of their own strengths and areas for improvement, fostering a greater sense of ownership and engagement in their employment situation.
More autonomy over own situation. This may come in various forms and can include freedom to choose service provider or giving individuals earmarked financial support that can be used for something that improves their chances of entering employment or education. Such measures can create a stronger sense of ownership of the process, which, in turn, can lead to better employment outcomes.

For inspiration, we have collected signature projects from Norway, Sweden, and Denmark, which provide examples of how to leverage alternative arenas, foster motivation through autonomy, and utilise peer-to-peer feedback to support individuals. These are further described in the box below.

However, when improving the interactions between the individuals and the system, several considerations must be taken into account. For example, providing individuals with the freedom to choose their service provider can be overwhelming, especially if they lack information about the available options, which can diminish the positive impact of such initiatives. Additionally, it is crucial to establish effective controls over private service suppliers, and the incentive structure should be designed to benefit vulnerable individuals. When that is said, increasing co-creation, meeting individuals closer to their own environment, promoting peer-to-peer feedback, and providing more autonomy for vulnerable individuals can improve the labour market participation of vulnerable individuals in the long term.

Initiatives focused on alternative arenas, motivation through autonomy, and peer-to-peer feedback

Integrating vulnerable individuals into the labour market often requires innovative approaches that go beyond traditional employment programmes. This box highlights initiatives that leverage alternative arenas, foster motivation through autonomy, and utilise peer-to-peer feedback to support individuals. By meeting individuals where they are – whether through physical activities, community-driven peer-to-peer feedback, or financial empowerment – these programmes illustrate diverse pathways to enhance labour market participation.

**Co-creation – part of the Door-to-Door project (Opgang til Opgang) in Denmark**

Co-creation refers to the interactive and dynamic relationship where value is generated through the interaction between the caseworker and the vulnerable individual. In this context, individuals play a central role in creating the value of public services, while public organisations act as facilitators of this process.

This concept is a cornerstone of the Door-to-Door project in Denmark, a holistic and relational employment intervention aimed at supporting entire families. Key elements of the project include empowering families to make their own decisions and fostering a collaborative alliance between the family and the municipal team. The role of the municipal team is to support the family in developing their own agency, for example, by helping them connect with others, enabling them to build a good and sustainable life. The participants in the project have increased their participation in the labour market.

Source: Kjær, Tauby-Theill & Lohmann (2023)

**Arenas and alternative meeting forms – the Street Teams (Gatelagene) in Norway**

Gatelagene is an initiative organised by the sports community (Fotballstiftelsen) and is a low-threshold initiative offering football training sessions for individuals with past or present substance abuse challenges. Participants are provided with a sense of unity and belonging through teamwork and shared experiences.

Although the main purpose is not employment, the programme helps players build confidence and experience a sense of achievement through regular activities. It prepares participants for work by fostering collaboration between the Football Foundation, clubs, NAV (Norway’s Labour and Welfare Administration), and municipalities. Employees from NAV occasionally turn up at the training, and participants who are ready and willing are offered formal job training opportunities. This highlights the potential of meeting the vulnerable individuals in alternative arenas, in this case training facilities at local football clubs. The programme facilitates gradual integration into the workforce by fostering personal development among participants. The programme has demonstrated positive results for individuals and society; however, it has not been evaluated causally.

Source: Oslo Economics (2024)

**Peer-to-peer feedback – Neighbourhood Mothers (Stadsdelsmammor) in Helsingborg, Sweden**

The aim of the project Stadsdelsmammor 2.0 was to reduce social isolation among foreign-born women, enhance their participation in society, and bring them closer to the labour market. This was achieved through local neighbourhood mothers (Stadsdelsmammor) and multi-cafés. These mothers, often from the same areas as the target group, acted as bridges to Swedish society, providing basic information about how it functions and practical support. The neighbourhood mothers, many recruited from the target group itself, shared their experiences of being new in Sweden, spoke multiple languages, and helped women with tasks such as contacting authorities or taking steps towards work or education.

The initiative has demonstrated positive results, and the concept continues to operate within municipal services in Sweden. Similar initiatives are used in Denmark and Norway, among other countries.

Source: Länsstyrelserna (2022)

**More autonomy over own situation – Youth Budget (Ungebudget) in Denmark**

The Youth Budget project provides vulnerable unemployed individuals with DKK 25,000 (approximately EUR 3,333) to spend on items or services that enhance their chances of entering employment or education. The participants are young people facing multiple barriers to employment, such as substance abuse, social anxiety, or low self-esteem. In collaboration with a caseworker, they determine how to allocate the funds, provided the spending directly supports their journey towards work or education. Eligible expenses include therapy, computers, or driving licences.

The programme is designed to foster autonomy and motivation by empowering participants. Evidence shows that they demonstrate a high level of responsibility in managing the funds, and initial evaluations demonstrate positive employment outcomes and improved overall wellbeing.

A similar concept exists in Sweden in the Rusta och Matcha project, where individuals, based on the results of a profiling tool, receive support from a private service provider of their own choice. The impact of this freedom of choice on employment outcomes is currently being evaluated.

Source: Lind Foundation (2023) & Arbetsförmedlingen (2024)

Recommendation 3.2

Strengthen relationship-building efforts – empower caseworkers to build continuous and trustful relationships with vulnerable individuals

The caseworker’s ability to build a strong relationship with the individuals is currently hindered by large caseloads and a lack of continuity in following the individual’s progress due to, e.g., frequent caseworker changes. This results in a reduction in the overall effectiveness of interventions, as well as decreased engagement and motivation among caseworkers, which can potentially become self-reinforcing and result in less individualisation of programmes.

We recommend enhancing caseworkers’ capacity to build and establish strong, ongoing, and trust-based relationships with vulnerable individuals by providing them with extended authority and resources. This includes:

Smaller caseloads. Reduce the number of cases assigned to each caseworker, especially those working with vulnerable individuals. This allows caseworkers more time to understand and address each individual’s unique needs, which has proven useful in a Danish municipality. This signature project is further described in the box below.
Increased continuity in the case management. Minimise caseworker changes to ensure consistency in support. This can foster a trusting relationship between the vulnerable individual and the caseworker.
Empowered decision making. Grant caseworkers greater autonomy and flexibility in decision making, enabling them to tailor interventions to the specific circumstances of each individual. Such measures can contribute to more personalised, timely, and effective support.
Enhanced training and resources. Provide caseworkers with the necessary training and tools to be able to provide an individualised support that addresses each individual’s unique needs.

This approach prioritises the human element of case management, recognising that trust and continuity are essential for effective support. By addressing the systemic barriers that hinder relationship building, this recommendation aims to enhance the effectiveness of interventions.

The Hjørring Model – reducing caseloads and increasing competencies among caseworkers

Hjørring Municipality in Denmark implemented employment initiatives from 2015 to 2018 to reduce vulnerable individuals’ reliance on sickness and cash benefits and strengthen the workforce in the municipality. The Hjørring Model comprises four key elements: 1) setting individual job or education goals with citizens, 2) identifying resources and barriers with input from interdisciplinary teams, 3) selecting and implementing targeted interventions, and 4) conducting regular follow-ups.

Key requirements for success are manageable caseloads (reduced from 70–80 to 35–40 cases per caseworker), competent and empowered staff, tailored activation processes, and interdisciplinary collaboration among professionals and services. Research highlights positive causal effect, such as increased working hours and smoother transitions from temporary benefits to self-sufficiency using Danish register data. Overall, data from Hjørring Municipality demonstrates that the investment has been cost-effective. However, the business case has not been causally evaluated. The effectiveness of the Hjørring Model and related job centre efforts in the North Denmark Region has been recognised by the OECD.

Sources: Ravn (2019; 2022), Ravn & Nielsen (2019), OECD (2024) & Hostrup (2019).

While strong relationships between caseworkers and vulnerable individuals are essential, it is important to balance trust building with clear expectations to encourage progress. Focusing too much on building relationships without maintaining accountability can lead to dependency. Further, we are aware of the fact that reducing the caseloads among caseworkers can be a costly endeavour, especially in the short run. However, it has been documented that such investments lead to more successful outcomes in the longer run, as documented in the box below.

Ohjaamo – One-Stop Guidance Centres in Finland

Since 2014, Finland’s One-Stop Guidance Centres, known as Ohjaamo, have provided comprehensive support and guidance to young people under the age of 30 in areas such as work, education, and everyday life. There are nearly 70 Ohjaamo centres across Finland, offering services like Onni coaching, which supports young adults (ages 18–29) in managing challenges related to wellbeing, stress, and everyday life.

Based on cost-benefit analyses, these centres not only cover their operational costs but also generate government savings. As of early 2025, the multisectoral Ohjaamo model, including Onni coaching, became a mandatory component of Finland’s new employment initiatives.

Sources: Valtakari et al. (2020) & Ohjaamo (2025).

Recommendation 3.3

Empower caseworkers to exempt vulnerable individuals from requirements and sanctions, and increase economic incentives for progression towards employment

Striking the right balance between economic incentives, requirements, and sanctions, and providing vulnerable individuals the time and space to integrate into the labour market is a significant challenge. Stricter requirements and sanctions can have unintended consequences, potentially pushing vulnerable individuals further from employment. Conversely, some vulnerable individuals remain reliant on public benefits due to insufficient economic incentives to progress towards work.

We recommend empowering caseworkers to exempt vulnerable individuals from requirements and benefit sanctions for a defined period. This approach would reduce uncertainty about their subsistence, alleviating stress and enabling them to focus on addressing the challenges that hinder their labour market participation.

Simultaneously, we propose strengthening economic incentives for vulnerable individuals who are assessed as ready to work, encouraging progress towards employment. This includes:

Allowing exemptions from sanctions for vulnerable individuals. The complex individual circumstances and the need to address other challenges necessitate that exemption options become an integrated part of caseworkers’ toolkits. An example of this is the basic income scheme currently being developed in Norway, as described in the box below.

Giving incentives to take a few regular paid hours. Minimal or no deductions for taking a few paid hours can provide economic encouragement to work even a small number of hours. This can create a more secure transition from unemployment to employment. Even a limited number of paid hours can strengthen the individual’s connection to the labour market and provide a vital sense of purpose and participation in working life. This gradual entry can, over time, foster stronger labour market attachment. Furthermore, state actors should consider whether benefit schemes are designed at the individual level or the household level, as this distinction plays a crucial role in incentivising individuals to engage with the system.
Giving incentives for progression in flex jobs towards more hours. To promote progression in flex jobs, it is important to have incentives that encourage individuals to increase their working hours when possible. A flexible system can offer financial benefits that make it appealing to take on more hours without negatively impacting economic security. An example of this is the social free pass, which is further described in section 3.3.

Research suggests that sanctions often fail to motivate the most vulnerable individuals and may lead to disengagement or negative outcomes, such as increased criminality or poorer educational outcomes among children. However, sanctions can be useful for individuals closer to the labour market by encouraging participation. Empowering caseworkers to waive sanctions, when necessary, allows them to build trust-based relationships, but this must be paired with strong incentives to avoid dependency and support for gradual integration into the labour market.

Basic income for young NEETs in Trondheim (Norway) – reducing requirements and incentivising employment without offsetting benefits

NAV in Trondheim has applied to launch Norway’s first basic income pilot, offering young people under 30 who are neither employed nor in higher education an annual income of approximately 237,000 NOK. Recipients do not need to prove eligibility beyond their current employment and education status and will remain connected to NAV for support and goal setting. Further, the recipients are allowed to keep the financial support even if they increase their own income.

The initiative aims to simplify benefits, replacing a complex system with a straightforward minimum income to reduce barriers to employment. The application is currently being evaluated by the Norwegian Ministry of Labour and Social Inclusion. Research will be integral to evaluating its impact, ensuring lessons inform future policy. Inspired by similar trials abroad, the project seeks to improve health, wellbeing, and opportunities for young people in Norway.

Many of the long-term unemployed I work with struggle to meet the job-seeking requirements. If they miss meetings or do not write enough applications, they are sanctioned and eventually fall out of the system. The strict rules do not motivate them – instead, they lose contact with the employment system, even though many still need help.
Finnish caseworker on the challenges with sanctioning

Source: Jakobsen (2024).

3.4 Policy track 4: Getting companies on board

Effectively integrating vulnerable individuals into the labour market requires active engagement from employers. This policy track underscores the importance of equipping employers with the tools, knowledge, and support needed to foster inclusion. By addressing barriers such as insufficient information and complex collaboration processes, these initiatives aim to, among other things, simplify participation for employers. Key recommendations focus on promoting inclusive hiring through targeted information campaigns, job carving, and employer outreach, while streamlining public-private collaboration.

Recommendation 4.1

Promote an inclusive labour market through systematic information, employer outreach, and best-practice cases

Many companies today are willing to take on social responsibility by employing vulnerable individuals. However, a lack of information about opportunities and potential can make employers hesitant to hire vulnerable individuals. This is partly due to insufficient knowledge about available support schemes, uncertainty about the target group, concerns regarding productivity risks, and an inability to communicate the case internally within the company, for example, by using good case examples.

We recommend that state and local actors systematically work to enhance employers’ awareness of the opportunities and potential benefits of contributing to a more inclusive labour market. This requires, among other things:

Information campaigns that provide knowledge about the potential benefits of hiring vulnerable individuals, the availability of public support, and examples of best practices. These campaigns could also introduce alternative approaches to addressing challenges, such as insurance models to mitigate perceived risks or strategies like job carving and diversity as a parameter for improving productivity.
Assistance for companies in creating inclusive workplaces. This could involve developing a framework for inclusive human resource practices, which allows employers to examine and reassess the conditions in the workplace and address obstacles typically experienced by vulnerable groups. Further, it involves enhancing employers’ inclusion competencies, which refers to, e.g., an employer’s understanding of vulnerable individuals and their special needs. It cannot always be assumed that such competencies are present within companies. Providing structured guidance, training, and tools can empower employers to integrate inclusive practices effectively.
Establishing targeted job boards for vulnerable groups. These job boards should specifically be tailored to connect vulnerable groups with potential employers and facilitate direct interactions. Such platforms can help employers meet candidates in person, fostering greater understanding and breaking down stereotypes. Additionally, they allow employers to explore the tangible opportunities and potential benefits associated with employing individuals from vulnerable groups.

Promoting an inclusive labour market requires thoughtful approaches. Employers should view inclusive hiring as part of their ESG (Environmental, Social, and Governance) commitments, linking social responsibility to sustainable growth for employers. Support must be flexible, especially for smaller businesses, with tools and evidence to address productivity concerns, such as examples of and help to implement job carving in their businesses. Efforts must also ensure that vulnerable individuals are given meaningful roles to foster genuine inclusion.

Make room (Gör plats!) – the impact of an information campaign in Sweden

The Swedish Public Employment Service (PES) launched the Gör plats! campaign in 2018–2019 to encourage employers to hire individuals with disabilities. The campaign aimed to shift norms and attitudes by highlighting the untapped potential of this group.

An evaluation conducted by PES indicated significant outcomes:

Employer impact: 40% of surveyed employers reported a more positive attitude towards hiring people with disabilities after seeing the campaign.
Media influence: Media coverage of disability in the labour market increased, with a shift in portrayal from vulnerability to potential labour.
PES messaging: PES themselves adopted a more resource-oriented narrative, emphasising abilities over challenges.

While causal effects could not be determined, the campaign showed strong correlations between employer interest in supported hiring and campaign activity, as well as broader improvements in societal attitudes.

Source: de Verdier et al. (2020).

Recommendation 4.2

Strengthen the match between vulnerable individuals and employers, and simplify employers’ collaboration with local actors

A lack of clarity, complex regulations, and too many points of contact with local public actors complicate and limit employers’ willingness to collaborate with local actors. Additionally, insufficient focus on creating strong social and professional matches between vulnerable individuals and employers can lead to poor outcomes, discouraging future collaboration.

We recommend that state and local actors prioritise improving skills and social matches while simplifying employer collaboration. This includes:

Creating strong matches by providing and facilitating support for initiatives like job carving and promoting the industry packages programme. These efforts can help ensure a good professional and social match between vulnerable individuals and employers. Successful cases from job carving are described in the box below.
Streamlining employer contact and establishing a single point of contact for employers with public employment services (PES), covering both the hiring process and ongoing contact. Coordination between different services (e.g., health and employment) must be managed entirely by public authorities. Additionally, local actors should foster closer collaboration between internal departments, such as between teams working with business development and employment-focused teams.
Reducing administrative burdens and simplifying employers’ interactions with the public employment services, ensuring they are not burdened with individual education plans or similar administrative tasks. The only decision a company has to make is whether to employ a vulnerable individual for a specified number of hours per week at an agreed wage.

These steps aim to build trust, reduce complexity, and foster productive partnerships between employers and public actors. This places great demands on caseworkers to ensure that employers are equipped to support vulnerable individuals and that these individuals are prepared for workplace-focused initiatives, which is essential since a poor match can be demotivating for both parties and possibly hinder future collaboration with employers. Further, it should be noted that implementing initiatives such as job carving at workplaces can be challenging in practice. A project in Denmark attempted to disseminate information and tools related to job carving to employers through network and information meetings. However, evaluations of the project revealed that this approach was less successful, partly due to the difficulty of getting employers to prioritise attendance at such meetings. Consequently, there is a need for more systematic research into how and under what conditions such initiatives can be effectively implemented (Holt et al., 2023).

Job carving – creating employment opportunities and increasing productivity

Job carving reorganises workplace tasks to create customised roles for individuals with limited qualifications or reduced work capacity. Managers, often with support from specialised consultants like PES, identify tasks that can be reassigned to form new positions. This approach not only provides employment opportunities but also allows core employees to focus on skill-intensive duties, improving overall productivity. Training and workplace adjustments often accompany the process, making it beneficial for both employees and employers.

In Denmark, a blacksmith company hired a cash benefits recipient to handle cleaning and maintenance, enabling the blacksmiths to focus on production, which increased efficiency at a rate equivalent to adding another full-time worker. Similarly, Oslo’s Prosjekt oppgavedeling assigns non-clinical tasks in healthcare to long-term unemployed individuals, freeing nurses to focus on patient care and providing participants with job opportunities. Both examples show the mutual benefits of tailored task sharing.

In a medium-sized Danish town, the electrical industry faced a labour shortage, leading to the establishment of a cable assembly training programme to quickly teach citizens basic tasks. Similarly, in the automotive industry, citizens are trained to change tyres, freeing up other employees for different tasks. The key lies in how eager businesses are to secure labour.
Danish caseworker on successful implementation of job carving (combined with education)

Source: Scoppetta et al. (2019a), Scoppetta et al. (2019b), Cabi (2024) & Lie & Brevig (2024).

3. Policy recommen­dations