Debate: The new LAS regulations increase the skills shortage and hinder innovation

Last year, the most comprehensive labor law reform in a long time came into effect. The new LAS regulations, which are partly based on an EU directive from 2008, entail significant changes in Swedish labor law. However, it is mainly one particular change that will have serious consequences for Sweden, write Consid’s CEO Peter Hellgren and HR chief Anita Beslic in a debate article in Jönköpings-Posten.

According to an EU directive, customer companies in Sweden who hire consultants for 24 out of 36 months must offer them employment. However, the new Swedish labor law risks seriously damaging the consulting industry. Companies have two options: offer the consultant employment or pay the equivalent of two months’ salary. These options, both jointly and individually, risk causing a significant shortage of expertise in the consulting industry, limiting competitiveness on a global scale, and contributing to skills migration.

The Confederation of Swedish Enterprise’s (Stiftelsen Svenskt näringsliv) recruitment survey shows that seven out of ten companies struggle to recruit personnel, especially in IT and infrastructure. The new regulations may exacerbate the skills crisis by making it more difficult for companies, authorities, and municipalities to hire specialists. This new system will result in significant costs for all parties, particularly for the public sector.

The new labor law regulations aim to “give employees more security,” but this suggests that the parties drafting the law proposal lack knowledge of the IT industry or have completely overlooked it. The consulting industry cannot offer the same opportunities for skills development and further education as IT consulting companies, which is why customer companies rely on consulting firms for their expertise.

The outdated view of the labor market held by labor market parties and policymakers in Brussels and Stockholm is exacerbating the situation. The industry needs clarity on who is covered by the law and what it means so that they can adapt accordingly. The lack of clarity surrounding the law and who it covers will only add to the industry’s challenges. The first legal cases will not be heard until 2025.

Read the full article to understand the impact of the new labor law regulations on the consulting industry in Sweden here.


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