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Flexicurity - The Danish Active Labour Market Policy: Can it Be Copied? Thomas Qvortrup Christensen Confederation of Danish Employers CICERO FOUNDATION SEMINAR Paris 15 February 2007
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The Danish situation on Labour market Low unemployment in relation to other EU- Member States and a significant fall in unemployment in the 90s.
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Unemployment NOTE: September 2006. SOURCE: Eurostat. Per cent
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The Danish situation on Labour market Low unemployment in relation to other EU- Member States and a significant fall in unemployment in the 90s. Lowest unemployment since 70s ! –shortage of labour Among the countries with the highest participation and employment rates. Low youth-unemployment
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Main characteristics of the Danish employment policy The active labour market policy in Denmark has traditionally been built on a broad political consensus Close involvement of the social partners –Support of active line –Involved in the regional/local management and implementation
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The Danish flexicurity model Flexible Labour market Generous Benefit system Active labour market policy (ALMP) Qualification effect Motivation effect High flexibility Many job openings: 800.000 job shifts per year 300.000 new jobs per year 300.000 jobs disappear each year Benefits High compensation for low-wage groups: 90 pct. Duration: 4 years ALMP Emphasis on upgrading of skills Test of availability
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Average Job Tenure in OECD Years SOURCE: CEPS (2004).
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(4,3) ( 3,6) (2,2)(4,9)(7,4) (9,1) (6,7) (3,9) (5,0) (9,1) (8,4)(10,8) (4,0) (10,8) Employment Security NOTE: Figures in brackets are unemployment rates in 2001. SOURCE: CEPS (2004) and Eurostat. Scale from 1-10 – the higher the number the more secure, 2001
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Participation in Continuing Education Per cent of employed, 2003 SOURCE: OECD (2006). NOTE: Covers non-formal job-related continuing education and training over the previous 12 months.
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Educational Costs at Company Level Per cent of total labour costs for educational training in private companies, 1999 SOURCE: Eurostat (2002).
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Regulation by Framework Agreements Collective agreements cover aprox. 90 pct. of the employed in companies affiliated to DA member federations Framework agreements Supplemented by agreements at company level
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Employment Regulation Collective agreements the primary regulation: Wages Working time, overtime Redundancies, shop stewards, extra holidays Sickness pay, maternity leave, pension, training, Legislation only on specific topics: Holidays Health and safety Equal pay and equal treatment (sex, race, religion etc.)
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Flexicurity in Europe? Outcome of long history Social partners role Social security, pensions, health care are not a part of a specific position High degree of flexibility for all groups ALMP – availability-testing and upgrading is very expensive Company structure. Mainly smaller firms
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Challenges Globalization Ageing Changes to the Danish system – dynamics is crucial
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Low Availability of Unemployed Per cent of unemployed, 2005 SOURCE: Special report from Statistics Denmark. Years old
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Making Work Pay Incentives to work for the lowest paid are small 26 per cent of the unemployed gain less than 70 Euro/month if they get a job. 12 per cent of the employed gain less than 70 Euro/month compared with the unemployment benefit. 5 per cent of the employed earn less than if they were unemployed. SOURCE: Rockwool Foundation (2003).
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