Emergency rescue plan for Denmark’s long-term unemployed

Can Denmark’s Social Democrat-led government accept that 16,000 unemployed Danes loose their unemployment benefits in the new year? This has been one of the hottest political topics this summer. The government has responded with an ‘emergency plan’ which aims to get those affected back into work - but there will be no guarantees for jobs or for longer periods of receiving unemployment benefits. 

From January 2013 new rules mean anyone who has been unemployed for more than two years loose their right to further unemployment benefits. Some of those affected will go on to receive a smaller sum in cash help. Others are not entitled to this when their unemployment benefit period ends - for instance if they own a house which they then could be forced to sell.   

So far Danes have been able to claim unemployment benefits for four years, and the decision to halve this time was taken by the previous centre-right government. When the Social Democrats, the Danish Social-Liberal Party and the Socialist People’s Party came to power, the new government chose to stick to the previous government’s decision, even in the face of major protest from the trade union movement and from the government’s political supporters in the Red-Green Alliance.

From no to yes

The protests have intensified over the summer as the end of the year approaches and the first of several thousands of unemployed people loose their right to claim unemployment benefits. Both trade unions and the Red-Green Alliance have demanded amendments to the unemployment benefits rules. The government has flatly refused to change them, but during summer cracks began showing within the governing coalition on the issue. 

The Socialist People’s Party said the benefit claimants should get some help, while the Social Democrats and the Social-Liberal Party at first said no. But faced with enormous criticism in the media all summer for not caring about long-term unemployed in a difficult situation, the government established a working committee in August together with the social partners. The result was a so-called emergency package aimed at securing extraordinary efforts are made to find jobs for those who will loose their benefits.

No job guarantee

The emergency package comes with a 332m Danish kroner (€44.5m) pot, and one of its main points is the increased use of so-called job rotation. Permanent staff in a company receive further education while their jobs are being looked after by temporary staff and the company gets money to pay them. The unemployment insurance funds will establish a special task force dedicated to the unemployed who will loose their benefits come January, as well as a fast track system to secure faster access to internships or wage subsidised jobs and focused job-seeking help. 

The emergency package is in itself no guarantee for finding jobs to all the benefit claimants who will loose their benefits in the new year, yet the package is viewed by most to be a step in the right direction. There is also broad agreement that this does not mean the end of the debate on the unemployment benefit system. The Red-Green Alliance has for a long time said it will push for changes to the system when it is invited to support the government during next year’s budget talks.

The Red-Green Alliance wants the government to change the amount of time you need to work in order to earn the right to claim unemployment benefits when you loose your job. Today Danes must work for one year before they’re entitled to unemployment benefits. The Alliance wants to halve that period and the party says this is “as close to the most ultimate demand” they will ever make at negotiations on the finance law. The Danish Confederation of Trade Unions (LO) agrees. LO is happy to see the emergency package as a step in the right direction, but does not think it will be enough to stop some unemployment benefit claimants from falling outside of the benefit system in the new year.