This article is originally published in The Atlantic.
In Sweden, employers pay into private funds that retrain workers who lose their jobs. The model makes the whole economy more dynamic.
NORRKÖPING, Sweden—When Beate Autrum first heard that she and hundreds of other employees were getting laid off from the Whirlpool factory where she worked, she was terrified. Autrum, a single mother, had uprooted her whole life to move to Sweden from Germany to work for Whirlpool, and she worried about her immigration status, how she would support her daughter, and whether she’d find a new job again. It was 2014, a tough time to lose a job in this industrial Swedish town, as other companies such as Vitamix and Seco Tools were also laying people off. But minutes after she heard the news about the layoffs, Autrum began hearing something else from colleagues and bosses: Don’t worry, TRR will help you.
TRR, which stands for Trygghetsrådet, is what’s known as a job-security council—a private organization unique to Sweden that helps laid-off workers. Employers pay into these job-security councils, and if they lay employees off, those workers receive financial support and job counseling from the council to help get them back into the workforce as soon as possible. Autrum, for instance, was immediately given a personal counselor, who administered a Myers-Briggs personality test, edited her resume, and helped her figure out what types of jobs she could move onto next. She was offered funds to take classes in her field or other fields, if she thought they would help her find a new job. Whenever she felt down, or doubted her ability to find a new job at age 45, her counselor would reassure her. “I’m so glad that TRR existed,” she told me. “You get this feeling, of aha, this is not the end of the world. There will be a chance for me.” Autrum soon found a job at a company that makes turbines.
The effectiveness of job-security councils could provide a lesson for the U.S., which has long struggled to get people back into the workforce after they lose their jobs, especially in places where jobs have been displaced by automation or trade. Sweden leads the OECD in helping displaced workers find new jobs—over 85 percent of such workers find new jobs within a year, primarily because of these arrangements between employers and social partners, according to a recent OECD report. The job-security councils are more effective than government-administered programs, according to the report, because they intervene immediately after a layoff, and because they have financial resources that public re-employment offices, which also exist in Sweden, can’t provide. They also encourage laid-off workers to have frequent contact with counselors, who encourage them as they seek a new job. They are available only for workers who are members of a union, which is about 70 percent of the Swedish workforce.
No studies provide hard, experimental data as to the effect of job-security councils, but many experts say that they are invaluable, though Sweden’s strong economy also undoubtedly plays a role in workers’ re-employment prospects. And, beyond the question of whether people do find a new job more easily, many people who have received a council’s assistance say that the psychological comfort mattered greatly, and helped them through a hard time.
Job-security councils also help make the economy more dynamic because they make it easier for companies to shed unproductive divisions without union resistance, while helping the workers who lose their jobs as a result of these layoffs to find new work, according to Lars Walter, a professor at the University of Gothenburg who has written a book about job-security councils. In other countries, unions would resist job cuts because they would want to protect their members, he said, in Sweden, unions agree to job cuts because they know workers will be retrained and made more productive. “The idea is that we shouldn’t defend jobs, we should support the worker,” Walter told me.
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