Flexicurity - The Danish Active Labour Market Policy: Can it Be Copied?

1. 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

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 Per cent NOTE: September 2006. 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 ! –shortage of labour • 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 • Close involvement of the social partners • Support of active line • Involved in the regional/local 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. (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 Scale from 1-10 – the higher the number the more secure, 2001 NOTE: Figures in brackets are unemployment rates in 2001. SOURCE: CEPS (2004) and Eurostat.

9. Participation in Continuing Education Per cent of employed, 2003 NOTE: Covers non-formal job-related continuing education and training over the previous 12 months. SOURCE: OECD (2006).

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

11. 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

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. 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

14. Challenges • Globalization • Ageing • Changes to the Danish system – dynamics is crucial

15. Low Availability of Unemployed Per cent of unemployed, 2005 Years old SOURCE: Special report from Statistics Denmark.

16. 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).