Recommendations ready for new Danish employment policy

Cuts to the job centres’ much criticised activation offers for the unemployed and more focus on unemployment funds. These are among recommendations from a committee led by former Minister for Taxation Carsten Koch. The government has asked it to prepare the ground for a reform of the employment system for unemployed people who have signed up to an unemployment fund. 

After one year in the making, the much anticipated recommendations are now ready and have been sent to the social partners for consultation, before being presented to the government in February 2014. The content will not be made public until then, but leaks suggest an employment policy with a range of new elements to it. 

Unemployment funds to play greater role

One of the committee’s more controversial proposals is that unemployed people with a good chance of finding new work quickly should be allowed to choose whether they want to deal with their job centre or the unemployment fund during the first six months of unemployment.

With that Carsten Koch is interfering in a dispute between municipal job centres and unemployment funds which has been running for years; whose responsibility is it to work with the unemployed?

Today’s rules say unemployed people on benefits must attend meetings and hold conversations both with their municipality’s job centre and with their unemployment fund manager. The unemployment funds feel this is unnecessary, and they have long been pushing to take over the entire responsibility for people during their first six months of unemployment. 

Carsten Koch does not want to go that far, and the municipal job centres and the employers in The Confederation of Danish Employers (DA) are also very much against the idea of strengthening the role of the unemployment funds. They do not believe the funds to be better positioned than the job centres to find jobs.

Meaningless activation targeted 

If the politicians choose to follow Carsten Koch’s recommendations it will also mean an end to forcing unemployed people to take part in guidance and retraining. Instead they will be offered the chance to agree on measures directly with their job centre. This recommendation comes after massive criticism from job centres which have argued that forcing the unemployed to attend special courses and retraining programmes has been both a waste of money and of the time of the unemployed. 

The Carsten Koch committee does, however, stress that the unemployed will continue to be available to the labour market and that they will still have to be available for work in order to be able to collect unemployment benefits.

The committee also wants to give job centres a far more pro-active role in their cooperation with businesses, and they should systematically offer help in terms of recruitment, guidance, retraining and the retaining of workers when they for instance need long term sickness leave. 

Education for lower benefits

Another noteworthy proposal from the committee is to give unemployed people over 30 the chance to take vocational education in return for a cut in their unemployment benefit. This means the unemployed will pay parts of the bill themselves in order to return to the labour market. The committee does not say how much the benefits would be cut, but people should be offered a loan which would take them up to a regular benefit level.

Koch also suggests the system should be better at targeting the unemployed who really need help. Not all unemployed people should be offered six weeks education of their own choosing, which is the case today, the committee says. Unemployed people who can easily find work should loose their right to such training. 

The committee also recommends speeding up the activation for unemployed people over 30. Today this doesn’t kick in until after nine months of unemployment. The committee wants to see activation happening after six months, for instance in the form of internships.  

The committee has also looked into which activation measures actually work. And they all do — except state wage subsidies. The committee found no positive activation effect stemming from that. Wage subsidies could play a positive role as a social measure, however.  

Around in circles in darkness

The government acknowledged the need for an employment policy reform last year, in the wake of severe criticism of municipal job centres’ attempts at getting unemployed people back into work. The Minister of Employment, Mette Frederiksen (Social Democrats) agreed there was a need to reboot the measures aimed at the unemployed, which cost Denmark 6bn Danish kroner (€804m) every year.

“For too long the measures have been running around in circles in darkness. This has led to controls and meaningless activation rather than real retraining and lasting employment. It is our duty to think again,” said Mette Frederiksen as she commissioned the Carsten Koch committee to do their work.

The government will not comment on the Carsten Koch committee’s recommendations until they are made public later in February. After that the government will draft its own suggestion for reform. The aim is to secure a broad parliamentary majority backing and support from the social partners, and to pass the reform in parliament before the summer recess.