Four of the five Nordic countries reviewed in this policy brief are reforming their systems of Active Labour Market Policies (ALMPs). Continuous improvement processes in these systems take place in parallel in all five countries (Denmark, Finland, Iceland, Norway and Sweden).
Reforms across OECD countries, including the Nordic region, are increasingly guided by evidence on ALMP effectiveness and efficiency.
All Nordic Public Employment Services (PES) now operate blended models of service delivery (encompassing both in-person and remote channels) and have undertaken significant digital advancements in recent years, including by enhancing their service delivery through the adoption of AI technologies.
Co‑operation between Nordic PES takes place at the local (border regions), Nordic and international levels. These co‑operation channels support the functioning of the Nordic common labour market, as well as facilitate mutual learning and knowledge exchange across Nordic countries.
This policy brief puts forward policy options for the Nordic PES to further support a more inclusive common Nordic labour market, including by: systematically implementing evidence‑based continuous improvement processes as a default way to strengthen and modernise ALMP provision; continuing to develop and promote digital services, while ensuring that in-person support remains available for those who need it most; and strengthening joint initiatives by the Nordic PES to address common labour market challenges.
Reforms, modernisation and co-operation of Public Employment Services to promote an inclusive Nordic common labour market
This policy brief summarises the key findings of the OECD report The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market (OECD, 2025[1]), which explores how reforms of PES and ALMP systems in the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) contribute to the common Nordic labour market. The common Nordic labour market agreement was signed in 1954 to foster integration and co‑operation among Nordic countries in terms of employment and mobility (The Nordic Council and the Nordic Council of Ministers, 2019[2]). This agreement facilitates Nordic nationals to freely take up employment and establish residence in another Nordic country.
This policy brief examines current PES reforms, trends in PES modernisation and digitalisation among the Nordic countries, and co‑operation practices between Nordic PES. The policy brief presents a number of recommendations on how the Nordic PES can further strengthen and enhance their work to promote an inclusive common Nordic labour market.
Labour market shocks and megatrends, such as ageing, globalisation, and the green and digital transitions have significant implications for the Nordic common labour market as a whole, the individual labour markets and the role of ALMPs and PES (OECD, 2023[3]). PES are called to serve a more diverse set of clients, identify and anticipate changes in skill needs, enhance jobseekers’ employability, prevent unemployment and support displaced workers, and support marginalised and vulnerable groups. At the same time, tight budgets call for ever more effective and efficient use of resources and stronger accountability frameworks.
Four of the five Nordic countries studied in this policy brief are undergoing a reform in their ALMP system to better tackle labour market trends and challenges. The reform in Sweden has moved towards more contracted-out employment services (OECD, 2023[4]; Egebark et al., 2024[5]) and Denmark is likely to follow to increase efficiency of their systems and give jobseekers the freedom to choose their preferred service provider (Ekspertgruppe for fremtidens beskæftigelsesindsats, 2024[6]). Finland is decentralising its ALMP implementation to the local level to bring services closer to jobseekers and employers and better utilise the municipal ecosystem to provide comprehensive support (OECD, 2023[7]; MEAE, 2023[8]). Iceland is planning to improve employment opportunities for people with disabilities, thoroughly revising all key pillars of supporting and incentivising people with reduced work ability to look for and find employment (Social Insurance Administration, 2024[9]). The only OECD Nordic country not going through a reform process is Norway which had an overhaul of its ALMP system in 2006, merging employment services, benefits and many other related functions into a single agency NAV (Duell, Singh and Tergeist, 2009[10]).
Besides the occasional major reforms, ALMP services, measures, and the organisation of ALMP delivery are going through a continuous improvement process in all Nordic countries. ALMPs are constantly adjusted to better align with the labour market needs and policy priorities, and new ALMPs are designed to tackle newly identified challenges (Table 1). For example, while Norway is not reforming its ALMP system, its government published a white paper on ALMP provision in September 2024, aiming to increase employment rate by adjusting a wide range of ALMP services and measures, as well as PES approaches, in addition to making other changes in economic, employment and welfare policies (Regjeringen, 2024[11]). The Swedish PES has developed one of the most extensive approaches among Nordic and OECD countries to support the green transition (Lauringson, Pantelaiou and Westlake, forthcoming[12]).
Main recent and upcoming changes in the Nordic ALMP systems, either via reforms or continuous improvement processes
Source: OECD (2025[1]), The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market, https://doi.org/10.1787/54cec4d6-en.
The ALMP reforms and changes in the Nordic countries have been inspired by good practices in other Nordic countries and mutual learning from each other has continued throughout the reform processes. Furthermore, the reform designs have been guided by evidence, with a dedicated expert committee to help the authorities to prepare the reform in Denmark and piloting the new ALMP delivery models in Finland and Sweden. More evidence on the performance of institutional set-ups of ALMP provision could lead to even more informed reforms in the future. Hence, the ongoing and planned reforms should be thoroughly monitored and evaluated to provide lessons on good (and bad) practices to other countries, particularly those in the Nordic region. Tighter co‑operation and sharing best practices within the region should be maintained and further complemented by mutual exchange of good practices with countries beyond the region.
Addressing the Nordic common labour market is not part of the ongoing and planned reforms in the ALMP systems or revisions to ALMP packages. Nevertheless, there will still be some impact on the common labour market, as the reforms are likely to have an impact on the labour market situation and attractiveness in individual countries. For example, the performance of the ALMP systems is likely to have an effect on the success of addressing short-term labour market shocks, as well as megatrends like digitalisation, greening and ageing. The Nordic countries need to be mindful about the possibilities for co‑operation in achieving an inclusive labour market for the Nordic citizens, as well as attracting talent beyond the region, even if such efforts do not need to be part of the ALMP reform agendas.
All PES in the Nordic region now operate blended models of service delivery (Table 2). While variation exists, overall the availability of digital PES services for both jobseekers and employers is well developed in the Nordic countries and in most cases is more prevalent than across the OECD on average.
Channels used for the provision of job-search support and counselling by country
Note: This figure is based on information from 39 PES in 38 countries, with information from two responding sub-national Belgian PES reported separately.
Source: OECD (OECD, 2025[1]), The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market, https://doi.org/10.1787/54cec4d6-en.
All Nordic PES have undertaken significant digital advancements in recent years. Notable examples include the deployment of a new customer relationship management (CRM) system for PES staff in Finland (with widespread implications for services, including profiling, monitoring job-search activity of clients and targeting of ALMPs), the new PES operational IT system Galdur (or magic) in Iceland enabling more modern and data-driven processes and services, the gradual transition from legacy systems to more modern architecture in Sweden (including several AI solutions) and the modernisation of the case handling process in Norway.
All Nordic PES now have at least one AI solution in place, compared to one‑in-two PES in OECD countries (Brioscú et al., 2024[13]). Finland, Norway and Sweden are the front-runners in this domain in the Nordics, each having several AI solutions already deployed. While AI presents many opportunities for PES, these technologies also bring with them a number of risks that require proactive mitigation. Here, the Norwegian PES (NAV) has recently developed a dedicated AI strategy, following discussions and input from across the organisation, which establishes, among other things, a set of principles to ensure responsible use of AI within the PES.
Co‑operation between Nordic PES takes place at the local (border regions), Nordic and international levels. In cross-border regions, this co‑operation between Nordic PES involves the co‑ordinated provision of support and information to jobseekers and employers considering taking up employment or recruiting across a Nordic border. This is done through PES involvement in dedicated cross-border information services located in key border regions. These cross-border information services played a crucial role during the COVID‑19 pandemic, due to their unique positioning. However, in their day-to-day operations, they face a number of challenges, including due to a lack of sufficient and timely data and statistics, particularly on cross-border mobility trends (both migration and commuting).
At the Nordic level, Nordic PES co‑operate through high-level committees, including the Nordic Labour Market Committee established to implement the common Nordic labour market agreement (The Nordic Council and the Nordic Council of Ministers, 2019[2]; Lundgren et al., 2024[14]), and other ad hoc initiatives to foster knowledge exchange, including staff exchanges and study visits. Nordic PES also participate in a number of initiatives organised at the European level (e.g. EURES), that have spin-off effects for Nordic co‑operation.
Overall, these various channels contribute to close co‑operation and awareness between Nordic PES. However, co‑operation between Nordic PES on specific technical topics (such as digitalisation and AI) and on joint actions or strategies, including those to address common challenges such as labour shortages or the green transition, has not yet been developed. Furthermore, beyond information exchanged and gathered through various groups and committees, systematic data exchange of any kind to support this co‑ordination between Nordic PES does not exist.
Implement continuous improvement processes throughout PES activities as a default way to strengthen and modernise ALMP provision, and keep up with the changing labour market needs, technological change and changes in PES environment and ecosystem more generally.
Apply comprehensive approaches to on-going and planned ALMP reforms to balance prerequisites for bottom-up innovation and ensuring good unfragmented services across the country. Key frameworks to implement these approaches will need to include agreed co‑operation and co‑ordination models, strong accountability frameworks supported by benchmarking and identification of best practices, clear strategies to ensure sufficient capacity across service providers, and efficient data exchange within the ecosystem.
Move from politically motivated reforms to evidence‑driven reforms by collecting evidence before launching reforms, piloting changes to fine‑tune reform design, designing monitoring and ex-post evaluation frameworks already during the design phase of reforms, and ensuring sufficient funding for evaluation.
Continue to offer and promote a hybrid operating model combining both digital and in-person services, providing flexibility for clients and ensuring that in-person support remains available for those who need it most (including vulnerable groups and those with limited digital skills).
Develop dedicated AI strategies (potentially as part of wider digitalisation strategies) to set out the objectives and principles for AI use within the PES, establishing accountability for AI systems and promoting transparency and explainability.
Establish systematic and comprehensive approaches to monitor and evaluate digital solutions, including formal evidence generation on their impacts (such as counterfactual impact evaluations).
Consider formalising the co‑operation between the Nordic PES in the future to strengthen exchanges on topics particularly relevant to the Nordic labour markets and good practices that are more likely transferable, while continuing exchanges on good practices of ALMP provision with countries beyond the Nordic region to enrich the evidence available for continuous improvement processes and reforms.
Enhance Nordic co‑operation on an expert level, including on topics such as digitalisation, AI and legal topics, and on common challenges (e.g. skills shortages and the twin green and digital transitions).
Strengthen joint initiatives by PES, including in the border regions, to relieve skill shortages, such as dedicated talent attraction campaigns, co‑ordination of Memorandums of Understanding with origin countries, and developing joint Skill Mobility Partnerships (SMPs) in line with long-term goals for securing skills and improving co‑operation with third countries.
Explore legislative options to facilitate third country nationals to commute across Nordic borders.
References
[13] Brioscú, A. et al. (2024), “A new dawn for public employment services: Service delivery in the age of artificial intelligence”, OECD Artificial Intelligence Papers, No. 19, OECD Publishing, Paris, https://doi.org/10.1787/5dc3eb8e-en.
[10] Duell, N., S. Singh and P. Tergeist (2009), “Activation Policies in Norway”, OECD Social, Employment and Migration Working Papers, No. 78, OECD Publishing, Paris, https://doi.org/10.1787/226388712174.
[5] Egebark, J. et al. (2024), En effektutvärdering av arbetsförmedling med fristående leverantörer, IFAU, https://www.ifau.se/Forskning/Publikationer/Rapporter/2024/en-effektutvardering-av-arbetsformedling-med-fristaende-leverantorer/.
[6] Ekspertgruppe for fremtidens beskæftigelsesindsats (2024), Anbefalinger til fremtidens beskæftigelsesindsats, Beskæftigelsesministeriet, https://xn--fremtidensbeskftigelsesindsats-0uc.dk/media/zxbnsxyy/bm-full_report.pdf.
[12] Lauringson, A., I. Pantelaiou and E. Westlake (forthcoming), “The pivotal role of active labour market policies and public employment services in the green transition”, OECD Social, Employment and Migration Working Papers, OECD Publishing, Paris.
[14] Lundgren, A. et al. (2024), The Common Nordic Labour Market 70 Years and Beyond, Nordregio, https://doi.org/10.6027/r2024:14.1403-2503.
[8] MEAE (2023), Acts on the transfer of TE services to municipalities have been approved, https://tem.fi/en/-/acts-on-the-transfer-of-te-services-to-municipalities-have-been-approved.
[1] OECD (2025), The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market, Connecting People with Jobs, OECD Publishing, Paris, https://doi.org/10.1787/54cec4d6-en.
[7] OECD (2023), Evaluation of Active Labour Market Policies in Finland, Connecting People with Jobs, OECD Publishing, Paris, https://doi.org/10.1787/115b186e-en.
[3] OECD (2023), Nordic Lessons for an Inclusive Recovery? Responses to the Impact of COVID-19 on the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/2aa7bcc1-en.
[4] OECD (2023), Note on the design of the compensation model for contracted service providers, https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/employment-services/sweden/Note-on-the-design-of-the-compensation-model-for-contracted-service-providers.pdf.
[11] Regjeringen (2024), En forsterket arbeidslinje— – flere i jobb og færre på trygd. Meld. St. 33 (2023–2024), https://www.regjeringen.no/no/dokumenter/meld.-st.-33-20232024/id3052167/?q=aktiv%20arbeidsmarkedspolitikk&ch=1#match_0.
[9] Social Insurance Administration (2024), Amendments to the invalidity pension system approved by parliament, https://island.is/en/o/social-insurance-administration/news/amendments-to-the-invalidity-pension-system-approved-by-parliament.
[2] The Nordic Council and the Nordic Council of Ministers (2019), Agreement Concerning a Common Nordic Labour Market, https://www.norden.org/en/treaties-and-agreements/agreement-concerning-common-nordic-labour-market (accessed on 1 October 2024).
Read the full report:
OECD (2025), The Role of Public Employment Services in Promoting an Inclusive Nordic Common Labour Market, Connecting People with Jobs, OECD Publishing, Paris, https://doi.org/10.1787/54cec4d6-en.
See more OECD work on employment services:
Contact
Mark Pearson (✉ mark.pearson@oecd.org)
Theodora Xenogiani (✉ theodora.xenogiani@oecd.org)
Anne Lauringson (✉ anne.lauringson@oecd.org)
Ailbhe Brioscú (✉ ailbhe.brioscu@oecd.org)
The financial support provided by the Nordic Council of Ministers for this work is gratefully acknowledged.
