Recent large investments in northern Sweden connected to the green transition – primarily within mining and manufacturing (fossil-free steel, batteries) – have led to substantial increases in local demand for labour. In a territory with low unemployment and a decreasing labour supply due to ageing and a history of net outmigration, there is a substantial risk that this increased labour demand will, particularly in the short term, draw at least to some extent from the public sector.
Against this backdrop, the chapter examines the dynamic effects of employment expansion in the mining and manufacturing industries on public sector employment in northern Sweden during the period 1990–2019. It also analyses which factors affect the probability of a worker leaving the public sector for a job in manufacturing or mining.
Our results suggest that the expansion of manufacturing and, in particular, mining has a negative short-term effect on public sector employment. The largest effect is attributable to poaching from public administration, with education and health less affected. Assuming a linear trend based on previous labour market interdependencies, a three standard deviation increase in mining (about 2,700 new jobs) and manufacturing (about 10,800 new jobs) could potentially lead to 8% of the current public administration workforce being poached. The results also indicate that younger individuals, low- and high-income earners, and those highly educated in the social or technical sciences are the most likely to leave the public sector. In the longer perspective, these vacancies go on to be filled by skilled but inexperienced workers.
A number of policy implications arise from the above findings. First, given the regional dimension of job mobility, policy-makers should consider how large investments influence the other parts of a regional economy, rather than simply attending to the immediate demands of focal industries. Second, while the poaching of public sector employees will inevitably occur, the functioning of the public sector also hinges on the supply of workers entering the labour market. There is therefore a pressing need to bolster the status of key public sector jobs and improve working conditions, thereby ensuring they are regarded as viable career opportunities when mining and manufacturing expands. The public sector should also ensure that it is in a position to attract and retain workers crowded out of the mining and manufacturing in the event of future rationalisation. Third, general policy interventions may not serve local needs, especially the spatial mismatch of available jobs and supply of workers. Support for relocation tailored to local demands is therefore crucial.
Nordregio , 2024. p. 179-210