Although both the Beveridge curve and the matching function indicate that matching efficiency has improved somewhat in recent years, unemployment among foreign-born persons remains high (see Figure 5). Moreover, long-term unemployment among foreign-born persons (which rose sharply during the pandemic) has not recovered but has instead risen again over the past year (see Figure 7).

Figure 7. Unemployed 27 weeks or longer, 15–74 years Per cent of the labour force

An important explanation for the continued high unemployment among foreign-born persons is that labour force participation has increased substantially (see Figure 8).^[12] The fact that labour force participation among foreign-born persons is higher than among Swedish-born persons in the age group 15–74 years is due to the fact that foreign-born persons have a different age distribution, with fewer persons over the age of 65. Persons older than 65 years have on average a low labour force participation rate, which means that the labour force participation rate for Swedish-born persons in the age group 15–74 years is lower than for foreign-born persons. In the age group 25–54 years, the labour force participation rate of those born in Sweden is now 3 percentage points higher than that of those born abroad. In the third quarter of 2024, the labour force participation rate in the 25–54 age group was 93 per cent among those born in Sweden and 90 per cent among those born abroad. Behind this increase are many structural changes in the labour market, such as fiscal reforms that have increased the financial incentives to participate in the labour force.^[13] Examples of such reforms include the earned income tax credit and changes to sickness and unemployment insurances and the old-age pension system. Foreign-born persons have also been affected by targeted reforms aimed at increasing the labour market integration. For example, there was a greater focus on the labour market when the main responsibility for the integration of newly arrived refugees was transferred from the municipalities to the Swedish Public Employment Service in 2011. Many municipalities have also begun to require that people receiving income support should be registered as job-seekers at the Swedish Public Employment Service. Thus, there have been new entrants to the labour force and to the group of jobseekers, which keeps the unemployment rate high.^[14] To some extent, this may also be due to the changes made to Statistics Sweden’s Labour Force Survey (LFS) in January 2021. Since the changes, the LFS seems to capture more unemployed persons than before, especially among the young. Another explanation for the increase in unemployment is that the economic situation has deteriorated, which is also an important explanation for the increase in long-term unemployment.