The COVID‑19 pandemic had a large impact on the labour markets of OECD countries as a result of widespread public health restrictions and associated dampened economic activity. In response, Nordic Governments, as did others across the OECD, promptly enacted a variety of labour market policy responses to tackle the many new challenges brought about by the pandemic. Nordic labour markets overall have exhibited a fast and strong recovery. However, just like the unequal impact of the crisis, the pace of recovery has not been equally experienced by all groups in the labour market – with some vulnerable groups facing a deeper and more prolonged effect of the crisis.

Governments are looking to learn lessons from the unprecedented measures taken in the context of the COVID‑19 pandemic, as they address the new challenges brought about by the ongoing cost-of-living crisis but also make progress towards labour markets that are more inclusive, sustainable, and resilient to future shocks. The OECD Directorate for Employment, Labour and Social Affairs contributes to these efforts by analysing the impact of COVID‑19 on employment and jobs, examining the labour market and social policy responses taken by countries and by developing policy advice drawing on international good practice.

This report examines the impact of the pandemic on Nordic labour markets and the associated policy responses undertaken by Nordic countries in the areas of unemployment benefits (UB), job retention (JR) schemes, active labour market policies (ALMPs) and skill policies.

Faced with the backdrop of sudden changes in the labour market due to the onset of the COVID‑19 pandemic, Nordic countries were quick to respond through policy interventions across the areas of unemployment benefits, job retention schemes, active labour market policies and skill policies. This chapter provides an overview of the impact of the pandemic on Nordic labour markets and an assessment of the associated policy responses undertaken. Drawing on the key lessons that can be derived from the Nordic crisis response, the chapter also provides a set of key recommendations in each policy area to enable Nordic countries to build more inclusive and resilient labour markets in the post-pandemic period.

This chapter describes the labour market impact of the COVID‑19 crisis in Nordic countries from an international perspective. As in most OECD countries, Nordic countries experienced a fast recovery of their labour markets. At the height of the crisis, unemployment rates increased more in Nordic countries than in many other European countries, but the increases were generally not more persistent. The contraction in employment rates in Nordic countries was similar to that of other European countries and generally short-lived. Nordic countries, however, exhibited varying degrees of resilience – with Sweden and Iceland experiencing slower recoveries. The differential impact of the crisis across industries translated into an unequal impact on groups of workers. Thanks to the robust recovery, much of the unequal impact had been reabsorbed by early 2022. Nevertheless, young people and workers without tertiary education felt the effects of the crisis more strongly and for longer across all Nordic countries.

Job retention schemes and unemployment benefits have been the key policies used in the Nordic countries and across the OECD more broadly to enhance labour market resilience and contain the increase in inequality during the COVID‑19 crisis. By supporting workers’ jobs and incomes, the schemes have preserved productive capacity and supported aggregate demand, laying the foundations for a strong recovery. This chapter offers a comparative overview of the structure of unemployment benefit systems and job retention schemes in Nordic countries and how they were adjusted to deal with the specific challenges of the COVID‑19 crisis.

Active labour market policies (ALMPs) and Public Employment Services (PES) have an essential role in assisting jobseekers and people at risk of losing their job on their journey back to quality employment and helping employers in finding employees with the right skills. In times of crisis, this role becomes particularly acute. This chapter explores the contribution of PES and ALMPs to the Nordic labour market policy response to the COVID-19 pandemic. First, an overview is provided of trends in the reliance on PES by jobseekers and public expenditure on ALMPs in Nordic and OECD countries. Second, the chapter describes how Nordic countries altered PES operating models and adapted their ALMP provision during the COVID‑19 crisis and the recovery. Institutional set-up of Nordic ALMP provision is then examined, including the role played by social partners. Finally, it highlights the importance of evaluating the effectiveness of ALMPs and tools used by PES.

Skills shortages are one of the most pressing issues for long-term resilience in the Nordic countries. The COVID 19 crisis highlighted the challenges faced by otherwise high-performing skill development systems in adapting quickly to sudden changes in the labour market. Lessons can be learned from the adjustments countries made during the pandemic to improve their responsiveness to changes in skills demand and supply and to strengthen skills matching in the long term. This chapter provides an overview of the demand for and supply of skills in the Nordic countries, their adult education and training systems and patterns of participation in training. It then discusses the measures taken in the context of the pandemic, namely: i) the mechanisms used to stimulate demand for training and their impact; ii) the support provided to ensure training supply and take-up; and iii) the role of the social partners as negotiators, advisers, and decision-makers.