This Country Focus analyses the reasons behind the underperformance of young people and immigrants in the Swedish labour market and identifies policies for Sweden to secure full use of its labour resources.

The performance of the Swedish labour market is generally very good. However, the labour market does not function well for young people without upper-secondary education, for those with non-EU migrant background or for the low-skilled in general. The main elements likely to contribute to low labour market integration of these groups are: a lack of work-based learning, the design of upper-secondary education, strong duality in employment protection legislation, and the generous system of student support. These factors appear to be detrimental to low-skilled people who are prone to being trapped in temporary jobs or recurring periods of unemployment, hindering their permanent establishment in the labour market.