Long-term unemployment: Denmark has a lead position in the EU

Available in Greece are twice as likely to end up in long-term unemployment as unemployed here in the country. An analysis from the Labour movement Erhvervsråd (AE-Council) based on figures from march 2019 shows that Denmark has the lowest share of long-term unemployed in the EU. In total, there are over 30,000 available rooms at home, who have been jobless for more than a year. It is equivalent to one percent of the total workforce, or 19 percent of the unemployed in Denmark.

According to AE the Council's chief economist, Erik Bjørsted, witness the figures on ’an extremely well-functioning labour market’.

- We have a labour market with a very low degree of marginalization, even though we have been through a very serious crisis. The financial crisis was very long lasting and cost the greatest loss of jobs since the 1930s, but we are yet to come relatively unscathed through, says the chief competition economist.

If you ask Erik Bjørsted is the recipe for the Danish success is simple. The three main ingredients in the three-legged flexicurity model is the flexibility, security and active employment measures. But according to AE the Council, there is a danger that you are sawing off one leg of the Danish model.

This is due not least to the politicians in the Danish parliament through a number of years, both have shortened the unemployment benefit period and made it harder to genoptjene entitled to the allowance. At the same time is dagpengenes value has been eroded, which, among other things because unemployment benefits do not follow the general price and wage developments.

- In the event that one becomes vacant, covering daily allowance and a lower proportion of one's salary. So one simply has a worse insurance. It may well be a matter of concern for whether the model can pass, and whether we can continue to have a flexible labour market that we have today, says Erik Bjørsted.

Calculations from AE-the Council show that the unemployment benefits in 1995, on average, covered approximately 62 percent of the employees ' salary, while the figure in 2025 will decrease to approximately 50 percent.

- It can lead to the foundation under the flexicurity model crumbles. If workers are less insured, will they perhaps not accept the flexible rules for firing, explains Erik Bjørsted.

He is referring to, that our great neighbour in the south, Germany, in the beginning of the new millennium, the so-called Hartz-reforms in order to combat unemployment. In spite of the major reforms have available German far greater risk of ending up as long-term unemployed than unemployed danes. The analysis shows that more than 40 percent of the unemployed in Germany have been unemployed for more than a year.

- It can wonder, then, that Germany has such a high long-term unemployment, when they have implemented all the reforms, which in theory should counteract it. They have gone all the way with the shortening of the unemployment period and lower benefits for the unemployed – including lower benefits for the long-term unemployed, says Erik Bjørsted.

According to the chief competition economist will witness the development south of the border, to the tough German reforms has been the wrong medicine in order to fight long-term unemployment. Erik Bjørsted estimates that Denmark's leading position in the EU hangs together with the Danish model. Therefore, he warns against weakening the social safety net further.

At The Faculty of Social sciences at Aalborg University sits professor Thomas Bredgaard. He explains that approximately three-quarters of the kontanthjælpsmodtagerne not have been assessed as ready to work. This is because they are grappling with problems other than unemployment.

- It is typically some complex and compound problems. A point is that they have several problems at the same time – in addition to the lack of a work. It can be social, physical or psychological problems. Often it is a mixture of several problems at the same time, he says.

Thomas Bredgaard points out that the number of welfare recipients who cannot work has fallen through the last years of the boom. He considers, however, that it will be more difficult to get the remaining group of weak welfare recipients in jobs. Therefore, there is a ’more elaborate’ and ’more expensive’ efforts to out in the country's municipalities, if they are to succeed in getting them down to work. So far have successive governments attempted to whip the unemployed into jobs through the use of economic incentive structures, but the research indicates that the strategy has little effect on the weakest available.

- If you look at the cross-analyses in the field, I will venture the assertion, that the carrot works better than the whip against the weak benefit claimants. There is not very good evidence for, that you can whip this group into work, he says.

Denmark's leading position in the field of european countries arouses joy in the Liberal party's minister for employment, Troels Lund Poulsen, which attributes to the Danish model a large part of the credit for the development.

- It makes me always happy, when we again and again see the black-on-white, it goes well with employment in Denmark. The figures testify that the Danish model works while we have implemented a number of sensible initiatives, says in a written answer from the minister.

Troels Lund Poulsen dishes at the same time a criticism against the country's municipalities, according to the minister has failed to help the long-term unemployed. He believes that the ’too many years’ placed ill citizens on passive income support in social assistance. Therefore ousted the government in the autumn of eur 100 million. kr. in order to get more long-term unemployed in jobs. In addition, the government has also set 430 million. kr. to help citizens stuck in the ledighedskøen.

- If you are sick and in need of another massive help, then you should of course not be in the social assistance system. It is very sad to see, that too many have been parked at a siding without proper help – but it is fortunately we now know that the correct, Troels Lund poulsen's response.