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Sweden's jobless a cash cow for coaching firms

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Sweden's jobless a cash cow for coaching firms
10:42 CEST+02:00
Private sector job coaching firms are earning double-digit profit margins from taxpayer-funded contracts with Sweden's Employment Agency (Arbetsförmedlingen) to help unemployed Swedes back into the workforce.

The agency began outsourcing part of its job coaching work to private firms five years ago, and since then several of the major players have earned profits amounting to a quarter of the state funding they receive.

A review by Sveriges Television (SVT) shows that the agency has used a core group of about 20 companies in the past two years. Many of the firms that have the employment agency as their main or sole client also register profit margins of more than 25 percent.

In other words, one krona out of four is turned into profit.

According to SVT's calculations, the agency has paid its independent contractors 4.7 billion kronor ($72 million) since the initiative to involve private companies began in 2008.

"It sounds high," agency administrative head Jan-Olof Dahlgren told SVT on Wednesday.

One of the oft-used companies is called Personalstrategerna ("staffing strategists"). One of their former employees, Catrin Hedqvist who worked with job seekers going through different kinds of rehabilitation, says the company itself was often understaffed.

"When I worked for them, we were almost never enough people. And we had too many clients that we were responsible for," Hedqvist told SVT.

"We were under a lot of pressure."

Magnus Henrekson, professor at the Stockholm School of Economics (Handelshögskolan), said it was important that the employment agency monitored the performance of its subcontractors.

"The question is, are the buyers keeping on their toes when it comes to making sure they are getting value for money?" he asked SVT.

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