Matching in the Swedish labor market has deteriorated after the financial crisis and the Riksbank believes that monetary policy can not do much to improve the situation.
The matching between employers and employees in the Swedish labor market has deteriorated after the financial crisis, and a major reason for this is that the composition of the unemployed changed. The proportion of people with less attachment to the labor has increased – for example younger, older and foreign-born.
writes Christina Håkansson at the Riksbank in an article in the Riksbank’s journal Economic Review.
” The results of the analysis indicate that there are still problems with the matching. It also shows that a large part of the deterioration in the match after the crisis can be explained by changes in the composition of the pool of unemployed, where more and more today is people with weaker ties to the labor market, “she writes .
She notes that since the end of 2009 the number of jobs available in relation to the number of unemployed has risen without the opportunity for the unemployed to find work recovered to the same extent.
One explanation for this is that the strong increase in the labor supply meant that groups that are further from the labor market is now participating in a greater degree than previously. This is seen for example in the Employment Service’s statistics, where the number of unemployed persons belonging to so-called vulnerable groups now make up the majority of the registered unemployed.
Christina Håkansson writes that the Riksbank’s monetary policy can not contribute as much to reducing the proportion of unemployment due to the deterioration of the matching.
“In order for unemployment to fall significantly required other than expansionary monetary policy,” she wrote.
Without such measures, there is a risk that the job market is becoming increasingly divided.
“labor shortage in certain industries and occupations may occur while many people with different / wrong skills are unemployed. In such a situation, there may be a risk that inflationary pressures increase through salary increases while there are free resources on parts of the labor market, “she writes.
Christina Håkansson also point out that the picture of how difficult matching problems varies between different data sources, where it looks worse with data from the Employment Service and better data from SCB.
“While it also there are signs that the match deteriorated after the crisis is the recent development in line with historical relationships. One explanation for the different results is probably due to the sources, although they provide a consistent picture of the unemployment problem, in part, include individuals, “she writes.
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