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Analysis

New Danish government: A new and challenging course for Danish labour market politics

| Text: Marie Preisler

Denmark’s new centre-right government faces the hard task of reforming the country’s unemployment benefit model.

Denmark gets a new centre-right government after parliamentary elections on 18 June 2015, which sensationally made the Danish People’s Party the country’s second largest party. The exact makeup of the new government is yet to be decided, but it will be led by the leader of the liberal Venstre party Lars Løkke Rasmussen, even though Venstre lost a few mandates.

Negotiations with the Danish People’s Party and the others in the so-called ‘blue block’ are expected to take several weeks, partly due to disagreements about central labour market policies. The Danish People’s Party has promised to improve conditions for people on unemployment benefit, while Venstre says it will not spend one krone more than today.  

The Danish People’s Party also wants to increase public sector spending by 0.8 percent year on year, while Venstre before the election said there would be no increase in spending — a position the party seems to be backing away from somewhat efter the election result.

With this election the Social Democrats achieved its greatest growth for 14 years and regained its historical position as Denmark’s largest party. They still lost power because the parties in the so-called ‘red block’ lost seats. So the Social Democrat leader, Prime Minister Helle Thorning-Schmidt, stepped down both as head of government and of her party after ten years at the helm.

With this, Denmark has lost its first ever female prime minister, but in her leaving speech Helle Thorning-Schmidt said she would not be the last. She was probably thinking of her successor, newly appointed leader of the Social Democrats Mette Fredriksen. She has held several government posts. Her final post was Minister of Justice, and in her period as Minister of Employment she carried out a range of labour market policy reforms, including the controversial halving of the time period in which people could claim unemployment benefit. 

In his first comment to the election results, the president of the Danish Confederation of Trade Unions (LO) Harald Børsting did not hide the fact that he was very disappointed over the change of government.

“It’s rubbish,” he said

At the same time the LO President did express hope for a good relationship with the new government. 

“We will create jobs, that is our priority,” he said. He hopes a centre-right government will cooperate constructively with trade unions.

During the election the Venstre leader Lars Løkke Rasmussen said he would invite the social partners to talks aimed at finding solutions to a range of major social problems, including how to handle the economic challenge of having so many people on social benefits. 

The LO President is ready to accept the invitation:

“We always welcome an invitation to tripartite negotiations,” said Harald Børsting on election night.

The outgoing government helt tripartite negotiations in the spring of 2012, which ended without result.

After claiming victory, Lars Løkke Rasmussen said he wanted to pursue several broad cross-party agreements.

“If we stick together across party lines we can create solid results,” said the Venstre leader.

An unprecedented number of voters changed party during this parliamentary election; a total of 42 percent voted differently than they did last time around. That is far above the normal of one third.

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