Lukewarm reception for government's new labour market initiative

In October 2001, the Danish Minister of Labour launched a new proposal aimed at reorienting labour market policy. All parties sees this initiative as 'a step in the right direction', but none find it sufficient. It is seen more as a matter of adjustments to make some parts of the current 'activation' system for unemployed people more flexible. The social partners are not enthusiastic.

The Danish system for the 'activation' of unemployed people who are covered by unemployment insurance - ie the offer of training and placement services to return them to employment (DK9810187F) - has long been accused of being ineffective and bureaucratic. This criticism has come from several actors within the system, politicians, civil servants and the social partners (DK0108130N). In an internal study carried out by the Ministry of Labour (Arbejdsministeriet), unemployed people themselves have stated that they are relatively satisfied with the system, but the media have highlighted a number of examples of unemployed people participating in meaningless activation measures.

In October 2001, the Minister of Labour, Ove Hygum, launched a long-awaited initiative to reorientate labour market policy. The intention of the government is that the system should be simpler and more transparent and that the motivation and involvement of individual unemployed people should play a larger role in individual activation programmes.

Active jobseeking

The total period of unemployment benefit entitlement (which will continue to be four years) will in the future be split into a jobseeking period of nine months and a job placement period lasting for the rest of the benefit period (ie 39 months).

During the first period, the unemployed person will be assisted by the Public Employment Service (Arbejdsformidlingen, AF) in 'active jobseeking'. The AF will set up a new national curriculum vitae (CV) and job 'bank', not only for unemployed people, but also for people who already have a job and for enterprises wishing to recruit new employees. If the efforts to bring the unemployed person back into employment during this nine-month period are not successful, an action plan is to be drawn up in cooperation with the public employment services. This action plan will be much more individualised than previously, in an attempt to meet the specific needs of the individual unemployed person. Under the present system, the unemployed person is required to be involved in activation measures for 75% of what is currently known as the 'activation period'. According to the new proposal, unemployed people are now to be offered vocational training and education for a minimum period of 17 weeks during the first year of the job placement period, 21 weeks during the second year and 26 weeks during the third year. However, if requested by the unemployed person, the AF has a duty to offer activation measures during the entire period of 39 months .

New incentives and attitudes

The government's initiative will also change the relationship between 'rights and duties' in the system. The AF has a duty to offer full-time activation, and the unemployed person has a right only to participate in vocational training, jobseeking activities and education for the periods mentioned above.

Special requirements are also introduced for those in the system who are responsible for getting unemployed people back into employment, ie the regional public employment services and providers of courses. Managers of the regional employment services will be paid on the basis of results, according to a 'how many into work' principle, and the same will apply to private providers of relevant training programmes. At the same time, a certain element of private competition will be introduced as temporary work agencies will be given better possibilities for competing with the public employment services in providing jobs for unemployed people.

Social partner views

The Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA) supports the new performance pay system for job placement staff and welcomes the establishment of a national CV and job bank. However, apart from these proposals, DA calls the initiative 'an insufficient reform'- although the word 'reform' is actually not used in the government's proposal. 'The entire system lacks flexibility,' says Tina Voldby, head of the DA labour force department. She would like to see a flexible labour market, with the workforce moving across occupational lines and job functions, accompanied by a complete reform of the unemployment insurance system and social assistance system in order to match such a flexible labour market. In this perspective, the government initiative is seen as only a minor change.

The Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) also considers that the new initiative, while cutting bureaucracy, is insufficient. LO believes that the rights of unemployed people are weakened by the new proposed minimum levels of periods of activation measures. First and foremost, states LO, more money should be spent on education in order to bring more unemployed people back into employment. LO also thinks that the national job bank should be used by all employers, so that all job vacancies are advertised through the same channel.

Commentary

The initiative, which the Social Democrat-led government calls a 'reorientation of labour market policy', is in many ways inspired by liberal/conservative ways of thinking and has been met with a certain measure of goodwill on part of the liberal/conservative opposition parties. They see the initiative as 'a step in the right direction' and exactly the same words are used by DA, LO and some researchers. This consensus is so conspicuous that it is tempting to assume that the government has been looking for the 'lowest common denominator' in connection with this proposal. To call it a reorientation of labour market policy, as the government does, is arguably taking it too far. It is more a matter of adjustments of a set of activation measures which is 'still evaluated according to a centrally managed measuring system which, with its 21 different efficiency measures, comes close to being of Soviet dimensions', as one labour market researcher puts it in a commentary on the initiative.

Not even the new financial incentives for job placement staff and trainers are a genuine innovation, but they can, however, be seen as a new orientation within the framework of the activation system. It is an open question whether they will have any effect. Financial incentives may mean that priority will be given only to activities which are profitable, but which do not necessarily lead to the best results. In the end, the whole effort of trying to create jobs and get people into employment requires that employers show a different type of involvement and initiative than just automatically calling for more flexibility on any given occasion. (Carsten Jørgensen, FAOS)

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