Combining a High level of Welfare with Flexibility – Is the
Danish Labour Market Approach a Model for Stagnating
Eurozone Countries?
Thomas Qvortrup Christensen
Confederation of Danish Employers
CICERO FOUNDATION
Paris 23 February 2006
The Danish situation on Labour
market
Low unemployment in relation to other EUMember States and a significant fall in
unemployment in the 90s.
Unemployment
Per cent
17,2
PL
SK
10,1
EL
BE
9,5
DE
8,5
9,2
FR
8,5
EU25
7,8
CZ
UK
7,5
PT
NL
NOTE: December 2005.
SOURCE: Eurostat.
7,5
IT
4,9
6,7
EE
4,7
6,4
Sl
4,4
5,6
LU
4,3
DK
16,1
IE
20
18
16
14
12
10
8
6
4
2
0
The Danish situation on Labour
market
Low unemployment in relation to other EUMember States and a significant fall in
unemployment in the 90s.
Lowest unemployment since 70s !
Among the countries with the highest
participation and employment rates.
Low youth-unemployment
Main characteristics of the Danish
employment policy
 The active labour market policy in Denmark has
traditionally been built on a broad political consensus
 A high degree of regionalisation of the administration –
14 independent regions/counties in Denmark. (From 1.
January 96 municipalities)
 Close involvement of the social partners
– Support of active line
– Involved in the regional management and
implementation
The Danish flexicurity model
High flexibility
Flexible
Labour market
Many job openings:
• 800.000 job shifts per year
• 300.000 new jobs per year
• 300.000 jobs disappear each year
Qualification effect
Generous
Benefit system
Benefits
High compensation for
low-wage groups: 90 pct.
Active labour
Emphasis on
upgrading of skills
market policy
Test of availability
(ALMP)
Duration: 4 years
Motivation effect
ALMP
Average Job Tenure in OECD
Years
12
10
10
8
8
6
6
4
4
ICE
US
DK
UK
IE
NL
CZ
NO
HU
ES
CH
Fl
PT
PL
D
GR
SK
F
L
SE
B
IT
OECD
12
SOURCE: CEPS (2004).
Employment Security
Scale from 1-10 – the higher the number the more secure, 2001
(4,3)
(3,6)
(2,2)
(4,9)
(7,4)
(9,1)
(6,7)
(3,9)
(5,0)
(9,1)
(8,4) (10,8)
(4,0)
GR
PT
ES
FR
IT
UK
EIR
BE
FIN
DE
SE
NL
AT
(10,8)
DK
9
8
7
6
5
4
3
2
1
0
NOTE: Figures in brackets are unemployment rates in 2001.
SOURCE: CEPS (2004) and Eurostat.
9
8
7
6
5
4
3
2
1
0
Participation in Continuing Education
Per cent of employed, 2004
50
45
40
35
30
25
20
15
10
5
0
50
45
40
35
30
25
20
15
10
5
0
EL
IT
HU
ES
PT
PO
EIR
CZ
DE
LUX
BE
FR
AT
SL
CA
UK
SCH
USA
FIN
SE
DK
Source: OECD, Education at a Glance, 2005
Educational Costs at Company
Level
Per cent of total labour costs for educational training in
private companies, 1999
3,5
3,5
3,0
3,0
2,5
2,5
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
0,0
EL
PT
AU
ES
DE
BE
IT
LUX
NO
EU-15
FI
FR
EI
NL
SE
DK
SOURCE: Eurostat (2002).
Flexible Regulation in Denmark
 Main Characteristics
Basic principles established more than 100 years ago
Regulation at company-level through collective
agreements
Disputes are handled by the two sides of industry solely
Employment Regulation
 Collective agreements the primary regulation:
Wages
Working time, overtime
Redundancies, shop stewards, extra holidays
Sickness pay, maternity leave, pension, training,
 Legislation only on specific topics:
Holidays
Health and safety
 Equal pay and equal treatment (sex, race, religion etc.)
Regulation by Framework Agreements
 Collective agreements cover aprox. 90 pct.
of the employed in companies affiliated to
DA member federations
 Framework agreements
 Supplemented by agreements at company
level
Flexicurity in Europe?
 Outcome of long history
 Social partners role
 Social security, pensions, health care are not a part of
a specific position => cost for employees to change
jobs are very small
 High degree of flexibility for all groups
 ALMP – availability-testing and upgrading is very
expensive
 Company structure. Mainly smaller firms
Challenges
Globalization
Ageing
High cost of educations, but DK not in top –
and decreasing
Changes to the Danish system