Labour market dynamics from a sectoral perspective
Labour market dynamics from a sectoral perspective
Introduction
The Nordic labour markets are undergoing long-term structural changes, marked by declining employment in agriculture, forestry and fisheries, and in industry, alongside growing employment in the service sectors. As shown in Figure 6.1, this shift reflects what has often been described as a transition toward post-industrial economies (Pedersen et al., 2008), a development shared with many other countries (Hurley et al., 2025). In Sweden, for example, manufacturing employment halved between the mid-1980s and early 2020s, while employment in the financial sector tripled (Fredriksson et al., 2023).
Figure 6.1: Change of employment in three main groups of industry sectors, 1960-2024. Source: 1960, 1975, 1990, 2004: Pedersen et al. (2008); 2014, 2024: Nordic Statistics database (2025). Sectoral categorisation: Agriculture, forestry, fisheries corresponds to NACE category A. Industry includes mining, manufacturing, electricity and water, construction (NACE B-F). Services includes trade, logistics, accommodation, business services, public sector, recreation and other service activities (NACE G-S). The three groups are sometimes referred to as primary, secondary and tertiary industries (see e.g. Pedersen et al., 2008). In other similar classifications, mining is often included in primary rather than secondary industries. For the sake of consistency with the historical data from 1960 onwards, we have chosen to include mining in Industry. |
These sectoral changes directly influence both job creation and displacement. Occupations that are easy to automate are declining, and approximately one-third of Nordic jobs have been considered at high risk of automation in the coming decades, although the risk exposure varies considerably between regions (Norlén & Randall, 2020). The introduction of AI further complicates this transformation, and is expected to affect a substantial share of work tasks across occupational groups (Eloundou et al., 2023). Studies show that a majority of employees in Sweden are in occupations that have at least medium AI exposure, while around 25% are in occupations with very high exposure, most of which are knowledge-intensive service jobs (Almega, 2025).
At the same time, rising energy prices, inflation and geopolitical tensions (see Chapter 8) have raised awareness of vulnerabilities linked to dependence on external suppliers of key resources. Recent analyses suggest that Western manufacturers are shifting away from cost-based offshoring of production, in favour of a greater emphasis on local and regional resilience, often described as 'reindustrialisation' (Capgemini, 2025). Draghi (2025) advocates a renewed European industrial strategy to reduce dependence on external suppliers of critical raw materials and digital technologies.
The long-term consequences of these developments remain uncertain. However, they point to drivers of both the continued expansion of service employment, now partly reshaped by AI, and a renewed emphasis on industrial development. These forces may influence the long-standing shift from industrial to service-based labour markets, although not uniformly across regions.
Against this backdrop, this chapter examines sectoral
changes in the Nordic labour market over the past decade, with a particular focus on industry and business services. Is the post-war structural transformation of the Nordic labour market still underway, or have reindustrialisation begun to shape recent developments?
The categorisation of sectors is based on the standardised classification of economic activities in the European Community, abbreviated as NACE. For the analysis in this chapter, six aggregate groups of industry sectors are used: Agriculture, forestry, fisheries (NACE category A); Industry (B, C, D, E, F), including manufacturing, construction, mining and quarrying, and other industry; Trade, logistics, accommodation (G, H, I), including wholesale, retail, transport and accommodation services; Business services (J, K, L, M, N), including ICT, finance and insurance, real estate, professional, scientific, technical, administration and support service activities; Public sector (O, P, Q), including public administration and defence, education, human health and social work activities; Recreation and other service activities (R, S), including arts, entertainment, recreation and other service activities.
To enable analyses of sectors at the regional level, and for the sake of consistency between national and regional data, in this chapter we use register-based regional and national data, unless otherwise noted. For the EU level, only Labour Force Survey (LFS) data is available. For more on register-based and LFS data, see Box 5.1 in chapter 5. Regional sectoral data is not available for the Faroe Islands, Greenland and Iceland. Due to a break in time series of register-based labour market data in Sweden 2020, older values for Sweden have been adjusted to reduce the impact on comparability over time.
In which sectors does the Nordic population work?
The sectoral structure of the Nordic labour markets differs from the EU average in several important ways. The Nordic labour market is characterised by a larger share of employment in the service sectors (both business services and public services), and a smaller share in agriculture, forestry and fisheries, and in industry (Figure 6.2). A common feature across all Nordic countries and territories is a high share of employment in the public sector, especially in education, health and welfare services, where the Nordic countries rank among the highest in the EU. All of the Nordic regions have public-sector employment shares above the EU average of 26% (Eurostat, 2025a).
In contrast, the Nordic countries and territories have lower shares of industrial employment compared to the EU average, especially in manufacturing. However, there are notable differences at the national and regional levels. Agriculture, forestry and fisheries account for a significantly larger share of employment in the Faroe Islands, Greenland, and northern Norway, as well as in a belt of Finnish regions stretching from Ostrobothnia to Kainuu.
With the exception of Åland and Greenland, the share of industry jobs is fairly similar across the Nordic countries, but there are substantial differences at the regional level. Manufacturing is the largest industrial subsector, with the highest employment shares along the Finnish Baltic coast and the inland parts of southern Sweden, while the lowest shares are found in Greenland and, more generally, in the capital regions.
Figure 6.2: Share of employment per sector, 2024. Source: Nordregio calculations based on data from National Statistical Institutes (NSIs) and Eurostat. Reference year: 2024, except Finland and Åland: 2023. Age: 20-64 years, except the Faroe Islands, Greenland and Iceland: all ages. Classification of sectors: NACE Rev. 2.NR bar chart. |
As shown in Figure 6.2, business services account for a relatively large share of total employment in the Nordic Region compared to the EU. However, business services encompass several subsectors with different characteristics, and there is considerable regional variation within the Nordics. The highest levels of employment in business services are found in Denmark, Finland and Sweden, where these jobs are primarily concentrated in the capital regions, followed by other urban regions or regions close to major cities. This concentration in the capital regions is particularly pronounced in high-skill subsectors such as information and communication, financial and insurance activities, and professional, scientific and technical activities.
At the regional level, there is a clear negative relationship between employment in industry and in business services, especially with regard to high-skilled business services. In other words, regions with a higher share of industrial jobs tend to have lower shares of business-service employment, and vice versa.
Labour market skill levels are defined and categorised in Chapter 7.
How has employment in the different sectors changed in the last decade?
Over the ten-year period 2014–2024, total employment in the Nordic countries increased by an average of around 1% per year, a rate close to the EU average (Figure 6.3). At the regional level,
only regions in Finland, including Åland, recorded a decline. Employment growth occurred primarily in service-oriented sectors, especially business services, while employment in agriculture, forestry and fisheries continued to decline across most regions, with the Faroe Islands and parts of Norway being the main exceptions. Public-sector employment increased by about 1% annually – slightly faster than population growth, and marginally above the growth of total employment. Åland diverges from the overall Nordic pattern, with a small decline in public-sector jobs.
Regional data for 2024 was not available at the time of writing. While the national data covers a ten-year period, in most cases the regional data cover a nine-year period (2014–2023). For that reason, change over time is shown as annual average change, which minimises the implications of one missing year.
Figure 6.3: Yearly average change of employment per sector, 2014-2024 (%). Source: Nordregio calculations based on data from National Statistical Institutes (NSIs) and Eurostat. Period: 2014-2024 except Finland and Åland: 2014-2023; Greenland: 2016-2024; Norway 2015-2024. Data for Sweden 2014 has been adjusted to account for the transition in labour market statistics from RAMS to BAS in 2020. Age: 20-64 years, except the Faroe Islands, Greenland and Iceland: all ages. Classification of sectors: NACE Rev. 2. |
Industry
Industry, which comprises manufacturing, construction, utilities and mining, is characterised by a more mixed regional pattern. As shown in Map 6.1, the Faroe Islands, Iceland and Greenland recorded strong industrial employment growth (2–3% annually), and other individual Nordic regions recorded similarly high increases. One example is Västerbotten in Sweden, which saw growth of several thousand jobs in connection with the expansion of the Northvolt battery plant in Skellefteå, prior to the company filing for bankruptcy in 2025. Industrial employment also grew at a pace significantly above national and Nordic averages in the capital regions and surrounding areas, especially in the Copenhagen/Sjælland region and the Oslo/Akershus area.
Overall, industrial employment increased or remained stable in all Danish and Norwegian regions. In contrast, many Swedish and Finnish regions, including Åland, saw slower growth or declines, which reflects the ongoing restructuring of traditional industrial jobs in these areas. In Finland, almost half of all regions experienced declining industrial employment, although a few recorded growth rates slightly above the Nordic average. While most Swedish regions saw moderate annual increases close to the national average (around 0.5–1%), several regions with relatively large numbers of industrial jobs recorded declines during the same period.
It should be noted that the industries described here refer to an aggregate of subsectors that represent the core of industrial and production-related activities in the economy. Although the majority of these jobs are in manufacturing (54% in the Nordic Region as a whole), construction also constitutes a significant share (an average of 37% across the Nordic countries). In some regions, other subsectors dominate, such as the oil industry in Rogaland in Norway, and mining in Swedish Norrbotten and Finnish Lapland. These different subsectoral structures help explain the regional patterns described above.
In general, the total increase in industrial employment across the Nordic countries and territories has been largely driven by construction rather than manufacturing. This pattern holds in all countries and territories except Åland. In fact, manufacturing employment declined in Norway and Sweden over the ten-year period. These changes have affected women and men differently. Overall, employment change in the industrial aggregate was more positive for women than for men, resulting in a rising share of women in an otherwise male-dominated sector.
Map 6.1: Yearly average change in employment in industry, 2014-2023 (%). Source: Nordregio calculations based on data from National Statistical Institutes (NSIs). Industry is defined according to NACE Rev 2., section B, C, D, E, F (manufacturing, mining, quarrying, and other industry, including construction). National level data for the Faroe Islands, Greenland and Iceland. The Faroe Islands and Iceland: 2014-2024; Greenland: 2016-2023. Data for Sweden 2014 has been adjusted to account for the transition in labour market statistics from RAMS to BAS. Age: 20-64 years, except the Faroe Islands, Greenland and Iceland: all ages. Nordic average: 0.8% |
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Business services
Employment in the business services sector has developed more consistently than in the industry sector. It has been the principal driver of employment growth across the Nordic Region during the period. Although 2014–2024 saw rising employment in many economic sectors, business services was the only sector to noticeably increase its share of total employment, rising from 19% in 2014 to 21% in 2024 (public-sector employment has also increased, albeit only marginally, by 0.3 percentage points).
Annual growth rates of 2–3% at the country or territory level were common, with particularly strong expansion in regions close to capitals or in larger cities (Map 6.2). Iceland, Åland and the Faroe Islands also recorded solid growth, as did Västerbotten and several regions in the southern parts of the Nordics, including the capital regions.
Peripheral and rural regions, however, experienced more modest increases – and in some cases, declines. Generally, regions with high business-service employment shares in 2014 tended to increase these shares faster than regions with lower starting points. This reinforced existing patterns and led to further divergence between the regions.
Unlike the industry sector, which saw considerable variation in developments across subsectors, the expansion in business services was relatively consistent across subsectors. From a labour-market perspective, the occupational structures of these subsectors differ significantly. Two-thirds of the total growth in business services occurred in information and communication, and in professional, scientific and technical activities – subsectors characterised by high shares of high-skill occupations (Eurostat, 2025b).
Map 6.2: Yearly average change of employment in business services, 2014-2023 (%). Source: Nordregio calculations based on data from National Statistical Institutes (NSIs). Business services is defined according to NACE Rev 2., sections J, K, L, M, N (information and communication, financial and insurance activities, real estate activities, professional, scientific, technical, administration and support service activities). National level data for the Faroe Islands, Greenland and Iceland. The Faroe Islands and Iceland: 2014-2024; Greenland: 2016-2023. Data for Sweden 2014 has been adjusted to account for the transition in labour market statistics from RAMS to BAS. Age: 20-64 years, except the Faroe Islands, Greenland and Iceland: all ages. Nordic average: 2.3% |
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Discussion
From the sections above, it is clear that the overall development of business services differs from that of industry. However, growth in one sector does not necessarily imply decline in the other. On the contrary, many regions with relatively strong increases in industrial employment also recorded substantial growth in business services, e.g., the capital regions, the Faroe Islands and Västerbotten. As such, while industry and business services follow different trajectories, they do not evolve in isolation. The 'servicification' of manufacturing is making industry increasingly dependent on services (National Board of Trade Sweden, 2016). Business services enable industrial modernisation by supporting digitalisation, automation and organisational change, which partly explains the relatively slower growth or decline of manufacturing jobs up to this point (Fredriksson et al., 2023). At the same time, industry generates demand for financial, ICT, legal and other business services (Arnarson & Gullstrand, 2022). The relationship between business services and industries is therefore highly symbiotic.
These interdependencies are likely to remain central to the competitiveness of the Nordic regions, particularly in the context of the digital transition and the rapid introduction of AI. A 2024 survey indicates that the share of employees using AI at work increased from 12% to 65% in a single year (EY, 2024). Although the overall use of generative AI in the Nordic Region remains below the global average of 75%, according to the same survey, these developments indicate an ongoing transformation of the Nordic labour markets.
Technological change is not just a Nordic concern, but has been highlighted as a major challenge across Europe. Draghi (2025) argues that Europe is experiencing structural rigidity, with low productivity growth explained by factors such as specialisation in mature technologies and weak returns from the first digital revolution (the rise of the internet). However, the increased use of AI does not necessarily imply job loss. AI may also generate new jobs, which suggests that reinstatement rather than displacement of labour may better describe current labour-market adjustments (Lanamäki et al., 2024). Similarly, historical evidence indicates that technological change has created more new jobs than it has displaced (Hurley et al., 2025).
Conclusions
At the Nordic level, employment data suggest that the long-term structural transformation of the labour market, which has been underway since at least the 1960s, is set to continue. Service-oriented activities continue to define the employment landscape, as in the rest of Europe (Hurley et al., 2025). Although the pace of structural change has slowed, employment growth between 2014 and 2024 was driven mainly by the service sector – and by business services in particular. Employment in agriculture, forestry and fisheries continues to decline, with the Faroe Islands being a notable exception. While the number of people employed in industry grew slightly, indicating a degree of reindustrialisation, only business services – and, to a lesser extent, the public sector – increased their shares of total employment in the Nordic Region.
These trends are also visible at the regional level. On the whole, business services grew faster than industry in more than 80% of the Nordic regions, although it is important to nuance this finding. The Faroe Islands and Iceland recorded strong growth in both business services and industry, as did the capital regions and parts of their hinterlands. As part of this restructuring, the share of women in the otherwise male-dominated industry sector has slowly increased. Regions with already high business-service employment tended to grow fastest in this sector, whereas industry showed no corresponding pattern. Growth in industrial employment has been driven mainly by construction rather than manufacturing, while the strongest growth in business services occurred in subsectors with high shares of high-skill occupations.
Given current geoeconomic turbulence and the rapid pace of technological change, the future sectoral composition of the Nordic labour market may change in new ways, and the longer-term implications of those factors remain uncertain. Nevertheless, their regional consequences warrant close monitoring, as employment in industry and business services often responds to different economic and locational drivers. Understanding these dynamics and supporting the conditions that allow regions to adapt to ongoing restructuring will remain essential for policymakers seeking to navigate future labour-market challenges and their regional impacts.
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