Stockholm Draws on Past Lessons to Embrace AI Future

Social protections designed for an earlier era of industrial change are helping the Swedish capital cope with the disruption of artificial intelligence.

Kaijia Gu, Rory Heilakka
Kaijia Gu
Partner, Oliver Wyman
As a leader of the City Readiness team, Kaijia Gu collaborates with business leaders, academics, and policymakers to identify ways that cities can transform potential waves of disorder into new opportunities for innovation, in part by tapping into the potential of their diverse networks of people and organizations. She has lived in major cities around the world most of her life including Beijing, Xi’an, Ithaca, Boston, New York, and London, where she currently lives with her family.
Kaijia.Gu@oliverwyman.com
Rory
Principal, Oliver Wyman Forum
Rory is a Principal in Oliver Wyman’s Transportation and Services and Pricing, Sales and Marketing practices, based in New York. He has advised clients on issues ranging from business design and go-to-market strategy to accelerating clients’ use of advanced analytics. As a Fellow for the City Readiness team, Rory collaborates with business leaders, academics, and policymakers to improve global understanding and responses to the disruption and opportunities emerging from the increased application of artificial intelligence. He has worked around the world and lived in various cities including Philadelphia, New York, and Pune, India. In his free time Rory is a competitive squash player, aspiring cook, and home brewer. Rory holds a BA from the University of Pennsylvania.
rory.heilakka@oliverwyman.com

The growth of artificial intelligence raises concerns about job security and inequality in many places, but Stockholm is better prepared than many others for its disruption. A skilled and adaptable workforce gets much of the credit for the Swedish capital’s resilience. It also helps that just 29 percent of the city’s jobs are at risk of being disrupted by AI, according to Oliver Wyman Forum research. Only four of the 105 municipalities in our Global Cities AI Readiness Index – Prague, London, Zurich, and Tel Aviv – claim a lower percentage.

Yet what really sets Stockholm apart is how well it copes with disruption. Sweden’s well-developed safety net, including socialized medicine and extensive job-training programs, help the city and its residents and businesses face the AI future with more confidence than others.

Rarely has that safety net been needed as much as it is today. Unemployment has been rising slowly for nearly two years, reaching 7.2 percent in February, according to Statistics Sweden. That seems certain to rise with the spread of COVID-19, which has infected thousands of Swedes and caused economic activity to slow sharply across Europe.

Sweden’s welfare system has been alleviating worker displacement in industries ranging from automobiles to information technology for decades. The country maintains an array of job security councils established since the 1970s under agreements between employers and unions. They make speedy work of finding new opportunities. Nearly 90 percent of workers are re-employed within a year of being laid-off, second only to Finland among countries surveyed recently by the Organisation for Economic Cooperation and Development. TRR Trygghetsradet, the largest council, says most job seekers find “equivalent or better” employment. Existing skills in areas such as sociology, design, and computer science can be applied to new AI careers, for example as robot personality designers.

The city’s Open Data project makes publicly available a wide range of information – everything from air quality to where to find electric vehicle charging stations – from the region’s 26 municipalities. Dozens of companies are already using the platform to develop or improve their services.

Data-driven initiatives are already having a positive impact around the country. Stockholm’s KTH Royal Institute of Technology, for example, is working with the Massachusetts Institute of Technology to deploy AI and big data in urban planning, including in support of several studies on social segregation and inequality.

Our research also finds that Stockholm offers one of the best environments for high-tech development, with strong property rights and government support for starting new businesses, as well as high quality-of-life indicators and immigration policies that attract global talent. Those factors are a big reason why Stockholm claims the top spot among small cities, and sixth place overall, in our AI Readiness Index. Only Singapore, Auckland, and Copenhagen have more comprehensive legal and statutory frameworks for AI. 

That said, creating a tech-disruption council or advisory board to channel Stockholm’s vision and better execute its plans could enhance AI preparation. The city also needs to attract more global companies and to build out its research institutions to drive continued innovation and growth and match its progressive mindset. Most recently, those research institutions are playing an active role in the fight against the coronavirus. Three research projects at Stockholm’s Karolinska Institute pursuing vaccines and therapies to contain the virus were selected in March by the European Commission for emergency funding. At the KTH Royal Institute of Technology, researchers are developing a new testing method for the virus. And at Stockholm University, chemists are making and delivering hand sanitizer, plastic gloves, face masks, and other medical supplies to local hospitals in need.

With the coronavirus’ potential to create a lasting shift in labor markets and potentially accelerate tech-driven jobs, Stockholm must maintain its bedrock of resiliency – social welfare systems and workforce protections – that has stood the test of time through decades of transition in industries ranging from automobiles to information technology, in order to support its increasingly dependent populations.

It’s unclear how the coronavirus may change the course of the role of AI’s integration into Swedish society. But Stockholm’s legacy of resiliency and strong social safety net can send a message to would-be imitators: You don’t have to reinvent the wheel to prepare for the challenges disruption brings.

Kaijia Gu

Partner, Oliver Wyman

As a leader of the City Readiness team, Kaijia Gu collaborates with business leaders, academics, and policymakers to identify ways that cities can transform potential waves of disorder into new opportunities for innovation, in part by tapping into the potential of their diverse networks of people and organizations. She has lived in major cities around the world most of her life including Beijing, Xi’an, Ithaca, Boston, New York, and London, where she currently lives with her family.

Rory Heilakka

Principal, Oliver Wyman Forum

Rory is a Principal in Oliver Wyman’s Transportation and Services and Pricing, Sales and Marketing practices, based in New York. He has advised clients on issues ranging from business design and go-to-market strategy to accelerating clients’ use of advanced analytics. As a Fellow for the City Readiness team, Rory collaborates with business leaders, academics, and policymakers to improve global understanding and responses to the disruption and opportunities emerging from the increased application of artificial intelligence. He has worked around the world and lived in various cities including Philadelphia, New York, and Pune, India. In his free time Rory is a competitive squash player, aspiring cook, and home brewer. Rory holds a BA from the University of Pennsylvania.