COPENHAGEN Thue Christian Thann Nikolajsen, 26, graduated as a physicist from the University of Copenhagen last November. The master’s degree was born with quantum physics studies. Since then, Nikolajsen has applied for about 70 jobs.
– According to the instructions of my unemployment fund, I have to apply for an average of “1.5 jobs” per week. It is very doable.
Nikolajsen must keep in regular contact with both his unemployment fund and the employment office. In the video, he talks about his responsibilities and opportunities as a job seeker:
Denmark’s labor market model emerged in Finland’s election debates to partly explain why there are so few unemployed people in Denmark. In March 2023, Denmark’s unemployment rate was 2.8. In Finland, the unemployment rate for people aged 15–64 was 7.0.
In this article, we present the Tanska model, from which the tiered earnings security and the easing of dismissal protection emerged in Finland. However, the tiered model was not yet in use in Denmark during the Finnish elections.
In Denmark, unemployment funds play a significant role. They actively support the employment of their members with, for example, regular meetings and training. In Finland, cash registers have a narrower task.
Flexible labor market and support network for the unemployed
Danish labor market experts generally refer to the Danish labor market system as flexicurity. The term refers to flexibility and a safety net. Chairman of Faglig Fælles A-kasse umbrella organization representing unemployment funds Eva Obdrup illustrates how to quickly hire and on the other hand also fire employees.
– You may hear on Monday that your workplace is laying off people, and on Wednesday you will be without a job. On the other hand, you can count on the fact that you will not be left with nothing, but will start receiving support right away.
According to Obdrup, the two-day notice period applies to, for example, those working on buildings and many office workers. In trade and the public sector, for example, notice periods are longer: for example, three months after three years of employment and half a year after ten years.
The unemployment benefit starts to increase from the day the salary payment ends, be it after two days or two months.
Denmark’s unemployment benefit is at best around 3,000 euros if a person has paid full membership of the fund for at least four years straight and has earned at least 3,700 euros per month. With a monthly income of 2,500 euros, the unemployment benefit is about 2,000 euros.
Denmark’s unemployment benefit seems to be significantly higher than Finland’s. Although the cost of living and the general salary level in Denmark are higher than in Finland, Danish support is also relatively better than Finnish support. This is often forgotten when talking about the Danish model, points out the senior researcher who studied the flexicurity model Rolle Alho from the E2 Research Institute.
In his opinion, when talking about staggered earnings security and easing the protection against dismissal, the characteristics of different countries are too rarely taken into account.
– Denmark’s geographical location is better, and distances within the country are shorter than in Finland. In addition, Danish companies are more internationalized than Finnish companies and the employment situation has long been better than in Finland, Alho states.
According to Alho, these can have a positive effect on employment and job acceptance in Denmark.
In Finland, the notice period depends on the duration of the employment relationship. For example, after three years of employment, the notice period is one month, and after ten years, four months.
The unemployment benefit for those who have been in the working life will improve, for those who have just graduated, it will decrease
The public has talked about the Danish model, where the unemployed receive more support at the beginning of their unemployment period, and then the support drops significantly. Until the spring of 2023, only one day’s benefit dropped every four months from the monthly unemployment benefit, and not even that if the job seeker had done some part-time work.
The graduated model was only introduced in May 2023. According to the model, those in working life receive a higher unemployment benefit than before for the first three months of unemployment, after which the monthly benefit drops by a couple of hundred euros. After that, a maximum of one day’s allowance is deducted from the allowance every four months, as before. Support can be received for two years.
On the other hand, the unemployment benefit for newly graduated familyless persons is now lower than before, at most a good 1,600 euros. After three months, the amount decreases, and in total you can only receive employment support for one year. New graduates with dependents will receive the same amount of support as before for two years without gradation.
In Finland, the gradation of financial support has only been discussed so far.
The umbrella organization of Denmark’s cash registers takes a cautious approach to the country’s fresh changes.
– It is good that employment support is partially improved, but it is problematic that it happens at the expense of recent graduates, Obdrup states.
Obdrup adds that the non-financial support provided by cash registers and employment agencies is an important part of the flexicurity system.
– Regular meetings with employment counselors and various trainings keep jobseekers active and help them find a new job quickly.
According to Statistics Denmark, unemployment has remained below three percent for a long time. According to the Labor Market Agency, there are more than 13,000 long-term unemployed, i.e. people who have been without work for at least a year. That is about 14 percent of the unemployed. There are much more long-term unemployed people in Finland, more than 33 percent of unemployed job seekers.
– A model that encourages a more active job search can work now that the labor market is good. But the support model should react if the economy changes, says Obdrup.
According to him, a job seeker finds a new job in about three months on average.
Reasons behind record low unemployment
Since the tiered model has only recently been introduced, there must be something other than tiered support behind Denmark’s low unemployment.
Chief economist at Arbejderbevägelsens Erhvervsråd, a think tank specializing in the labor market Sophie Holme Andersen sees two reasons for Denmark’s good employment situation. According to Holme Andersen, the main reason is the general economic situation.
– The Danish economy has continued to rise after the lifting of the corona restrictions. It has kept the demand for labor high, leading to record high employment and near record low unemployment.
According to the think tank, the quick recovery is partly due to the politics of the corona era, where investments were made in public projects and part of the wages of employees were paid to avoid large layoffs. Thus, companies were immediately ready to respond to demand when the situation improved.
Holme Andersen names flexicurity as the second reason.
– People are ready to be more flexible in the dismissal rules when they know that they will receive unemployment support and the necessary training if they become unemployed, Holme Andersen writes to .
Researcher at the University of Tampere Fairy tale Ojala says that emphasizing gradation is not very fruitful. The entire benefit system should be viewed as a whole.
According to Ojala, it would be essential to assess the situation of those living on the smallest subsidies. According to him, for example, those receiving income support should not work, and they do not have access to services that promote employment.
According to him, Denmark could be a model for developing human capital.
– If it is thought that the unemployed do not want to work because of their laziness, they must be forced to work by staggered benefits. If, on the other hand, we think about where everyone could develop and offer their work input to the labor market, the focus would be on supporting the job seeker’s work ability and professional skills.
Ojala reminds that in Finland it should also be examined whether the pay and working conditions are such that they encourage work. Now the lowest collective bargaining wages are too low.