In 2012, as Nokia’s dominance in the mobile phone market crumbled, thousands of employees in the Finnish city of Oulu faced an uncertain future. Among them were Pasi Leipälä and his co-workers Teemu Vaattovaara, Jyrki Okkonen, and Ville Ylläsjarvi. Until then, they had been part of a stronghold of Nokia’s research and manufacturing. Suddenly, they found themselves facing unemployment.
Communities in crisis
Mass layoffs have long been a painful feature of industrialised economies. They hit sectors that depend on economies of scale, where it’s all or nothing: plants either operate at full tilt or shut down entirely – often in just a few weeks.
And while nationally, large collective dismissals are easy to ignore, making up less than 15% of all firings, the real story unfolds locally, where they can leave an entire community bereft of opportunities. The region of Oulu is a stark example. Between 2008 and 2015, when Nokia faltered, the regional unemployment rate increased by 80%.
Workers laid off en masse often face long-term losses. Even when they find new jobs, wages are frequently lower, as good quality manufacturing jobs are hard to replace. Regions can take years to recover as displaced workers leave the workforce early, move away, or remain jobless. Businesses that once thrived alongside these workers—cafés, shops, local suppliers—suffer too, deepening the economic wounds.
At the mercy of geopolitics
Large plants are often integrated into global supply chains, and vulnerable to the shifting sands of international trade and geopolitics. Today, as countries seek to restructure trading relationships, similar upheavals loom large. The car manufacturer Volkswagen was considering closing several factories in Germany this year, putting thousands of jobs at risk. Only a last-minute deal with unions averted closures until 2030. Industries across OECD countries, from electric battery makers like Northvolt in Sweden, to industrial giants like ThyssenKrupp in steel manufacturing, are in similar situations.
What can be done to cushion the blow? Sometimes companies manage to restructure with public funds, local investors or even employees stepping in, trading lower returns for meaningful community engagement. For instance, Meyer Werft, a shipyard in Germany’s Ems-Achse region, preserved jobs earlier this year through strategic adjustments and fresh funding. However, when a company’s decline is driven by global megatrends rather than a temporary downturn, such efforts may become costly band-aids.
Moving on
The key to resilience lies in breaking free from over-reliance on fragile industries. Birmingham, United Kingdom, provides an important lesson. When MG Rover, the British region’s biggest employer, shut down in 2005, it wiped out over 6 000 jobs overnight, with four time as many endangered in the local supply chain. But years of work by the regional development agency to diversify the local supply chain likely saved 10 000 to 12 000 jobs. However, not all new jobs measured up to the old ones in terms of wages. This highlights another key lesson: the need to continually work to develop emerging manufacturing sectors that can generate new high-quality, jobs to replace those that were lost.
Where possible, it pays dividends to engage with workers before layoffs occur to soften the landing. However, structural change may be sudden, leaving little room to anticipatory adjustments. And while jobs may be available in other places, many workers – and their families – remain deeply rooted in their communities and unwilling, or unable to move on. In such cases locally targeted programmes are essential to help workers transition. For instance, the European Globalisation Adjustment Fund for Displaced Workers (EGF) help workers involved in crisis with at least 200 dismissals move to a new job. This often supports efforts to retrain workers – including the highly skilled ones – to match new opportunities.
Creating a bridge
Pasi Leipälä, Teemu Vaattovaara, Jyrki Okkonen, and Ville Ylläsjarvi found a new future in 2012, with support from Nokia’s Bridge programme. The programme offered displaced workers grants of up to EUR 25 000 and entrepreneurial training, which they used as a springboard to found Haltian, a provider of Internet-of-Things (IoT) solutions for real estate. The venture quickly gained traction, growing to 45 employees within a year. Now Haltian employs 140 workers, mostly at its Oulu headquarters.
The Bridge programme also supported workers in low-skill occupations with job search assistance and training. Partnerships between educational institutions and the City of Oulu—through the Innovation Alliance—helped spark new ideas and businesses. In 2011-12, 114 new startups sprang up in the region. Retaining skilled workers in the region stimulated foreign investments and local job creation. Between 2010 and 2016, eight foreign companies opened new R&D facilities in Oulu and 2 600 ICT jobs were created.
Be prepared
As several OECD countries brace for the next wave of job losses in industry, stories like Haltian’s remind us that mass layoffs, while devastating, can also be a catalyst for renewal. But it pays to be prepared, and navigating such transitions takes careful planning, a clear vision, and strong local leadership.
OECD support for resilient job transitions and regional renewal
The OECD provides actionable policy guidance to support transitions, mitigate local shocks, and rebuild economic vitality. These resources offer insight into job reallocation, active labour market strategies, and place-based interventions to help displaced workers and affected regions move forward.
- OECD Employment Outlook 2025 — examines employment dynamics, job reallocation, and policies enabling resilient and inclusive careers
- Innovative Approaches to Tackle Long‑term Unemployment — highlights promising practices to support vulnerable jobseekers
- Place‑based Policies for Displaced Workers — sets out strategies for local interventions aimed at regions facing worker displacement
Giuseppe Cappellari is a Research Associate and prospective PhD graduate in Economics at the University of Hohenheim, Stuttgart, Germany. His areas of expertise include micro-data analysis, local labour markets, regional development, and local administrative capacity. He holds graduate and undergraduate degrees in Economics from the University of Hohenheim and from Ca’ Foscari University, Venice, Italy. He was an intern at the Institute for Applied Economic Research in Tübingen, Germany, and at the OECD Center for Local Development in Trento, Italy.
Carlo Menon is the Lead of the OECD Spatial Productivity Lab at the OECD Trento Centre. His areas of expertise are micro-data analysis, business dynamics, innovation, regional and urban economics, and policy evaluation. He first joined the OECD in 2011 and also held positions at the Central Bank of Italy and at Laterite, a fast-growing research company operating in East Africa. His research has been published in renowned academic journals, including Economic Policy, Journal of Economic Geography, Industrial and Corporate Change, and World Bank Economic Review. He also co-authored more than 30 policy reports and working papers. His paper on local firm size and civil justice enforcement, co-authored with Silvia Giacomelli, was awarded with the Urban Land Institute Prize for the best paper published in the Journal of Economic Geography in 2017. He holds a PhD from the London School of Economics and Political Science, UK, and graduate and undergraduate degrees in Economics from the Ca’ Foscari University of Venice, Italy.
Wessel is an economist at the OECD Trento Centre for Local Development where he works in the Spatial Productivity Lab on local drivers and determinants of regional productivity ranging from the performance of firms to the functioning of local labour markets. Before joining the OECD, he was an Assistant-Professor at Newcastle University and Research Fellow at Oxford University, UK.