1. "Reforming Danish ALMP - an assessment from a flexicurity perspective"
Per Kongshøj Madsen
Centre for Labour Market Research (CARMA)
Aalborg University, Denmark
OECD Employment, Labour and Social Affairs Seminar
March 3, 2014

2. Per Kongshøj Madsen
Professor at CARMA, Aalborg University and Research Fellow at IZA
Chairman of the Economic Council of the Labour Movement
Member of the Koch-Commission

3. What’s to come The background: Danish flexicurity and the crisis
The criticism of ALMP
The tasks of the expert group
Proposals for reform
What are the next steps?

4. The Danish version of flexicurity
Low EPL
High mobility
Adaption to globalization
The social contract
Flexible labour market
Support from welfare state institutions
Educational policy and more!
Unemploy-ment ínsurance
ALMP
Employment security
Income security

5. Danish flexicurity – against the wind
The overall development on the labour market:
Steep decline in employment in
Then stagnation in employment and unemployment
A remarkable decline in the workforce
The reactions to the crisis (figure 8)
The stress on Danish flexicurity ”classic” (figure 9)
Still shelter from the storm!
Demolition of Danish flexicurity or gradual reforms?

6. Stylized facts

7. Decline i GDP

8. Elasticity of employment with respect to GDP

11. Flexicurity under stress?
Call for more job security
Can the social partners keep the balance?
Flexible labour market
Fewer public resources)
Educational policy and more!
Unemploy-ment ínsurance
ALMP
Under pressure from the crisis
Less generosity

12. LTU in the EU
Unemployed for more than 12 months as a share of total unemployment:
Source: Eurostat

13. Source: Eurobarometer:Monitoring the social impact of the crisis Wave 6, Flash EB No. 338, April 2012.

14. Falling apart or minor cracks in the building?
Per Kongshøj Madsen (2013): “Shelter from the storm?” - Danish flexicurity and the crisis in: IZA Journal of European Labor Studies, Vol. 2, No. 6,

15. What’s to come The background: Danish flexicurity and the crisis
The criticism of ALMP
The tasks of the expert group
Proposals for reform
What are the next steps?

16. The calls for reform Inefficient and ”meaningsless” activation
Disappointing results from many evaluations of effects and costs of ALMP, especially of ”education”

17. The calls for reform Too much control
Of the unemployed by the jobcentres
Of the work of the job-centres by the national authorities
Dissatisfaction with the functioning of the job-centres:
Too small to fit with the regional labour markets
Too small to care for groups with special needs (e.g. academics)
The governance system (lack of cooperation between the jobcentres, the weaker role of regions, the regional boards and the social partners)

18. The calls for reform
Overlapping activities of the jobcentres and the UI-funds.
Not sufficient contact between the jobcentres and the employers
Dissatisfaction with the IT-platforms of the jobcentres
The shortening of the duration of unemployment benefits from four to two years from January 1, 2013, makes it more urgent to make an effective effort to get the unemployed back to work.

19. The tasks of the Koch-commitee
To make proposals for reforms that:
Lead to lasting employment for the unemployed
Implies an upgrading of qualifications if relevant
Are based on more on confidence and less on control with the unemployed (empowerment)
Strengthen the link between the job-centres and the employers
Make the instruments used more cost-effective that at present
Do not imply extra costs for the public budgets
A tripartite process

20. The proposals: Five pillars
New, individual and job-focused effort for the individual unemployed
Targeted training and education of unemployed
Enhanced focus on the needs of businesses
Stronger economic incentives for the job-centres and less bureaucracy and process requirements
New regional organization and stronger stakeholder involvement

21. Pillar A: Individual support
Assistance already in the dismissal phase
Job search phase with frequent counseling in the first six months
Activation after 6 months with job-training measures for the unemployed over 30 years (after 3 months for young unemployed under 30 years of age)
Elimination of repeated mandatory activation
Initial profiling and stricter requirements to support to high-risk groups
Low risk-groups may choose to complete the first six months of counseling in the unemployment insurance funds

22. Pillar A: More individual support
Booking of interviews and job search support activities in the first six months
Training of managers and employees in UI-funds and job centres in counselling
Requirement for ongoing documentation of intensive, comprehensive and realistic search in a Job Log
New possibilities of sanctioning for lack of job-search
Harmonisation of public and private sector wage subsidies

23. Pillar B: Education
Upgrading of skills should be targeted at motivated unemployed
Right to training for unemployed with a job-offer
Right to basic courses in literacy, numeracy and writing
Right to 6 weeks of training after 6 months of unemployment, in agreement with the job center
Right to education for unskilled unemployed over 30 years with reduced benefit and a credit facility
No need to be available for work, if taking part in education

24. Pillar C: Contact with employers
Systematic contact from job centers to employers based on knowledge of the labor market
Better means of job centers to facilitate recruitment of manpower and skills-upgrading of existing employees
Strengthened cooperation across municipalities
Establish fewer entry-points for large companies with recruitment needs
Monitoring of current and future infrastructure projects and other major construction projects

25. Pillar D: Economic framework
Reduction of process requirements for jobcentres
A reformed system of economic incentives for municipalities (the same reimbursement for all activities and reduces reimbursement over time for the individual unemployed)

26. Pillar E: A new regional structure
The current 94 local employment councils and 4 regional employment regions should be reorganized into 8-12 new regional councils, which better reflects the regional labour markets
The new councils will support cooperation between municipalities, between municipalities and unemployment funds, as well as between job centers, educational institutions and the regional growth fora.
The new councils will have representatives from social partners and other stakeholders
The new councils will administer funds for education and training

27. Still hard work ahead! Carsten Koch Michael Rosholm, Aarhus University
Vibeke Jensen
Aarhus Municipality
Per Kongshøj Madsen
Aalborg University

28. Next steps
Draft report dealing with reform of ALMP the insured unemployed ready for comment from social partners: January 2014
Report presented to the Government: February 25, 2014
New report on the non-insured unemployed and other groups at the margin of the labour market to be prepared during 2014
Prepare mandate for a new commission dealing with the UI-system

29. Thank you for your attention
Towards a brighther future!