Published December 2021
Is the Danish labour market equipped for future needs?
The Danish social model has justly received international attention in terms of ensuring an efficient and dynamic economy while also ensuring an appropriate income distribution. One of the things often highlighted is the Danish labour market model, called flexicurity, which combines a high level of labour market flexibility with a well-developed safety net.
The model is a result of a long tradition of collective agreements between the social partners that cover pay, working time and other conditions. Another characteristic is the collaborative democracy which enables parties to enter into broad agreements across the political blocks. One of the results of this is the implementation of comprehensive labour market reforms, backed by both sides of the Danish parliament over the past 25 years.
Can Denmark do more?
In 2021, reforms of the labour market have again been on the political agenda. The government has presented its reform programme “Denmark Can Do More I”. Several opposition parties have tabled specific reform proposals, and a reform committee has been appointed that is to look at the potential of new reforms and that will submit recommendations sometime in 2021 and 2022.
In this report, we centre on the structural challenges faced by the Danish labour market. The dynamics in the Danish labour market are high compared to other countries. Our analyses indicate, however, that the flexibility of the labour market may be challenged.
The Danish social model is dependent on a high level of employment to sustain the balance of public sector revenue and expenditure. Young Danes not enrolled in education is a group that is often singled out because it holds an unreleased employment potential. One of our analyses show that, over the past 30 or 40 years, the group of uneducated 25-year-olds has grown much smaller yet weaker measured by employment and income. Here, the labour force potential is probably less than many would think.
The child penalty
Women’s pay drops compared to that of men once couples have their first child. Our analysis shows that the gap is larger for low-skilled women and narrower for couples where the male partner takes a larger share of the maternity leave. Much of the pay gap is probably caused by the family’s decisions when it comes to prioritising career, working time, and distributing chores. Earmarked leave might change some of that.
Check out the report and get insights into:
- - The dynamics of the Danish labour market
- - The edge of the labour market
- - Men and women in the labour market
- - The labour market of the future
You can read about the results of these analyses and many others in this executive summary of the full Danish report. We also follow up on recommendations and ideas for the Reform Committee’s work from previous reports in the Small Great Nation project.
We hope you enjoy the read!