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Denmark's flexicurity model threatened

COPENHAGEN (AFP) - Denmark's flexicurity system is under threat as the government has decided to halve the unemployment benefits period as part of a broader austerity move, experts and unionists say.

Only Danes pay more taxes than Swedes
'The Left Party is savers' enemy number one'

Flexicurity, which mixes flexibility for employers -- who can hire and fire personnel easily -- with social security for workers, was instrumental in helping Denmark dramatically slash its unemployment rate and has garnered much attention in other European Union countries.

The famed model is based on one of the most generous unemployment benefits schemes in the world, which includes continuous training and support for the jobless, who can claim up to four years of unemployment benefits.

It has resulted in an extremely flexible labour market: every year, a whopping 30 percent of Danes change jobs, and those between jobs or who get laid off can obtain up to just over 2,000 euros (2,580 dollars) before taxes per month in benefits.

But flexicurity is under threat since the government has decided to halve the length of benefits, Jens Jonatan Steen of the centre-left Cevea think-tank warned.

"By lowering to two years as of July 1 the amount of time one can claim unemployment benefits, the centre-right government has taken down a central pillar of the system: security," he told AFP.

"The height of irony is that Finance Minister Claus Hjorth Frederiksen, who strongly lauded the model, is now the one knocking it down," as part of his drastic cost-cutting measures to put state coffers in order, he said.

Morten Thiessen, the president of the labour commission at the Danish engineers' union, also thinks the government is "tearing down the flexicurity model."

"By taking away the 'security' aspect, flexicurity does not mean anything any more," he said, deploring the loss of what he deems the model's central aspect.

And according to a study by the Interresearch institute, Danes seem to agree.

Planning for the upcoming reduction in unemployment benefits time, two out of three Danes (or 64 percent) said in a survey earlier this year they would request greater job security from employers, with longer notice before lay-offs and bigger termination packages.

"Employees are starting to pressure their unions to get more from employers," Cevea's Steen said, thereby putting more weight on job security as social security erodes.

At the Danish Confederation of Trade Unions, LO, international secretary Marie-Louise Knuppert told AFP the decision to cut benefits' length was "a very bad idea, because the (unemployment) period gives the possibility to acquire new skills."

The cuts will affect those who have the hardest time entering the labour market, she said.

But for her, the cut in the amount of time one can be on unemployment benefits does not mean the end of the flexicurity model.

"The model isn't buried, even though one of its pillars has been shaken, because it rests on many other elements like training for the unemployed and job mobility," she said.

Danish Labour Minister Inger Stoejberg has defended the cuts and say they would not destroy the flexibility of the Danish labour market or "sound the death knell of the Danish model."

"On the contrary, the objective of the Danish model is to quickly integrate people to the labour market, not to leave them on benefits for years," she wrote in an op-ed in June, adding "two years is already long compared to other countries."

For Steen Bocian, Danske Bank's chief economist, the cuts already mean the Danish model is "entering a period of uncertainty."

"Everything will depend on how unions react. They have, just like employers, a central interest in preserving the flexible labour market which has proved to work, and which is to the advantage of workers and employment," he told AFP.

Last Updated (Monday, 19 July 2010 10:43)

 

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