The need for adaptive labour market systems Claus Andersen, Head of Division, The Danish Ministry of Employment

Brief presentation of myself Head of Division, The Danish Ministry of Employment Head of the ministry’s unit of analysis Deeply involved in the day-to-day policy making Also responsible for long termed analyses, e.g. effect analysis Head of a new behavioral insights unit (collaboration with the University of Copenhagen) Chairman for working group reforming unemployment benefit System for self-employed and new forms of work

Main topic of presentation My key argument today is: the labour markets of today and tomorrow demand highly adaptive systems I will support this argument by presenting: the key factors and conditions driving the need for change examples of the latest and future policy measures in Denmark

Why is there a demand for highly adaptive labour market systems? We live in a changing world – and the speed of change is/could be increasing Technology will – as previously - change the future of how we work (robots, artificial intelligence) But some sectors can be disrupted by new technology that travels fast in a globalized world The spread of new appliances, US Number of new industry robots in Denmark Source: Nicholas Felton “Consumption spreads faster today”, 2014 Source: DIRA, Danish Robot Network

The Danish example: what is flexicurity? Flexible labour market Generous welfare benefits Active Labour Market Policy

Key aspect of ‘flexicurity’: Easy to fire (and hire) Protection of permanent workers against individual dismissals: difficulty of dismissal Source: OECD Employment Protection Database, 2013 update.

Key aspect of ‘flexicurity’ II: High replacement rates in the bottom and great emphasis on active labour market policies Netreplacement rates for unemployed Public spending on ALMP as share of GDP Low Avg. High Wage level Note: Spendings on ”Sheltered and supported employment” is not included Source: OECD

The Danish example: How has ‘flexicurity’ performed so far – what do the numbers show? High employment rate above the OECD-average… Source: OECD Source: Statistics Denmark

The Danish example: How has ‘flexicurity’ performed so far – what do the numbers show II? …a high job mobility and a low inequality Source: OECD

Future challenge to the flexicurity model: More people are in risk of not fitting in to the model Sources of income the past 12 months Yearly growth in less permanent employments Source: Survey, Statistics Denmark and the Danish Ministry of Employment Source: Statistics Denmark

Case: Unemployment system for the future labor market Current system Two seperate unemployment benefit systems Differences in regulation Differences entitlement to unemployment benefits Based on individual assessment Manual processing New system System harmonisation One system handling all forms of employment Creates a safety net for everyone Consistency between the tax system and the unemployment benefit system Full digital and based on registers

Unemployment system for the future labor market - fully digital Self-employed person Annually € TAX ∑ Income data Benefit Unemployment insurance funds Monthly € Unemployed Employee

Latest policy measures in Denmark adress the need for highly adaptive labour market systems The Danish government will very soon establish a “Disruption Council” Avoiding the “usual suspects” , the council will consist of experts, business, social partners, youth representatives It will analyze and discuss: How Denmark utilizes the possibilities of new technology and globalization And at the same how to maintain and develop a labour market without social dumping The Danish government will in June begin a new round of tripartite negations with focus on the Danish system of adult education and vocational training Main ambition is to creating a responsive system that is quickly receptive to labour markets demand for competencies

Thank you for the time – any questions? Contact: can@bm.dk