Regional labour flows between manufacturing and business services: Reciprocal integration and uneven geography

This article uses Statistics Sweden’s full-population geo-coded register data for Swedish workers and their labour market moves, between 2010 and 2014, to analyse regional flow patterns of employees between manufacturing, general business services and knowledge-intensive business services (KIBS). The findings generally show that labour flows between manufacturing and services have important bi-directional features, even with manufacturing generally declining. There is no staff exodus from manufacturing to services, but rather an exchange suggesting skill interdependencies, especially between high-tech manufacturing and KIBS. However, there are strong geographical dimensions to this, emphasising a reinforcement of the spatial division of labour patterns. In trend terms, the decline of manufacturing is rather similar across all regional types; however, business services are growing much faster in metropolitan regions. The labour flow between manufacturing and KIBS is more likely in metropolitan regions, but far more often additionally involves geographical mobility, either between or towards the metropolitan regions. Thus, the major challenge facing less dense and peripheral regions is not necessarily the decline of manufacturing per se, but that (a) the low levels of transition into business services are insufficient to make up for employment losses in manufacturing and (b) the fact that there is considerable out-migration of experienced and skilled workers from manufacturing, who are joining the growing numbers of business services in metropolitan regions.