Swedish minister: Still room for improvement to the common Nordic labour market

“The agreement on a common Nordic labour market has naturally lost some of its importance because EU legislation now regulates EU countries’ – including the Nordics’ – labour markets.

But the agreement is still relevant even if we do not give it that much thought. It has shaped much of the Nordic cooperation and sense of community and prepared the ground for our collaborative structures,” Johan Pehrsons tells the Nordic Labour Journal. 

“The agreement for instance outlines how the Nordic labour market authorities should cooperate to avoid imbalances in our common labour market. It also stipulates that the countries should keep each other informed about developments in the labour market and labour market policy measures. This is still on the agenda during Nordic meetings both on civil servant and political levels,” says Johan Pehrson. 

Only 0.5 per cent of the Nordic population commute to a different Nordic country, compared to the EU average of 1 per cent. The number of people who move to another Nordic country is also low at 1.6 per cent. The figures come from Nordregio, and the theory is that the Nordic countries have become too similar. Do you agree? 

“There are surely several reasons for those figures, but of course, it made a big difference in the 1950s and 1960s when Sweden could offer both jobs and higher living standards to many people who made use of the opportunity to work in the common Nordic labour market.

“Today, things are different. Living standards are similar across the Nordics and in many cases, there is the same type of demand for certain skills throughout the Nordic region, which means that the number of people commuting or choosing to move to work in another Nordic country is lower now.”

Others think moving is too tricky. Is there anything in the pipeline that might facilitate commuting/moving within the Nordic region that can be executed in the shorter term? 

“One thing that hopefully will reduce obstacles is the tax agreement signed by Sweden and Denmark on 10 June 2024. 

"It includes some revised rules on the extent to which an employed person can work in their country of residence within the employment framework in the other country, while still paying tax only in the country of employment. These rules are also extended to include public sector employees. 

"There are also new rules on the allocation of taxing rights for certain types of income for which there are no specific allocation rules in the Nordic tax agreement. Finally, the compensation scheme is also amended so that compensation to the country of residence is also given for the income of public sector employees that is not taxed in that country. 

“We must continue to facilitate and reduce existing obstacles, whether they are related to taxes or other issues. I am pleased with the agreement we have just signed with Denmark, but we have certainly faced tricky issues, especially during the pandemic. We must all learn from this and ensure things become as simple as possible. We have come a long way, but we can do more."