AI subsidies lifted job ads - not employment. What public leaders should do next
AI is changing how firms run. But recent evidence from Sweden shows that more AI funding doesn't automatically mean more jobs.
A government-backed subsidy program helped small and medium-sized businesses invest in AI for the first time. Five years later, funded firms posted more vacancies - especially office jobs - yet total headcount didn't budge.
What the study looked at
Sweden's innovation agency, Vinnova, awarded AI grants from 2019 to 2020. Researchers matched project details with official business registries to track retention, hiring, and separations over time.
They compared firms that received funding to firms that applied but didn't receive it. This creates a practical counterfactual: similar firms, different funding outcomes.
The key findings
- Funded firms were 24 percentage points more likely to post a job vacancy five years after the award.
- Postings shifted toward white-collar roles. Think analysts, developers, and project leads - not manual labor.
- No measurable change in employment levels. More ads didn't turn into more hires.
The likely reason: firms couldn't find qualified candidates. Demand went up. Supply didn't.
Why postings didn't become hires
- Skills mismatch: AI projects demand data, software, and product skills that are still scarce.
- Wage and competition pressures: startups and multinationals often outbid smaller firms.
- Adoption lag: firms post early, then slow down to re-scope projects, tools, and teams.
- Geography and language barriers: local markets may not have the talent depth required.
How this aligns with broader evidence
An International Monetary Fund analysis in January 2026 reported that AI-skill vacancies pay more but haven't lifted overall employment in U.S. local labor markets. The same report estimates roughly 40% of jobs worldwide will be exposed to AI-driven change.
For context, see the IMF's research and commentary: IMF Blog.
Policy moves that convert demand into hires
- Tie subsidies to hires and retention, not just project spend. For example: milestone payments when funded firms onboard and retain talent for 12 months.
- Fund accredited, job-linked training. Pair grants with vouchers for targeted courses, apprenticeships, and on-the-job upskilling.
- Co-fund shared talent solutions. Regional AI fellows, public tech corps, or centralized data engineering support for SMEs.
- Use procurement to create real demand. Offer AI-ready contracts that reward firms employing and training local workers.
- Support fast, fair hiring. Streamline credential recognition, offer relocation assistance, and enable targeted visas where appropriate.
- Back incumbent worker transitions. Pay for reskilling plans that move existing staff into AI-adjacent roles.
- Standardize role templates. Provide clear competency frameworks for AI product, data, and engineering roles to reduce hiring friction.
- Measure outcomes, not intentions. Track vacancy-to-hire rates, time-to-fill, wage changes, retention, and productivity.
A practical checklist for agencies running AI grant programs
- Add "workforce outcomes" as a scored criterion in applications.
- Require partnerships with training providers or universities for any hiring-heavy project.
- Offer bonus funding for firms that hire apprentices or mid-career switchers.
- Publish quarterly dashboards on vacancies, hires, and completion rates for funded projects.
- Reserve a portion of funds for shared services (security, data engineering, MLOps) to reduce solo hiring pressure.
- Pilot wage or retention subsidies for hard-to-fill roles tied to verified skills.
What to watch next
This is one program in one country. Still, it's a clear signal: subsidies can stimulate demand signals without moving employment. The fix is to close the skills and hiring gap directly, not hope the market catches up on its own.
Expect more long-term evaluations linking grants, job ads, hiring, and productivity. Design programs now so the data you need will be there later.
Helpful resources
- Sweden's innovation agency: Vinnova
- Training pathways for role-specific AI skills: Complete AI Training - courses by job
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