A MAGIC FORMULA

FLEXICURITY: When foreigners speak about the Danish Model, they are often thinking mainly of the Danish labour market, which many see as having a magic formula. Workers and other employees in Denmark enjoy good wages and social benefits. Nonetheless, Danish companies in many industries are among the most competitive on the world market.

The Danish workforce is among the most productive in Europe and no restrictions apply regarding overtime, allowing companies to operate 24 hours a day, 365 days a year if they wish.

At the same time, Danish workers are among the most highly organised in the world – 85% belong to a union. As the employers are equally highly organised, the labour market enters into agreements without state involvement. It also disciplines itself through a specially developed labour law system. This ensures robust agreements lasting several years, and few working days are lost due to conflicts.

A unique and crucial point is that Danish employers can fire employees at very short notice. This allows the companies to adjust to changing market trends without suffering losses. Those losing their jobs do not suffer either, as the state immediately steps in with unemployment benefits that are not very different from the original wages.

Moreover, the unemployed have a good chance of finding another job quickly, as Denmark invests heavily in further education and retraining. The retraining opportunities also mean that industries that are short of labour, or new industries, do not have to wait long for the necessary workers.

The employment rate for women is exceptionally high, perhaps the highest in the world: 73.1% in 2005 as against 79.4% for men. With most women in Denmark having full-time jobs, the labour market is consequently enriched with a lot of talent, which would otherwise have remained in the kitchen and nursery. The massive employment of women has become possible through gender equality and a public childcare system that allows both parents to have full-time jobs without worrying about who will look after the children.

Both employers and employees agree on the success of the Danish Model with its combination of flexibility and security, known as ’flexicurity’.

“But there’s always room for improvement,” says the chairman of the Joint Association of Danish Unions, Hans Jensen. “The way the principles have been practised for many years has produced only small and unimportant hurdles in the collaboration. And as long as the government accepts the labour market conditions and ensures security, then we accept the flexibility part.”

THE DANISH MODEL Denmark is often called the Welfare State Denmark. Another expression often used is the Danish Model. What do they mean? In a way, it all started in the world of poetry. The clergyman, author and politician N.F.S. Grundtvig (1783-1872) wrote in a song about Denmark that a country has progressed far when “few have too much and fewer too little.” This is precisely the formula for the Danish welfare state. With taxes as a tool, an equalisation of income is achieved so that everyone has the necessary material framework for living a reasonable life. The model means that 33% of taxes (2005) is paid back to the citizens as transfer income and that the public sector is so large that it accounts for 30% (2005) of all employees. Nonetheless, there is no spirit of revolt against the tax burden in Denmark, although it was 50.1% in 2005 and thus one of the highest in the world. The people notice that they are getting something for their money – in addition to the transfer income, also virtually free education and free medical and hospital services. Moreover, the ideological debate about whether the public sector should become smaller or larger in relation to the private sector has almost disappeared.