Unemployment benefit cuts undermine the Danish model

The Danish word ”torsk” (cod) can mean both a fish and a particularly stupid person. So it was no coincidence that cod was on the menu when Danish trade unions set a table for Denmark’s 179 members of parliament in front of the Danish Folketing [parliament] as it opened after the summer recess as tradition has it on the first Tuesday of October.

The trade unions are angry with the government. Unusually angry. The cod stunt, newspaper opinion pieces and newspaper adverts have all been part of a major media offensive from the trade union representing public sector employees with some 500.000 members, protesting against the fact that from January 2013 unemployed people will only be allowed to collect unemployment benefits for two years, compared to four years today. With that reduction, the Social Democrat-led government undermines the entire Danish labour market model, warned trade union leaders in a joint opinion piece ahead of the opening of parliament.

Safety on thin ice

The Danish model leaves a relatively large part of labour market policies to the social partners, and the model rests on the fact that the partners’ agree workers can be dismissed relatively easily as long as they can emerge economically safe when they loose their job. The unions argue a shorter unemployment benefit period means that safety is on thin ice, and they threaten they will demand an introduction of longer warning periods for redundancies.

The unions are not swayed by the fact that the government has pledged 330m Danish kroner (€44.2m) for an emergency package which aims to find jobs for those who are about to loose their right to unemployment benefits. They don’t believe it will be possible to find jobs to everyone who is affected. Unions have set as a minimum demand that government must reduce from one year to six months the period people must work before again having earned the right to receive unemployment benefits.

This demand is echoed by the Red-Green Alliance (Enhedslisten), which traditionally supports the government in parliament, and by the government coalition partner the Socialist People’s Party (SF), while coalition partner the Danish Social-Liberal Party is completely opposed to the reduction in unemployment benefits. This means Prime Minister Helle Thorning-Schmidt faces a difficult task when she must negotiate the 2013 budget. She did not mention unemployment benefits at all during her opening speech in parliament and chose to focus on outlining a school reform which aims to secure a better education for Danish children and youth.