Danish labour market policy - Youth Riga May 2014, Senior Adviser Leif Christian Hansen, The Danish Agency for Labour Market and Recruitment,

Agenda and contents  Key figures  Flexicurity  PES organisation and institutional set up  Employability scheme and tools  Youth challenges and targets  Youth measures  Effects and results  Good practices and measures  Conclusions

Key figures  Population: 5,6 mill (16-66: 3,8 mill), Labour force: 2,9 mill, Employment rate: 76% (Female 72%), (55-64 years 62%).  Unemployment March 2014: 1) (EU/OECD survey), 6,5% (EU 10,6%), Youth: 11,8% (EU 23,7%) 2) Long term unemployment: 1,7%, EU 5,1%, 3) NEET years: 6,6%, EU 13,2%, (Not in Employment, Education or Training)  Registered at the Job Centres: 5,1% (135,800 Persons), Male 4,9%, Female 5,3%, years 3,5%, ,0%, ,9%, 60- 3,6%  Unionization rate: app. 70 %  Collective agreement coverage: %  Further adult training and education 31,6 %, EU 9,2 %,  GNP: 2009 – 4.9%, , ,2%, ,6%  Lab. budget 2014: app. 4% of GNP (2,3% active, 1,7% passive)

Employment and Unemployment  Employment rates: total, females, older (55-64):  EU: 68%63% 50%  Latvia: 70%68%55%  Hungary: 63%57%39%  Denmark:76%72%62%  Unempl. rates: total, females, youth, NEET, older:  EU:11,8%12,0%23,7%13%n.a.  Latvia:11,6%11,0%23,9%15%n.a.  Hungary: 7,9% 8,3%24,1%15%n.a.  Denmark: 6,5% 7,0%12,6%6,6%n.a.

NEET years 2012

The Danish flexicurity triangle (flexibility + security) Flexible labour market Unem- ployment benefits Active LMP Low employment protection: Easy to hire and fire (external flexibility) High job mobility (23% turnover) job openings (1 mill. before the crisis) unemployment spells Income security Unemployment benefits, 2 years duration incl. activation (earlier 4 years) high compensation for low- wage groups (90%), average replacement rate app % (For non-insured Social security benefits) Employment security: active labour market policy, activation, right and duty, individual job plan

Unemployment and education benefits Unemployment insurance - Voluntary (app. 77 % of the labour force), years  Benefits 90 per cent of former income, maximum 815 DKK per day (109 Euro) – 5 days per week  Time-limited inclusive activation, 2 years (earlier 4 years)  Administered by State-approved, private unemployment funds  Financing: 1) members contributions app. 520 Euro per year regardless of income and of unemployment level and individual risk 2) plus general taxes  Early retirement pay from 60/62 years to 65 (optional)  (Acute Packages due to the reduction from 4 to 2 years: Temporary lab.mark. benefit until 2016) Social cash benefit  Family-based and means-tested (app. 80% of unempl. benefits), Not time-limited  Administered by local municipalities (reimbursement from the state) Financing: general taxes State educational grant and loan schemes (SU) Students are entitled to public support for further education - regardless of social standing. 2 main programmes: One for people over 18 year following a youth education program, and one for students enrolled in a higher education course. General taxes. Education benefit ( (the cash benefit reform) Below 30 years old without education, The rate corresponds to the state educational grant, which is lower than cash benefit. Recipients with challenges can receive a higher rate after three months, General taxes.

8 Minister for Employment Danish Agency for Labour Market and Recruitment Regional Employment Councils 94 Integrated job centres for all job-seekers (insured and uninsured and people on sick leave) Local Employment Councils National Employment Council 98 municipalities 4 Employment regions Full responsibility of the municipality, State subsidies External service providers 27 unemployment Insurance funds 98 Social Welfare offices - Cash benefits The Danish institutional setup (changes can be expected) Government Municipalities Education, Training, Guidance 53 Youth Guidance Centres

An overview The Minister for Employment goal: People from public benefit into employment – young people into education, (Long term target: to increase the work force) 4 Annual targets for the Job Centres 2014: 1)Young people to start on an education 2) Reduce the number of People on Disability Pension 3)Reduce the number of Long Term Unemployed 4)Cooperation with companies The Agency for Labour Market and Recruitment implementing and following up, 4 tools: 1) Legislation for jobseekers and job centres, 2) Economic incentives to the Municipalities 3) IT-systems Benchmarking (Jobindsats.dk) 4) Dialogue, (5. The Labour Market Balance) 4 Employment regions monitor, advice, help and assistance to the job centres The 98 municipalities manage the Job Centres, responsible for the contact with the unemployed and with people on sick leave and with the Enterprises Performance Management: The Knowledge Bank (Jobeffekter.dk) and Benchmarking (Jobindsats.dk) Adult Vocational Training and Education: The Ministry of Education

Employability efforts (Activation) (changes can be expected) Focus on direct ways into employment, job search and job placement activities (self help) – and sanctions. Regular contact with the unemployed:  Day-one registration (65 % on-line) and CV  Job bank and CV bank –  Employability profiling (target groups/match groups)  At least every 3 months personal contact  Weekly online reporting to and from the job centre (job options)  After 9 months: job plan and activation, below 30 years after 3 months, below 19 years after 2 weeks, above 60 years after 6 months: 3 groups of activation schemes for all unemployed, focus on the labour market:  Guidance and upgrading of skills and qualifications: 60 %  Practical work training in enterprises: 25 %  Wage subsidies (private and public sector): 15 %

The Danish match model

Data on youth in DK, years Educational level of unemployed: App. 50,000 Young people below 30 years on social benefits:  9 out of 10 without education App Young people below 30 on unemployment insurance benefits  3 out of 10 without education Characteristics of unemployed: years: Typical drop outs from primary school, vulnerable groups years: unskilled, not started on or dropped out from upper secondary education (High School/Gymnasium) or from Vocational education and training (VET), ordinary young people or vulnerable groups years: all kinds of young people: unskilled, skilled, graduated, drop- outs, vulnerable, ordinary etc.

Youth Challenges and targets: From public benefit into education and employment, early intervention and activation 1. The overall objective for the youth schemes (15-29 years) is to:  get young people without an education into education  get young people with an education into employment  give young people the needed upgrading to obtain an ordinary education. 2. Educational target:  95% of a youth cohort is to complete a youth education by 2015, 65% a longer education, hereof 25% a university degree 3. Employment target:  The job centres must ensure a reduction in the number of young unemployed under the age of 30 in relation to the preceding year  All unemployed below the age of 30 without an education have a duty to begin an education and will get assistance  Youth guarantee after three months (-29 years): Right and duty to Job search, Counselling, Education, training and activation (EU Youth guarantee scheme after 4 months, -24 years.)  Reduce the number of People on Disability Pension/anticipatory pension, no people on DP without testing alternatives (ordinary jobs, flexi-jobs etc.) via Rehabilitation programme and rehabilitation teams (testing and training etc.)  For people below 40 years DP is the ultimate last resort

The Danish education system: an overview

Educational Challenges  Too low performance in compulsory education/schools (OECD Pisa tests) – low ability in reading and maths  Upper secondary school (high school/gymnasium) vs. Vocational education (VET) – 70 % of a cohort attend the gym, means lack of qualified young people on Vocational education. Ih the future risk for shortage and bottlenecks of vocational educated people.  Low performance and drop outs – at all levels, particularly on Vocational education  Shortage of practiceships in VET.  Too many years to complete a higher education (University studies) – high age af newly graduated compared to other countries

The New Social Security Benefit Reform Early intervention, education and activation  Focus on educating young people  Duty to work for the social security benefits (utility effort)  Better assistance to people to get closer to a job or an education, e.g. holistic effort with complex issues and mentor  All young people below the age of 30 without an education have a duty to begin an education and will get assistance  Assistance particularly for the education of lonely parents  Activity allowance to young people not ready to begin an education  Duty of intensive job search during the first three months  Effective sanction system  Mutual duty to support each other financially for cohabiting couples over the age of 25  Strengthened coordination between municipalities (job centres) and educational centres

Education and employment efforts

Measures for all years (Youth Guidance Centre and Job Centre)  year olds must be in education, employment or other agreed activity in accordance with their personal education plan. The activities shall aim at that the year old sooner or later completes vocational or upper secondary education or gain foothold at the labour market. First interview within 7 days.  Assessment of year olds readiness for education Leaving primary and lower secondary education to start at a vocational or upper secondary education, the Youth Guidance Centre must assess whether the young person possesses the necessary educational, personal and social skills. For young people assessed not yet ready, the municipality must provide training or whatever needed to qualify for a positive assessment.  The municipalities must offer young people not ready for education special courses aiming at uncovering the interests and competencies of the young person and prepare him/her for education.

Measures for years (I) Legislation rules - job interviews:  Age 18-29: entitled to a job interview within one month and thereafter at least every three months Legislation rules - activation measures  Age 18-19: entitled to activation within one month for min. 6 months  Age 20-29: entitled to activation within 3 months for min. 6 months  If still unemployed, the job centre initiates a new activation The Active Labour Market Policy instruments:  Vocational guidance and skills upgrading  Practical work-based training in enterprises  Wage subsidy jobs

Measures for year (II)  Young people without an education - Complete vocational or further education.  The cash benefit reform: Early intervention and activation  Initiative ‘Building Bridge to Education’  Reform of vocational education and training (VET)  The Retention Taskforce  Internship Centres  Youth Guidance Centres  Young people with an education - Ease their transition into employment.  Trainee efforts for graduates  Wage subsidy jobs  Enterprise training  Jobrotation  Upgrading in connection with a job  Usefulness job (nyttejob)  Job Centres  Young people without the preconditions to begin and complete ordinary education - upgrading of skills to be able to obtain an ordinary educa-tion.  Better transitions to, and retention in VET  We Need All Youngsters (Ethnic minorities)  Youth Guidance Centres

PES services to all young people  Tests in reading/writing and maths, and if needed courses  Mentoring services, to get in contact with local education supervisors, ensure the young get up in the morning etc. the young person can keep their mentor during education.  Additional resources for increasing co-operation between youth guidance centres, educational institutions and the job centres, e.g. Youth units  Early intervention and measures for newly graduated people from universities etc.  Assistance to young people to obtain an after-school job/leisure time job  Integration and better use of data from different administrative systems in order to assist and identify young people not in employment or training.  Visiting schools and informing pupils on the labour market  Local campaigns to prevent young people from becoming social benefit receivers when they turn 18 and instead take an education  Local projects financed by various funds, e.g. mental health – Try new ways  Special task force unit to assist the job centres

Strategy for building up evidence Collecting existing evidence Disseminate evidence Developing new evidence Research reviews Building a Bank of evidence Projects Randomized controlled trials Samspil.info Dialouge Jobindsats.dk A systematic approach WHY: Build policymaking on evidence Spent money wisely

We know that ALMP works. But what part of it works?  17 out of 19 Danish and International studies find positive effects of private wage subsidy jobs in general.  Our randomized social experiments as well as 35 out of 40 reviews show positive effects from job counseling.  Still need for more knowledge about effective policies (especially for weaker groups of unemployed).  For unemployed with lower labour market attachment we have evidence that wage subsidy job private and public have positive effects Evidence on successful AMLP:  Intensive and individualized follow-up and contact/dialogue  Demand-led training and education  Wage subsidized jobs in private enterprises  Employment and training activities in real enterprises combined with mentoring support for hard to place young people  Source: The AMS Knowledge Bank, Jobindsats.dk

Some specific measures  Job rotation scheme: Ordinary staff (private and public) attend training and are replaced by unemployed on activation with wage subsidy up to 12 months  Flexi jobs: People with permanent reduced working capacity. Short time work, full wage, wage subsidy to the private or public employer  Senior jobs in the municipalities: A right for people over 55 years loosing entitlement to unemployment benefit. Until the age of early retirement (60 years). Ordinary wage. State subsidy.  Employability Partnerships: To introduce young people to job and education - involves Youth Guidance Centres, Educational Institutions, Job Centres and Business  Business Centres: Local enterprises and the job centre assist and help vulnerable group to be integrated in a concrete enterprise, Generation 1: disadvantaged and vulnerable people on social benefits, Generation 2 Long term social benefit recipients and people in a ressource program (ability testing)  Production schools: Alternative entrance to VET offering individual courses based on practical work and production to young people without immediate qualifications to enter secondary education.

Well performing youth employment countries – common characteristics Flexible labour markets Dual vocational educational systems (vocational schools and practice ships in enterprises Germany 7,8% Switzerland 8,5% Austria 9,5% Denmark 12,6% Close contact and interaction between universities/vocational educational schools and business/enterprises Student work experience Active and individualized locally focused labour Market measures reaching all young unemployed

History of modern Employment policy ”Enlarging the workforce”  1975-: extension of unemployment benefit period, early retirement pay, activation  1994: Right and duty activation, regionalisation and decentralisation, job rotation scheme, leave schemes.  (2000 Flexicurity - Denmark and The Netherlands)  2002: ”More people at Work”: e.g. external service providers  2006: The Welfare Agreement e.g. later retirement, senior job  2008: Increase the labour force (Danish and international recruitment) plus The Labour Market Commission (later retirement) : labour supply (tax reform), crisis packages (e.g. financial sector, labour market measures), the new job centres (municipalities) : The Fiscal Consolidation Agreement e.g. reduced unemployment benefit period, : reduction of the early retirement scheme  2011: new government, kick start and some new ALMP initiatives  : Acute Package for LTU, Youth Packages, Reform on flexi-jobs and disability pension, Reform on State Education Fund, reform on social cash benefits, Competitive Power Package  Expert Committee on ALMP spring 2014 (Carsten Koch Committee). Content and organisation of the employment policy.To be discussed in the Parliament 9. februar.

Conclusions  Relative low youth unemployment - Due to the dual VET- system, to the intensive and comprehensive employability system and to flexicurity  Very long tradition for tripartite cooperation in Denmark – also in VET and in employability programmes  Shortcomings and lacks in the educational system, Gymnasium versus VET  VET upgrading to come  Current political discussion in Parliament on the content and organisation of the employment policy  Get young people without an education into education  Get young people with an education into employment  Give young people the needed upgrading to obtain an ordinary education.  Thank you very much for your attention. It has been a privilege to be here