Negotiations on flexi-jobs and early retirement deadlocked

Negotiations in Denmark over a new early retirement scheme and special "flexi-jobs" for people with a reduced capacity to work were postponed in late 2000 due to disagreement between the parties. The LO trade union confederation wants people in "flexi-jobs" to be able to join unemployment insurance funds and thus have rights to unemployment benefits and early retirement pay, while the DA employers' confederation is strongly opposed to this idea. With the social partners unwilling to compromise on this point, the government may bypass them in introducing a reform.

Ambitious quadripartite negotiations on the "inclusive labour market" were scheduled to start in early October 2000, involving the government, local authorities and the social partners - the Confederation of Danish Trade Unions (Landsorganisationen i Danmark, LO) and the Danish Employers' Confederation (Dansk Arbejdsgiverforening, DA). The aim was to increase employment, mainly by supporting groups with a reduced capacity to work, such as long-term unemployed people, some groups of people with disabilities and those on long-term sick leave. This was to be achieved by means of state-subsidised jobs with special conditions, including "flexi-jobs" (DK9906130N). Surprisingly, the negotiations were postponed with reference to the ongoing negotiations concerning the 2001 state finance Act. However, this turned out not to be the full truth - in reality, the negotiations had become deadlocked and, in spite of several attempts to relaunch them, no progress has since been made.

The blockage of the negotiations affected plans to reform the early retirement scheme (DK9902111N), which should have been in place by the end of November 2000. The stumbling block which led to the breakdown of the negotiations on both points - which had become mixed up - was the theme of flexi-jobs. Flexi-jobs are a key issue in the debate on labour market support for groups with a reduced capacity to work, because the focus of the proposed reform is on what such people can do, as opposed to the earlier focus on what they cannot do. There is consensus among the government, the local authorities and the social partners as to the need to get more people into employment by means of flexi-jobs, but they are far from agreeing on how this can be done, and especially on the subject of early retirement rights.

LO is pressing for the acceptance of flexi-jobs on a equal footing with ordinary jobs, so that people performing the former may become members of trade union-run unemployment insurance funds on normal terms. They would thus be entitled to unemployment benefits and voluntary early retirement pay. This point has proved controversial, with LO being accused of merely seeking new members. On the other hand, there are fears that existing members of unions and their unemployment insurance funds may take offence when they learn that people in non-standard jobs will have the same rights as they have.

DA emphasises that members of unemployment insurance funds should be available for work on a full-time basis and people on flexi-jobs will, by definition, not be able to meet this requirement. Flexi-jobs could thus unintentionally increase the amount of unemployment benefits paid out, with many people receiving benefits while waiting to find non-existent flexi-jobs. DA has also implicitly indicated that employers will not be able to create as many new flexi-jobs as desired, unless the government reduces some of the new business taxes envisaged in the finance Act. However, this is unacceptable for the local authorities, as the government proposes that local authorities should cover 65% of the subsidy to be paid to people waiting for a flexi-job.

The government proposes that it should be possible for people in flexi-jobs to earn entitlement for a voluntary early retirement pay scheme through the unemployment insurance funds without being full members. It is not unlikely that the government may now choose to bypass the social partners in implementing a reform. Negotiations on early retirement will probably be resumed before the end of 2000, while negotiations about the inclusive labour market will not be resumed until January 2001. Figures from Statistics Denmark show that it has been possible to create only 2,000 flexi-jobs in the course of the past 12 months, compared with the government's ambition to create 6,000 such jobs per year. Most of the flexi-jobs have been established in the public sector.

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