Nordic employment services adopt AI in reform drive

The OECD report looked at how digitalisation and artificial intelligence (AI) is being used in public employment services in the Nordic region, and which strategies the countries have chosen to  help modernise these services. 

The report “The role of public employment services in promoting an inclusive Nordic common labour market” was introduced during a webinar recently. It has been financed by the Nordic Council of Ministers.

Cross-border cooperation

Last year, the Nordics celebrated 70 years of a common Nordic labour market. This was marked by a two-day conference in Malmö, Sweden, where participants were treated to a preview of the report, written by Anne Lauringson and Ailbhe Brioscú. 

Both work at the Employability Division of the OECD's Directorate for Employment, Labour and Social Affairs. 

The OECD's Anne Lauringson during the 2024 Malmö conference.  

One of the issues investigated in their report is how public employment offices in the Nordic countries help promote an inclusive Nordic common labour market. 

Strong desire for reform

Four of the five Nordic countries are making changes to the way employment offices operate. Norway is the exception.

The Nordic region is not alone in its desire to reform. According to the OECD researchers, two-thirds of OECD countries have reformed their public employment agencies in the past 15 years.

Nearly 20 years ago, Norway initiated its NAV reform – a merger of the National Insurance Service (Trygdeetaten), the National Employment Service (Aetat) and the municipal social services. It has been the largest reform in the field of labour and welfare in recent times, where municipalities and the state cooperate to deliver services to the public. 

No Nordic model

Even though the Nordic clearly get inspiration from each other, the OECD researchers say there is no common Nordic model for employment services.

“Nor is it a goal to have an identical model across the Nordic countries,” points out Anne Lauringson.

Sweden:

• Is moving towards a model with increased use of private actors in employment services
• Aims to make the system more effective and to offer job seekers more choice in service providers.

Denmark:

• Considers following the Swedish model of increased use of external providers.
• Has the same aim as Sweden – to make the system more effective and allow job seekers the freedom to choose their preferred service provider.

Finland:

• Moves responsibility for employment services from the state to municipalities. The reform came into effect at the start of the year.
• Aims to bring services closer to job seekers and employers and make better use of the municipal system for comprehensive support. 

Iceland:

• Is planning a comprehensive revision of the support system for people with reduced work capacity.
• Focuses on improved employment opportunities for people with disabilities and increased support and incentives for seeking and finding work.

The most important drivers for reform are often political, according to the OECD researchers.

"Ongoing evaluations are recommended to identify what works well and what works less well. We also encourage the Nordic countries to share their experiences and examples of good practice in employment services," says Anne Lauringson. 

Use of artificial intelligence in employment services

The OECD’s Ailbhe Brioscú says it is not an altogether surprising trend that employment services worldwide are introducing digital services and trials using artificial intelligence.

She says the use of AI is more widespread in the Nordic employment services than in other OECD countries.

Many Nordic employment services, here represented by Norway, Iceland and Finland, have started using chatbots in frontline services.

Employment services in all the Nordic countries have implemented at least one AI solution:

• Automated job-matching systems that analyse job postings and job seekers’ profiles to improve the recruitment process.  
• AI-based recommendations for skills development, offering tailored training suggestions based on the applicant’s work experience.  
• Chatbots in frontline services.

Information chatbots are the most common tool.

There is still a large untapped potential when it comes to the use of AI, believes Ailbhe Brioscú.

“Nordic employment service providers should work proactively to make sure the digitalisation process supports rather than hinders their work,” she says.

The example “Frida on the frontline”

Norwegian NAV introduced its chatbot Frida back in 2018. She was initially used to deal with questions around parental pay. Since then, Frida’s job has expanded. The chatbot is now part of NAV’s frontline services and can provide answers to general questions about NAV’s services and benefits.

Frida has proven to be an effective and important resource for NAV. She handles the equivalent of 70 to 80 advisors’ worth of daily inquiries at NAV’s Contact Centre.

During the Covid pandemic, she answered 270,000 inquiries in the first few weeks, according to a story in NEMU, NAV’s internal magazine.

Users say Frida usually provides the answers they are looking for, but the importance of face-to-face conversation for more complex issues is not forgotten.

Ethical challenges

Digitalisation does throw up some challenges, however. The use of AI in employment services raises some important ethical issues, especially related to privacy, algorithmic bias and transparency in decision-making, point out the OECD researchers.

They believe more countries should follow Norway’s lead and publish guidelines for the responsible use of AI in the public sector.

The OECD report recommends that the Nordic countries:

• Develop dedicated AI strategies for employment services, with clear objectives and ethical principles.
• Establish systematic evaluation methods to monitor the impact of digital solutions.
• Promote hybrid service models, where AI supports case management, but personal follow-up remains available for those who need it.