1. Flexicurity and Danish Labour Market Policy
September 2014
Chief Adviser Jan Hendeliowitz
Ministry of Employment
The Danish Agency for Labour Market and Recruitment
November 21, 2018

2. The Ministry of Employment
The Ministry has the overall responsibility for measures in relation to all groups of unemployed persons (unemployment benefits or social assistance) and for people on sickness benefits.
Responsible for the framework and rules regarding employment and working conditions
Safety and health at work and industrial injuries
Financial support and allowances to all persons with full or partial working capacity
Placement activities
Services in relation to enterprises
Active employment measures
One department ( three government agencies and one research centre:
The Danish Agency for Labour Market and Recruitment: 
The National Board of Industrial Injuries:
The Danish Working Environment Authority:
The National Research Centre for the Working Environment:
November 21, 2018

3. The Danish institutional setup
National Employment Council
Ministry of Employment
27 unemployment insurance funds
Danish Agency for Labour Market and Recruitment
Regional Employment Councils
4 employment regions
Government
98 Municipalities
94 integrated job centres for all job seekers (insured and uninsured)
Full responsibility of the municipality
Youth Guidance Centres
98 social welfare offices
Local Employment Councils
External service providers
November 21, 2018

4. An overview
At national level, the Minister for Employment has overall responsibility for employment policy and is administrative authority for the employment regions.
The Danish Agency for Labour Market and Recruitment (STAR) is responsible for implementing and following up on employment policy on behalf of the Minister. STAR has the following 4 tools:
Legislation: minimum requirements for jobseekers and job centres
Economic incentives: variable state financing
IT-systems: nationwide tools to ensure full transparency about the results and efforts which include Jobindsats.dk
Dialogue, monitoring, follow-up and continuous learning
Four employment regions. Their responsibility is to make sure that the job centres perform well – monitor, help initiate projects if something is not going well.
The 98 municipalities manage the job centres which are responsible for the direct contact with the unemployed (counselling and active measures).
November 21, 2018

5. Ministerial targets for the employment initiatives in the municipalities in 2014
Overall goal:
People from public benefit into employment – young people into education
Four targets
Young people without education receiving public benefits
People receiving permanent benefits
Long term unemployment
Enhance cooperation with companies
November 21, 2018

6. Management based on dialogue
4 employment regions carry through individual dialogue meetings with all 94 job centres including:
Monitoring of efforts and performance in job centres based on jobindsats.dk and a yearly performance audit
Facilitation of best practice amongst job centres
Intensive use of randomized controlled experiments to support performance management in job centres and regions
Other initiatives (reviews, external consultants etc.) that can help job centres produce better results
Evidence based development and management
Labour Market Balance
November 21, 2018

7. Key figures Population Unemployment June 2014: 5,6 mill
Labour force: 2,9 mill
Employed 2,786,000
Unemployment June 2014:
Total registered at job centres 133,900 = 5.1 % incl. people in activation 27,600
November 21, 2018

8. EU Employment Performance Monitor 2014
Denmark
EU total
Employment rate
75.6%
68.3%
women
72.4 %
62.5%
men
78.7%
74.2%
20-29 year-olds
67.7%
59.5%
55-64 year-olds
61.7%
50.1%
2020 employment rate target
80%
75%
Unemployment
7.0%
10.8%
youth (15-24 years)
13.1%
23.4%
Long term unemployment
1.8%
5.1%
NEET (not in employment, education or training, years)
6.0%
13.0%
November 21, 2018

9. Figures cont. 2010-2013 120,000 absence due to illness – 4,3 %
Pension age: 65/Average retirement age: 63,3 (2001: 61,6)
Members of Unemployment Insurance Funds 75 %
Unionization rate: %
Collective agreement coverage: %
Average wage 22 Euro per hour
Further adult training and education 2009: DK 31,6 %, EU 9,2 %, (2011 DK app %)
730,000 persons on public benefits
GNP 240 billion EURO/320 billion US dollars
GNP: 2009 – 4.9%, , , , ,2%
Labour market policy state budget 2013: 6,0 billion EURO/8,1 billion US Dollars (35 % active, 65 % passive)
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10. 730,000 people on public benefits
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11. Flexicurity
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12. OECD – June 2004
The Danish flexicurity approach provides an interesting combination of high labour market dynamism and relatively high social protection.
Underlying the success is the combination of:
flexibility (a high degree of job mobility thanks to low Employment Protection Laws (EPL)),
social security (a generous system of unemployment benefits) and
active labour market programmes.
The Danish model of flexicurity thus points to a third way between the flexibility often attributed to deregulated Anglo-Saxon countries and strict job protection characterising southern European countries.
November 21, 2018

13. The Danish flexicurity triangle
Low employment protection:
Easy to hire and fire (external flexibility)
High job mobility (23% turnover)
Rapid structural change:
job openings (used to be )
unemployment spells
Flexible labour market
Unem-ployment benefits
Active LMP
Employment security: active labour market policy, activation,
right and duty, individual job plan
Income security Unemployment benefits, 2 years duration incl. activation (earlier 4 years), high compensation for low-wage groups (90%), average replacement rate app % (cash benefits)
November 21, 2018

14. Unemployment benefits in Denmark
Voluntary (app. 77 % of the labour force), years
Benefits 90 per cent of former income 801 DKK per day (with a maximum of app. 2,300 Euro pr. month) – 5 days per week
Time-limited inclusive activation, 2 years (earlier 4 years)
Administered by state-approved, private unemployment insurance funds
Financing: 1) members contributions DKK/Euro 510 per year regardless of income and of unemployment level and individual risk 2) plus general taxes
Early retirement pay from 60 years (optional)
Cash benefits
Family-based and means-tested (app. 80% of unemploymnet benefits)
Not time-limited
Administered by local municipalities (reimbursement from the state)
Financing: general taxes
November 21, 2018

15. Flexicurity – The Danish way
A small, open and relatively homogeneous country.
Favorable framework conditions (The Welfare State)
The Danish model - deeply rooted in Danish history (since 1899) - pay and working conditions on the labour market are negotiated between the social partners
Understanding of mutual interests, trust and dialogue.
Tripartite negotiating, consensus rather than conflict Dynamic legislative process – regular review and revision
Cover the whole labour market, all sectors, all job-types, all groups
Many SME favours external flexibility instead of internal
Flexicurity is valid all over the business circle. Relevant both in upturns and downturns. It pays off to maintain a flexicurity apporach.
Reflections on rebalancing the elements in the model. Higher priority to ALMP and especially training and education
November 21, 2018

16. Labour market policies
November 21, 2018

17. Labour market challenges
The crisis and the increasing unemployment
Automatic stabilisers: unemployment benefits etc.
Timely, frequent and targeted interventions when needed:
Income tax, tax deductions for private home (cleaning and repair etc.)
Public spending
Labour market measures (work sharing, mass dismissals, education, youth package, long term unemployment)
Raise productivity
Emergency Rescue Plan for LTU
Labour shortage – (short and) long run
Work more – lower income tax
Young persons – earlier study completion
Older workers – later retirement
Marginalised unemployed/transfer recipients
Immigrants and descendants (2 and 3 generation)
International recruitment (
High absence due to illness
November 21, 2018

18. Employment policy (”Enlarging the Workforce”)
1975-: extension of unemployment benefit period, early retirement pay, activation
1994: The Labour Market Reform: expansive economic policy, right and duty activation, regionalisation and decentralisation, job rotation scheme, leave schemes.
(2000: ”Flexicurity” – The Netherlands and Denmark)
2002: ”More people at Work”: e.g. external service providers
2006: The Welfare Agreement (e.g. later retirement, senior job)
2008: The Job Plan: increase the labour force (Danish and international recruitment) plus The Labour Market Commission (later retirement)
2009: labour supply (tax reform), crisis packages (e.g. financial sector, labour market measures), the new job centres (municipalities)
2010: The Fiscal Consolidation Agreement/Austerity Package (e.g. reduced unemployment benefit period), long term unemployment measures
2011: reduction of the early retirement scheme
: new government, kick start and some new ALMP initiatives
2012: Acute Package for LTU and Youth Package
November 21, 2018

19. Recent Reforms Reform on flexi-jobs and disability pension
Reform on State Education Fund
Reform on cash benefits
Competitive Power Package
Reform on sickness benefits
Reform on the employment policy
Reform on international recruitment
November 21, 2018

20. Reform of the employment policy
Agreed on in June 2014
Implemented 2015
Target group: insured unemployed
Aim:
More unemployed into lasting employment as fast as possible
Unemployed get an individual, meaningful and job-targeted effort
Unemployed who need it will get a formal education
Education will be targeted unemployed who need it the most and according to the demand of the companies
Improve cooperation between job centres and companies
Increase flexibility of the effort towards each unemployed
Decrease structural unemployment
New regional organization
November 21, 2018

21. The new institutional setup
National Employment Council
Ministry of Employment
27 unemployment insurance funds
Danish Agency for Labour Market and Recruitment
- 3 decentralized labour market offices
Regional Employment Councils
Government
98 Municipalities
94 integrated job centres for all job seekers (insured and uninsured)
Full responsibility of the municipality
Youth Guidance Centres
98 social welfare offices
External service providers
November 21, 2018

22. The new contact process
Increased coordination between job centre and unemployment insurance fund
Intensified
Flexibility
Job log
2 weeks
Interview at the unemployment insurance fund
3-6 weeks
Interview at the job centre together with the unemployment insurance fund
Monthly
Interviews at the job centre
Twice within first 6 months
Availability interviews at the unemployment insurance fund
5th/6th month
After 6 months
Interview at the job centre every 3rd month and at the unemployment insurance fund when relevant
November 21, 2018

23. New requirements to active offers
Right and duty to only one active offer
-30 years: after max. 3 months
30-49 years: after max. 6 months
50- years: after max. 3 months
Targeted companies
November 21, 2018

24. Legislation - minimum requirements for active efforts
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
Every 3 months availability talk at the unemployment insurance fund
Weekly job search
Weekly online reporting to the job centre
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 - If unemployed again: new activation after 6 months for all
November 21, 2018

25. The Danish match model
November 21, 2018

26. Active efforts Simplified tools - focus always on the labour market
3 groups of schemes for all unemployed
Guidance and upgrading of skills and qualifications: 50 %
Practical work training in enterprises: 30 %
Wage subsidies (private and public sector): 20 %
Job interviews, job rotation schemes
Training and education should be targeted towards sectors with good job perspectives and towards unskilled and low-skilled unemployed, particularly young people below 30
Measurement system, Input and outcome – benchmarking between job centres, measures and across time. Transparency for everyone – including the social partners.
November 21, 2018

27. Economic incentives Municipality expenditures to public benefits
November 21, 2018

28. Evidence-based efforts
November 21, 2018

29. 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
Source: The STAR Knowledge Bank, Jobindsats.dk
November 21, 2018

30. Strategy for building up evidence
WHY: Build policymaking on evidence Spent money wisely
A systematic approach
Collecting
existing
evidence
Developing
new
evidence
Disseminate
evidence
Research
reviews
Building
a Bank
of evidence
Projects
Randomized
controlled
trials
Samspil.info
Dialouge
Jobindsats.dk
November 21, 2018

31. The knowledge database
Rapport 1
Database Calculation: Quality
Study Type
Geographical distance
Time Distance
Request: Target group
Researcher 1
Rapport 2
Rapport 3
Output: Effect of program
Researcher 2
Rapport 4
The knowledge database
Researchers
Users
November 21, 2018

32. The labour market balance model – data sources
Data on unemployment
Number of registered unemployed who have been unemployed for at least three month.
Half year data, following the same period as the recruitment survey
Source: Jobnet
Information about the recruitment situation of companies
Source: Biannual survey asking companies about the number of unsuccessful recruitments the prior two month.
Information about employment and job openings
Source: Yearly data from Statistics Denmark on employment and job openings.
November 21, 2018

33. The categories of the labour market balance
Balance between supply and demand
Job opportunities
Definition
Severe and structural lack of labour
Very good job opportunities
Job titles with severe recruitment problems and extraordinary low unemployment
Lack of labour
Job titles with recruitment problems and low unemployment
Mismatch between supply and demand
Job titles with recruitment problems and high unemployment
Good job opportunities
Job titles without recruitment problems and with low unemployment
Excess of labour
Limited job opportunities
Job titles without recruitment problems with high unemployment and few job openings.
November 21, 2018

34. Employment policy targeted the youth
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35. The Danish education system: an overview
November 21, 2018

36. Two targets regarding the youth
Job as quickly as possible is always the goal – for young people education is first priority
The key words in Danish Employment Policy (ALMP) for young people are: early active intervention and education
1. Overall Government educational target:
95% of a youth cohort is to complete a youth education by 2015, 65% a longer education, hereof 25% a university degree
2. 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 (EU-target four months)
November 21, 2018

37. The Cash Benefit Reform
Focus on educating young people
Duty to work for the cash benefits (usefulness job)
Better assistance to people to get closer to a job or an education, e.g. holistic effort 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 single 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 and educational centres
November 21, 2018

38. OECD Study: Jobs for Youth
Denmark’s dynamic youth labour market and well-developed activation strategy have helped young people weather the current recession better than their peers in most OECD countries.
November 21, 2018