Sweden is currently reforming its public employment service Arbetsförmedlingen, with the intention of contracting out employment services to independent providers. Alongside this, Arbetsförmedlingen is also undergoing restructuring, resulting in fewer physical locations and greater digitalization of services.
This paper highlights the potential role of the social economy, and in particular, work integration social enterprises, in providing publicly-financed employment services. The study examines the social economy’s current role in employment policies in Sweden, as well as its main features. The challenges facing social economy organizations in becoming providers in Sweden’s contracted-out employment services market, including the legal framework, contracting rules, financial barriers, payment models, and cooperation structures are also discussed. Based on international practices, the paper concludes with recommendations to aid the design and implementation of proposed policy changes in the Swedish context.
Sweden is currently undergoing a significant reform of its public employment service, Arbetsförmedlingen, which includes the contracting out of employment services to independent providers. Concurrently, Arbetsförmedlingen is undergoing restructuring that will result in fewer physical locations and increased digitalization of services. While the objective of the reform is to improve the efficiency and effectiveness of employment services, there are concerns about its impact on vulnerable groups and regions, and potential exclusion from the labor market. This paper explores the potential role of the social economy, particularly work integration social enterprises, in delivering publicly-financed employment services.
The social economy can play an essential role in delivering public employment services, as it has proven to be effective in providing training, job creation, and work integration for individuals who face significant barriers to employment. In Sweden, social economy organizations have a longstanding tradition and are currently receiving significant public funding to support their operations. However, challenges exist in engaging social economy organizations as providers in the contracted-out employment services market. Such challenges include legal framework, contracting rules, financial barriers, payment models, and cooperation structures.
In terms of the legal framework, Sweden’s Public Procurement Act may not provide sufficient flexibility to engage social economy organizations as providers, as the procurement process may prioritize low costs over social impact. Additionally, contracting rules may limit the ability of social economy organizations to participate in the market. Financial barriers, such as the need for significant up-front capital investments, may also pose significant challenges for social economy organizations. Payment models that prioritize outcome-based payments may also not be appropriate for social economy organizations, which may have different objectives than traditional for-profit companies. Finally, cooperation structures may pose challenges to social economy organizations in partnering with other actors in the employment services market.
The social economy and work integration social enterprises can play an important role in delivering publicly-financed employment services in Sweden, particularly for individuals who face significant barriers to employment. However, challenges exist in engaging social economy organizations as providers in the contracted-out employment services market. Policy changes are needed to ensure that social economy organizations can effectively participate in the market and contribute to the delivery of employment services in Sweden. Based on international practices, this paper recommends that policymakers consider establishing a dedicated fund to support social economy organizations, developing a more flexible procurement process that prioritizes social impact, and implementing payment models that take into account the different objectives of social economy organizations.