Reform - No job centers, hardly any penalties: Denmark wants to radically change its unemployment policy
Fewer rules, fewer talks, fewer sanctions, no civil servants, more freedoms: A Danish expert group consisting of economists and bureaucrats has presented recommendations for the reform of the unemployment policy. For a year, they have intensively dealt with the integration of people into the labor market. The result are six proposals to the government, which were presented in a 200-page report on Monday. If the government implements these measures, it would mean a radical overhaul of the existing system.
At the end of the day, it's always about the money. The so-called SVM government in Denmark, consisting of Social Democrats, Liberals, and Moderates, wants to save three billion Danish crowns (more than 400 million Euros) and let some air out of the bloated unemployment system. The citizen should be put in the spotlight, and both civil servants and the unemployed should receive more freedoms.
Almost 100 Danish Job Centers could close
With these proposals, the experts believe that the targeted savings could be achieved by 2030. Alone in the municipalities, costs would decrease by around 160 million Euros. According to the Danish news agency Ritzau, the government spends annually around 1.5 billion Euros on employment services, which is approximately 1.5% of the GDP and makes Denmark one of the countries with the highest expenditures worldwide in this field.
The recommendations aimed at making the system cheaper, simpler, and more human-friendly without affecting employment. The leader of the expert group, Professor Claus Thustrup Kreiner of the University of Copenhagen, emphasized the need for liberalization and simplification of measures to get people back to work. Despite a high employment rate, many Danes struggle to get back into earning a living. Therefore, the system needs to be "overhauled."
One of the most radical measures would be the abolition of the 98 Job Centers in the country in favor of a decentralized organization by the municipalities. These should receive more room for maneuver. The target groups for employment measures should also be reduced, and special regulations should be abolished. Civil servants should have more freedoms and focus more on individual care. Conversations and appointments with the authorities should be shortened, or even completely eliminated.
Germany debates more sanctions
Even in the case of sanctions, the expert group recommends loosening the screws significantly. Nine out of ten should disappear. In the future, there should only be sanctions if "trust has been broken." Those who are sick and so-called "job market outsiders" should particularly benefit from this. However, sanctions for the unemployed should be maintained, as they are still considered effective.
In comparison to the debate about basic income in Germany, the Danish ideas appear rather contradictory. Here, one rather wants to tighten the screws or completely abolish benefits. So, the traffic light coalition wants stricter penalties for social fraud and black work. Federal Chancellor Olaf Scholz (SPD) said in the ARD summer interview, "it's about making sure that no one can press down on anyone, that everyone works to overcome their own unemployment."
CSU Secretary-General Martin Huber urged the traffic light coalition even to rescind the introduced citizen's income at the beginning of last year and instead reinstate the preserved social welfare. Meanwhile, demands from the FDP and the Union to exclude Ukrainian refugees from the citizen's income have been voiced. Simultaneously, the Federal Employment Agency warned against cuts in the social budget.
Reform of Unemployment Policy would reduce bureaucracy
Could the new Danish model serve as an example? Thustrup Kreiner sees a genuine added value in his reform proposals. "There is a great potential to replace the current unitary system with a new approach that puts the needs of the individual citizen at the center." He dismisses the current system in Denmark. One has built a "centralized, detailed employment initiative," in which people are "hunted." "The system is complex and opaque primarily because coercion leads to dissatisfaction," quotes the newspaper "Politiken" the economics professor.
The reform would reduce bureaucracy, as significantly fewer resources would be needed for consultation and sanctions. Approximately half of the costs go towards administration, writes the newspaper "Berlingske." This is more than for integration into the labor market alone.
Criticism from Associations – Result expected after the summer
However, it is not expected that the planned major reform will negatively affect unemployment in Denmark. Quite the contrary. For 2030, a very small positive effect is even expected: 500 full-time employees more.
However, there is criticism. The Danish municipalities, for instance, are critical of the plan to save so much money. Similarly, the umbrella organization FH sees it that way. "In Denmark, there is a high demand for qualified labor forces. It is incomprehensible and short-sighted to save by making the unemployed fit for the labor market," says Nanna Højlund from FH. The union fears that the new recommendations will deprive the unemployed of "practically all their rights."
The now prepared proposals of the expert committee are expected to influence the work of the government. A result is expected after the summer break. "I am looking forward – as is the rest of the government – to dealing with the comprehensive report," said Labor Minister Ane Halsboe-Jørgensen. However, the last word has the parliament. The SVM government, however, has a broad majority in the Folketing.
In light of these reforms, Denmark might consider reducing the number of employment offices from 98 to a decentralized system managed by municipalities, aiming to save costs and provide more freedom for civil servants and the unemployed. On the other hand, Germany is currently debating whether to reduce or eliminate certain sanctions for the unemployed, focusing on those who have broken trust, while maintaining sanctions for those who continue to remain unemployed.
