1. Centre for Labour Market Research (CARMA) Aalborg University, Denmark Beyond flexicurity: Labour market policy adjustments and welfare reform in Denmark in the wake of the financial crisis Mads Peter Klindt, Assistant Professor, PhD Center for Labour Market Research (CARMA) Aalborg University mpk@dps.aau.dk Presentation at the MSE, Centre d’Economie de la Sorbonne, Paris May 27, 2011

2. Agenda The Danish model of flexicurity as it was Governance reform and policy changes in 2007/09 Rigging the ship: Small labour market adjustments in the wake of the crisis outbreak Changing the course: Debt crisis and new reform agenda Beyond flexicurity: New dynamics on the Danish labour market

3. 3 Denmark’s ‘Golden Triangle’ of flexicurity Aktiv arbejds- markeds- politik Traditionelt samspil mellem fleksibilitet og sikkerhed siden 1899/1907 (1969) Arbejdsmarkedspolitikkens trusselseffekt (2001-) Opvalificering og omallokering (1994-2001) Fleksibelt arbejds- marked Generøse overførsels- indkomster 3

4. 2007/09: Governance reform Insured (unemployment benefits) Uninsured (means tested social assistance) Local government (91 Municipalities) One-stop-shop jobcentres Ministry of Employment State finances u.b. and activation Local gov. partly finances social assistance Local government take over full responsibility (50/30 % of benefit payments reimbursed)

5. Small adjustments during 2009 Activation of young persons between 15 - 17 Immediate activation of people between 18-19 year old (ordinary education on ordinary conditions or job training on similar benefit). Stronger effort to combat long term unemployment among people aged18-30 (task force, screening of writing skills, regional planning) Altogether 500 mio. DKK

6. 2010: Economic restoration plan Unemployment benefits maximum duration cut from 4 to 2 years (1,3 billion DKK) Eligibility rules tightened CVT-allowance reduced by 20 percent Tax deduction for trade union membership fee reduced + loads of other initiatives Altogether public spending cut by 24 billion DKK

7. 2011: Reform package 2020 Further initiatives to cut down public spending (23 billion DKK) Most importantly reforms of the early retirement scheme (efterløn) and old age pension Retirement age will increase according increase in average lifespan Early retirement scheme will be reduced from 5 to 3 years and become less attractive for people with labour market pensions

8. Incremental developments since the 1990s Falling UB compensation rates Traditional trade unions loose members Active labour market policy much more focused on “work first”

9. UB replacement rates

10. Independent UB insurance funds in growth

11. Reduced use of ordinary education in the ALMP

12. Conclusion: Denmark beyond flexicurity