European Trade Union Institute, ETUI.

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Labour market reforms in Denmark: background summary

With an unemployment rate of 4.3%, which is very low compared to the European average, the Danish labour market is functioning fairly well. However, the government elected in June 2015 has proposed reforms to encourage people to return to work and stop claiming social benefits, to overcome the labour shortage and to solve the problems associated with the financing of pensions.

  • In June 2015 the government therefore announced plans to overhaul social benefits, adopt tax relief for low and top wage earners, simplify foreign national recruitment and reinstate tripartite negotiation.
  • Tripartite cooperation brings together representatives of the State, employers and trade unions to discuss issues connected with labour market policy. Any bill that may affect the labour market is sent for consultation to the various parties before being submitted to Parliament.
  • The first reform adopted by Parliament on 17 October 2016 has tightened the rules on social benefits to encourage recipients to re-enter the labour market. The reform: 1/ sets a new ceiling for social benefits and tightens the rules on accessing these; 2/ imposes the 225-hour rule (6 working weeks) to retain the right to full benefits; 3/ reduces the leave allocated to recipients of social benefits from 5 to 4 weeks.
  • Tripartite agreements have recently been negotiated.
    • On 17 March 2016 on the integration of refugees through work. From now on, integration will be based on the active contribution of refugees to Danish enterprise, instead of keeping them in passive programmes. The agreement’s main innovation is the adoption of the DA and LO joint proposal on the implementation of ‘basic training for integration’. The agreement offers various incentives to companies that employ refugees in normal jobs (non-aided) during the first two years of their residence in the country.
    • On 19 August 2016 on vocational training, apprenticeship and work placements.This involves adapting the education system to the needs of business and keeping adults in the labour market, given the increase in the retirement age. The aim is to create between 8 000 and 10 000 additional placements and for 30% of young people to choose the vocational stream in 2025.
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