Combining a High level of Welfare with Flexibility – Is the Danish Labour Market Approach a Model for Stagnating Eurozon

1. Combining a High level of Welfare with Flexibility – Is the Danish Labour Market Approach a Model for Stagnating Eurozone Countries? Thomas Qvortrup Christensen Confederation of Danish Employers CICERO FOUNDATION Paris 23 February 2006

2. The Danish situation on Labour market • Low unemployment in relation to other EU-Member States and a significant fall in unemployment in the 90s.

3. Unemployment NOTE: December 2005. SOURCE: Eurostat.

4. 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 ! • Among the countries with the highest participation and employment rates. • Low youth-unemployment

5. Main characteristics of the Danish employment policy • The active labour market policy in Denmark has traditionally been built on a broad political consensus • A high degree of regionalisation of the administration – 14 independent regions/counties in Denmark. (From 1. January 96 municipalities) • Close involvement of the social partners • Support of active line • Involved in the regional management and implementation

6. The Danish flexicurity model • High flexibility • Many job openings: • 800.000 job shifts per year • 300.000 new jobs per year • 300.000 jobs disappear each year Flexible Labour market Qualification effect Generous Benefit system ALMP Emphasis on upgrading of skills Test of availability Active labour market policy (ALMP) Benefits High compensation for low-wage groups: 90 pct. Duration: 4 years Motivation effect

7. Average Job Tenure in OECD Years SOURCE: CEPS (2004).

8. Employment Security Scale from 1-10 – the higher the number the more secure, 2001 (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) NOTE: Figures in brackets are unemployment rates in 2001. SOURCE: CEPS (2004) and Eurostat.

9. Participation in Continuing Education Per cent of employed, 2004 Source: OECD, Education at a Glance, 2005

10. Educational Costs at Company Level Per cent of total labour costs for educational training in private companies, 1999 SOURCE: Eurostat (2002).

11. Flexible Regulation in Denmark Main Characteristics Basic principles established more than 100 years ago Regulation at company-level through collective agreements Disputes are handled by the two sides of industry solely

12. 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.)

13. 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

14. Flexicurity in Europe? • Outcome of long history • Social partners role • Social security, pensions, health care are not a part of a specific position => cost for employees to change jobs are very small • High degree of flexibility for all groups • ALMP – availability-testing and upgrading is very expensive • Company structure. Mainly smaller firms

15. Challenges • Globalization • Ageing • High cost of educations, but DK not in top – and decreasing • Changes to the Danish system