Looking into future developments on the Nordic labour market, we started out this chapter by sketching some basic facts about the Nordic economy, industry sectors, its location and the labour market. Research on economic geography often tells a story of path dependence which means that when new economic sectors are developed they are frequently built upon previous assets, knowledge, skills and networks.

Furthermore, being part of the global economy, the Nordic Region is also impacted by megatrends. The ILO (2017) points to four main megatrends impacting labour markets, namely demographic change, technological change, globalisation and climate change and the green transition, that are also influencing the Nordic Region. For example, two of the key features in the Nordic Region relating to demographic change are urbanisation and the ageing population, with particular strain on those rural areas that face both an increasingly elderly population and lack of labour. Another example is the reduction of CO2 emissions and the green transition, which is a strong driving force for labour market demand and structural change in the industry sector with a strong need for re-skilling, up-skilling and new skills (e.g. Endresen Norrman et al. 2023; Kompetansebehovsutvalget, 2023; Fabricius et al. 2024).

When looking into the future of supply and demand on the Nordic labour market, we have to rely on forecasts based on assumptions developed by experts in a range of fields. In this chapter we have focused on the forecasts developed by CEDEFOP, a European institution for skills development, with the aim of accessing comparable data for the Nordic countries. We have complemented that by looking into national forecasts and forecasts developed by the self-governing territories. In addition, we conducted a survey where stakeholders involved in labour market development and cross-border cooperation shared their views on the future of the Nordic labour market.

The survey, conducted in April, targeted individuals employed in sectors related to the labour market. Individuals were contacted via email based on their organisational affiliations, with the survey distributed through the organisation's info email. Respondents came from all Nordic countries and territories, with the largest number being from Sweden and Norway. The survey results can be found in the appendix, but some intriguing findings merit discussion.

First, despite all respondents being employed in labour market sectors, over 40% were unaware of the vision of the Nordic Council of Ministers and nearly 40% believed the Nordic Region lacked integration. Second, four aspects of the labour market were highlighted as potential benefits of a common labour market: increased job opportunities, reduced unemployment, a higher supply of potential employees and improved skills matching. Notable obstacles included bureaucratic and administrative hurdles (such as tax and social security procedures), language barriers, challenges in coordinating with family commitments and difficulties in finding suitable housing.

When respondents were asked an open question, they echoed similar challenges. While the survey's sample size was limited, it is worth noting that respondents from Finland and Iceland mentioned language barriers more frequently than those from other Nordic countries.

To a large extent, we find that the Nordic countries are facing similar future labour market challenges. The ageing of the population and the ageing of the labour force present a challenge on labour markets across the Nordic Region. It means that fewer people will be entering the workforce and that governments will need to devise other solutions to manage the lack of labour. In Finland, three main avenues present themselves: increase employment levels to +80%, increase immigration of educated labour and decrease demand for workers in the welfare sector (Finnish government, 2023). Similar discussions are taking place in the other Nordic countries. While public discussion around increasing employment focuses on working at older ages, it also addresses the issue of bringing NEETs (individuals Not in Employment, Education or Training) onto the labour market and the potentials of using new technology.

When we look into employment rates across the Nordic Region, we find very high employment rates overall, in line with the Nordic model of high labour market participation, but we also find large local and regional differences. For example, it is in rural areas that we find both the highest and lowest employment rates. To increase employment in various groups (e.g.young, old, native, immigrant) and in a range of territories (urban, rural etc.), it will be important to address those different groups and territories in an appropriate way and by using place-based analyses and solutions to complement universal policies.

Another similar development in the Nordic Region and across the EU is the increasing demand for highly skilled labour. The increase in demand for labour is mainly for those with higher education or medium level education, with the exception of Denmark, where demand for labour with low education is also set to increase. The analysis of future job openings (including both replacements – of which the majority are retirements – and new jobs) indicates that it is highly skilled jobs that will be offered in the future, with the main groups being professionals, technicians and associate professionals. To address those challenges, the education system and measures for re-skilling and up-skilling on the labour market can be expected to play a key role. 

When we look into the labour market sectors where demand is expected to increase, we find a similar pattern across the Nordic Region, with growing demand in the businesses and services and non-market sector, where the welfare sector plays a crucial role. For the common Nordic labour market, the conclusions from those findings may point in different directions. On the one hand, it might be argued that the similarities between the Nordic countries could make it easier to get a job in another Nordic country, while on the other hand the Nordic countries could also be competing for the same labour force. Previous research has shown that those with a higher education have a greater propensity for international migration and that it is more common to migrate in earlier ages. However, it also seems that they have a preference for moving out of the Nordic Region (Pedersen, Røed & Wadensjö, 2008).

Two important messages can be drawn from the results of the survey of stakeholders engaged in the common Nordic labour market and regional development. The first is that the respondents take a positive view of the common Nordic labour market and highlight potential benefits such as increased job opportunities, reduced unemployment, better supply of potential employees and improved skills matching. The second message is that they also think that the common labour market faces many hurdles, with the most frequently noted obstacles including bureaucratic and administrative barriers, mainly relating to tax and social security, language barriers, challenges in coordinating with family commitments and difficulties in finding suitable housing. Those results are in line with several previous studies. To enhance labour market mobility across the Nordic borders, those considerations need to be taken into account.