1. Introduction

The common Nordic labour market was formalised by an agreement in 1954 between the Nordic countries and celebrates 70 years in 2024. However, the Nordic countries were at the vanguard of facilitating free movement of labour already before. The common Nordic labour market stands out as unique for the duration of its existence and the degree of freedom it offers to its citizens, “for a long time the Nordic countries have constituted a region without any significant institutional barrier to labour mobility across national borders.” (Pedersen & Røed, 2008, p 20).

The common Nordic labour market serves two main purposes; it enables people to search for jobs on a wider labour market which may reduce unemployment and improve income prospects in the long term, and from a social perspective, it may reduce the negative impacts of economic cycles by attracting labour from a larger region during an upswing and reducing unemployment during a downturn (see e.g. Pedersen and Wadensjö, 2008). This implies that over time Nordic labour market mobility has fluctuated, mainly influenced by country-specific economic cycles, such as during 1960-1970s when Sweden received many migrants, especially from Finland. 

While migration between the Nordic countries has been fairly stable at low levels since the 1990s, international migration has increased. However, Nordic labour market mobility also involves commuting across national borders and working remotely has increased, especially after the pandemic. Despite that cross-border labour market mobility plays an important role in specific cross-border regions and local areas such as the Greater Copenhagen area and the Swedish-Norwegian border, helping to recruit staff to key economic sectors and maintaining public and private sector services, cross-border commuting in the Nordic Region is less common than European average (Lundgren & Wøien Meijer, 2022). 

Those figures may be an indication that the common Nordic labour market is not running as smoothly as may be perceived, and a sign of many practical and administrative obstacles still remaining.

“Border database”, for example, provides a list of known cross-border obstacles between the Nordic countries: https://www.norden.org/en/border-database.

However, they could also be a sign of the high standard of living and quality of life that is found in all Nordic countries. That may imply that there are simply no major pull or push factors prompting people to move or apply for a job in a neighbouring Nordic country. A third explanation could be that other destinations are more popular. The European Economic Community (EEC) also identified the free movement of labour as a key element of the Treaty of Rome, with Denmark entering the EEC in 1973, followed by Sweden and Finland entering the European Union in 1995, Iceland and Norway becoming members of the European Economic Area (EEA) in 1994. In addition, the Nordic countries are also part of the Schengen Agreement.

Greenland and the Faroe Islands are not part of the EU. Further, Greenland, the Faroe Islands and Svalbard do not belong to Schengen, which means that special rules may apply to living and working in those areas (https://www.norden.org/sv/info-norden).

That means citizens in the Nordic countries can benefit from free mobility not only in the Nordic Region, but also on the European labour market.

The Nordic Council of Ministers adopted a vision in 2019 to become the most sustainable and integrated region in the world by 2030. The common labour market can be expected to play a role in accomplishing the vision of the Nordic Council of Ministers. Recent years have seen an increasing lack of labour in various industry sectors, including a lack of healthcare workers in the public sector. Estimates indicate that demand for labour will continue in the future. Given the long tradition of mobility between the Nordic countries, it is pertinent to ask whether the common Nordic labour market can contribute to addressing the current and foreseen lack of labour, and if so how? 

This report aims to shed light on development of the common Nordic labour market in the past 70 years and also look ahead to its potential. The focus is on labour migration and commuting between the Nordic countries. However, working in multiple countries or working remotely – which has become more common after the pandemic – will also be discussed.

In the first section of the report, we look back on how the common Nordic labour market has evolved over the past 70 years. We delve into the figures on migration and commuting and changes over time in the various countries and territories. Further, we discuss the role of the common agreement on Nordic cooperation and labour market mobility in the Nordic Region. In the second section, we start by looking into statistics on current and forecast supply and demand for labour in the various countries and self-governing territories of the Nordic Region, and discuss the potentials for a more integrated Nordic labour market. The third section of the report is based on the two earlier chapters, as well as the results of a survey of stakeholders and findings from interviews. In this final section we draw a number of conclusions from the previous 70 years and present some prospects for a more integrated Nordic labour market.

We will use an economic approach to labour migration focussing on movements and resettlements in geographical locations primarily motivated by labour market considerations. In the literature of geographical mobility, three topics are usually at focus; driving forces for migration, implications of migration and performance of migrants in the labour market of the host country (Borjas, 2014; Borjas & Chiswick, 2019; De Haas et al., 2019). 

The main methods used are desktop literature and document studies and descriptive statistics. The literature includes both grey literature, of which many publications from the Nordic Council of Ministers, and research literature pertaining to the topic. The descriptive statistics is to a large extent based on the statistics provided by the national statistical offices and the Nordic Statistics database. 

The second part of the report which is looking towards the future is mainly based on descriptive statistics from CEDEFOP (The European Centre for the Development of Vocational Training). It is also based on a survey to stakeholders who are engaged in the Nordic labour market and cross-border mobility conducted in March 2024 and five interviews with labour market experts in the Nordic countries (March-April 2024).

In the current report we will use several terms which are significant to our understanding of mobility across the Nordic Region and are the basis of our statistical analysis.

Cross-border Commuting – This concept refers to people who have their residence in one country but their workplace in another. Cross-border commuting usually implies that people more or less regularly move back and forth between the workplace and their home. Opportunities for long-distance work improved since the Covid-19 pandemic, so that physical visits at the workplace are potentially required at a less frequent scale than previously.

Emigration flows – Emigration refers to the process of moving away from one country to take up residence in another. Emigration flows measure the number of people who emigrate during a specific period of time (usually a year) regardless of the place where they were born.

Immigration flows – Immigration refers to the number of people who move to a country from abroad to establish residence there. Immigration flows measure the number of people to immigrate during a specific period of time (usually a year) regardless of the place where they were born.

International migration – The movement of people across country borders with the purpose of taking up residence in the receiving country.

Migrant stocks – The number of migrants living in a country at a specific point in time. Migrants are defined as people who have migrated to their current country of residence.

Nordic migration – The movement of people between the Nordic countries and autonomous territories.

Nordic migrants – Nordic migrants are defined as people who were born in one Nordic country but have taken up residence in another one for the purposes of work, study or family reunification.

Working age population – In our study it refers to those aged 15 to 64. Working age population measures the share of the working age population in the total population.

The common Nordic labour market is a wide topic that can be approached from different perspectives and by using different methods. In this section we discuss a few limitations.

The literature search conducted has been focusing on research literature and grey literature on the common Nordic labour market and topics related to this issue. To a large extent the snowball principle has been used in searching for literature, using Scopus and Google scholar and references from existing literature. It should however be acknowledged, that a more focused and systematic literature review has not been conducted within the limited time of the project (2023-2024). The literature consulted in this project is mostly written in English and Swedish. Publications written in the other Nordic languages could not be systematically taken into account.

The survey conducted within the project was sent out to stakeholders engaged in the common Nordic labour market in March 2024, with the aim to increase knowledge about what is perceived as the main hurdles for the further development of the common Nordic labour market. The survey questions were developed by the research team with input from labour market experts and it was sent out to key stakeholders for further dissemination in their networks. This means that we do not know the exact number of recipients and hence cannot calculate a response rate. Nevertheless, the survey had 62 respondents representing a fairly equal distribution from the Nordic countries (See appendix 5), and we can draw  certain conclusions from these results which are presented further on in the report. To complement the survey and gain more indepth knowledge about the developments in the individual countries, five interviews with experts on labour market (See appendix 3).

The lack of comparable statistics regarding migration and especially commuting flows across the borders in the Nordic Region has been identified as a problem (e.g. Nordiska Ministerrådet 2019; Brun et al. 2021). Data on Nordic migration flows and stocks is available but does not usually provide detailed information about migrants’ education, labour market status or area of economic activity for the each Nordic country of origin.  Furthermore, an effect of the freedom of movement between the Nordic countries is that it makes it difficult to know the motivation of people moving or commuting, compared to international migration when a work permit is needed. While some improvements have been made with regard to sharing comparable data and statistics across the national borders, several obstacles relating to cross-border statistics remain (Brun et al. 2021; Nordic Council of Ministers, 2022; Antilla et al. 2023).

While CEDEFOP provides extensive cross-national forecasts of skill and labor demand, it operates under certain assumptions regarding factors such as changes in population size, sector and industry expansions, and educational enrollment. These assumptions involve projections about the future that are based on estimations. It's important to note that readers should focus on overall trends rather than placing significant emphasis on specific numbers. Furthermore, since 2015, concerns about confidentiality have resulted in substantial restrictions on the level of detail available to researchers from the Eurostat Labour Force Survey. As a result, information on occupations (ISCO) and education (ISCED) classifications is aggregated. Additionally, although subject matter specialists from individual countries participate in peer review and validation processes, the use of standardized models and assumptions may restrict the incorporation of localized data and contextual factors.