Historic transition package for flexibility, adaptability and security in the labour market

Published

On 27 January 2022 the Government decided on a historic transition package to improve flexibility, adaptability and security in the labour market in the long term. The proposals are based on an agreement between the Government and the Centre Party.

On 27 January 2022 the Government decided on two proposals on a labour law reform and a new career transition assistance scheme to be referred to the Council on Legislation for consideration.

The proposals are based on an agreement between the Government and the Centre Party, stemming from the January Agreement. The proposals are in line with the agreement in principle that the social partners in the private sector had referred to the Government. The social partners’ intention was to take an integrated approach to tackling factors that together can create flexibility, adaptability and security in the labour market. They jointly requested that the Government propose how the agreement in principle should be implemented with regard to employment protection and the associated unemployment insurance issues, and how it should be implemented in line with the social partners’ proposals on a new public organisation for basic transition and skills support and a new and parallel form of publicly financed student finance.

The Government’s proposals include:

Labour law will be reformed, giving employers greater flexibility and better opportunities to adapt skills to operational requirements. Security for employees will be increased through improved predictability in a variety of terms of employment, such as standard working hours and forms of employment. Wider possibilities will be introduced for employers to make exceptions to the order of priority rules and lower costs when terminating employment, whereby exceptions to the order of priority rules will be extended by one person, and the limit on the size of the employer will be removed. The rules on termination of employment on objective grounds will be made clearer so as to increase predictability for employers and employees. Employers will no longer bear wage costs in the event of disputes concerning the validity of termination. Overall, the reform will make it easier for small and growing businesses to recruit staff and employ them on a permanent basis. The balance between different terms of employment will be improved. General fixed-term employment contracts will be replaced by a new form of fixed-term employment contracts that more rapidly transform into indefinite term employment contract – the time period will be halved. In the event of re-regulation of employees’ working hours, employers must follow specific order of priority rules and employees will be entitled to an adjustment period of up to three months. Hiring of temporary staff and full-time work will be regulated.

A new student finance scheme for transition and retraining will be introduced to strengthen employees’ position in the labour market. The scheme will make it significantly easier for people in mid-life and with work experience to undertake further education or training using student finance in the form of grants and loans which, for the vast majority, will be equivalent to at least 80 per cent of their wages. Professionals will be able to study for up to 44 weeks (equivalent to one year) while receiving the new student finance. At a time when society and the labour market are changing increasingly rapidly as a result of the digital transformation, the green transition, etc, it is important that people can develop their skills throughout their working lives through lifelong learning. The new student finance scheme is a reform for the freedom of Sweden’s workers, who will now have new and improved opportunities to strengthen their position in the labour market. Self-employed people will also be eligible for the scheme. Individuals will be able to initiate their own continuing skills development and retraining to strengthen their position in the labour market. This will strengthen the skills supply for employers, boost Sweden’s competitiveness and strengthen individuals’ power over their own lives.

The proposed date of entry into force of these legislative amendments is 30 June 2022.

Additional proposals concerning basic retraining and skills support

The memorandum Grundläggande omställnings- och kompetensstöd – för flexibilitet, omställningsförmåga och trygghet på arbetsmarknaden (‘Basic retraining and skills support – for flexibility, adaptability and security in the labour market’, Ministry Publications Series 2021:16) that was circulated for consultation proposed the introduction of a new basic transition and skills support scheme. The scheme will aim to strengthen the position of individuals in the Swedish labour market. The basic transition and skills support will consist of public basic support for individuals who are not covered by collective agreements, and central government financing of the basic transition and skills support provided by registered transition organisations. The consultation concerning the memorandum has identified a need to supplement certain proposals to make the scheme fit for purpose. The Ministry of Employment has therefore decided that an addendum to the proposal will be circulated for consultation.  

The proposed act on retraining and skills support does not have to be referred to the Council on Legislation. 

Central government costs of the proposals

When the reforms are fully operational (in 2026), the estimated total cost to central government will be around SEK 11 billion annually, taking into account wage trends. The annual cost of the new student finance scheme will vary, as it is partly linked to economic developments. Retraining support will be provided subject to the availability of funds.

Inquiry on collectively agreed unemployment benefits

Acting on a proposal by the social partners, in August 2021 the Government appointed an inquiry tasked with reviewing the conditions for a new form of collectively agreed unemployment benefits. The inquiry is due to submit its final report by 15 December 2024.

Press contact

Yasmin Hussein
Press Secretary to the Minister for Employment and Gender Equality Eva Nordmark
Phone (switchboard) +46 8 405 10 00
Mobile + 46 73 076 73 27
email to Yasmin Hussein
Anja L Sundberg
Press Secretary to the Minister for Education Anna Ekström
Phone (switchboard) +46 8 405 10 00
Mobile +46 76 116 77 45
email to Anja L Sundberg