The COVID-19 pandemic hit the workforce hard during its course. Many were furloughed or lost their jobs. Authorities implemented measures to counteract the negative effects of the pandemic, and the crisis may leave lasting marks on the labour market, as well as on its governance and regulation. Within 2025, Fafo, in collaboration with leading researchers at the University of Gothenburg and Aalborg University, is conducting comparative studies across Scandinavia on the impact of the crisis on the labour market, its institutions, and workers' attitudes towards the implemented measures.
Several questions will be investigated in the project: Which groups lost their jobs and bore the burdens? Were wages as sensitive during the pandemic crisis as they are in good times? And were wage cuts equally common for both collectively and individually negotiated wages?
When we analyse how persistent low-wage status is, we find that around 180,000 people aged 24-66 were permanently low-paid in 2019. That is 1/3 of the low-wage workers in 2019. Some characteristics are typical of the permanently low-paid. Most are women, have immigrant background, have shorter education, to a greater extent work part-time, and to a greater extent work in the private sector and in firms without collective wage agreement.
The shutdown in 2020 did not hit workers randomly. Workers with weak labour market attachment showed the greatest risk of falling out of paid employment. Permanently low-wage workers had a lower (but still significant) risk, and permanently higher-wage workers had the lowest risk. In other words, the economic repercussions of the corona pandemic, like those from more traditional and demand-driven economic crises, did not materialize randomly in the labour market. Those without a solid foothold in the labour market and those who over time linger at the lower end of the wage ladder are also more vulnerable in crises. This shows that periods with frequent recessions and/or lasting recessions can be more detrimental to the wage growth and the labour market activity of low-wage workers, and economic crisis can therefore exacerbate existing inequality.
We also examine how the labour market was adjusted and what role tripartite cooperation played in adapting to the crisis. Government, employers, and trade union organisations collaborated in the 1990s on establishing social pacts, common solutions that ensured coordination between various policy areas, where wage negotiations, fiscal policy, income security, labour market measures, and skills policy were considered together. Since then, tripartite cooperation has continued to play a role, but large collaborative solutions like the solidarity alternative of the 1990s have not occurred. Was it the case that, despite differences in the degree of cooperation before the pandemic crisis, the parties in these three countries were able to create good solutions under great pressure during the pandemic?
In the project, we are also interested in how the crisis affected the institutions, rules, and tools of the labour market. How were existing regulations for job security, unemployment benefits, and job retention changed during the pandemic, and were new arrangements established? To what extent did changes in rules and institutions during the pandemic crisis leave lasting traces in the form of new institutions, rules, or regulations? Did the changes lead to a different distribution profile for securing work and benefits, or have welfare provisions become more universal?
In a paper presented at ILERA 2022, we looked at and compared how so-called job retention schemes—furlough, short-time work, and wage compensation schemes—were changed and introduced in Norway, and to what extent the changes in Norway have similarities with the changes made in Denmark and Sweden.
Preliminary analyses show that a variety of innovative changes were made to existing institutional job retention schemes in Norway. Furlough schemes were changed in familiar ways, but also in new ways. In addition, new mechanisms and solutions were developed due to the pandemic itself and the government's shutdown of businesses. The changes were promoted in close collaboration between employer organisations, worker organisations, and the state, and were largely characterized by cooperation to address common challenges. The changes and new innovative solutions were largely path-dependent, primarily building on the existing furlough scheme. Institutional changes in job retention schemes in Norway did not significantly make the Norwegian schemes more like those in Sweden and Denmark.
In a paper presented at IREC 2023, we looked at whether and how income security for the self-employed changed during the pandemic in the Scandinavian countries. Crises can serve as critical moments, opening for new institutional solutions. Sometimes they can also provide opportunities for actors to push through agendas they have not been able to b
Cooperating with researchers at the universities of Gothenburg and Aalborg, we will compare how the Danish, Norwegian and Swedish labour markets and their governance models tackle and adjust to the consequences of the corona epidemic. Applying a multi-level, multi-method approach, we compare the crisis’ impact, and the policy responses and adjustments to it as it unfolds in time. Scandinavian labour market institutions and actors share many similarities, but regulations differ in important ways as do the national responses to the epidemic. Combining register and survey data, document analyses and qualitative interviews, the project builds on five work packages (WP). The core questions in WP1 and WP2 are how the economic shock affects the pattern of labour mobility, wage sensitivities, and the distribution of employment and earnings. WP3 examines to what extent the Scandinavian capacity for crisis management through coordination of economic policies, wage setting and social policies remains intact, and the role of social dialogue in shaping eventual reforms in labour market policies and institutions. WP4 analyses changes in specific policy instruments and institutions, such as temporary lay-off schemes and employment regulation, and how the adjustment paths are influenced by national differences in the depth of the crisis or the extent of policy concertation. Finally, WP5 studies attitudes and preferences of individuals in different labour market positions, their support for or disapproval of different policy schemes and changes. A research challenge could be the access to central representatives of governments and organized actors in WP3-4, but the research team has longstanding experience in research cooperation with such actors. WP5 requires information from surveys that, provided national funding in Denmark and Sweden, require coordination across countries, but researchers involved in this project have extensive experience with this type of data collections.