Job prize to get more Danish long term unemployed into work

2,500 taxfree Danish kroner a month just to work. That is the offer the Danish government is offering long term unemployed Danes. It has proposed legislation to introduce a “jobpræmie” – job prize – equivalent to up to 10 percent of a person’s income for no more than 18 months; a possible total of 45,000 Danish kroner (€6,000). 

The measure is planned to come into force on 1 April and will be valid for two years. It is targeted at some 164,000 Danes who have been unemployed and received benefits for a long consecutive period of time.  

Minister for Employment Troels Lund Poulsen from Venstre, the Liberal Party of Denmark, has said the job price will show people who have been unemployed for a long time that their budget will improve if they find work. But whether this will mean more long term unemployed people will get back into work is doubtful, thinks Professor Henning Jørgensen at Aalborg University’s Center for Labour Market Research, CARMA:

“Danish decision makers are great believers in economic incentives. Now they believe they can use a carrot to create greater motivation among people to work. Yet previous job prize experiences have been very negative both in Denmark and elsewhere,” he says.

Tried by both political left and right

“Jobpræmie” has been tried both by the political left and right in Denmark, with no discernible results, argues Henning Jørgensen. This time there is more money in the pot, but he does not believe that this will make a difference. It is the diagnosis that is wrong, he believes.

“Research shows that a lack of motivation for work is not the primary problem for the long term unemployed. Their problem is rather a lack of opportunity to offer their labour on the open labour market. This is often because the long term unemployed have a lot of other things to deal with, like illness or social problems.”

Prize money will not solve that, says the professor. He recommends a very patient approach and a return to the 1990s individual action plans for the individual long term unemployed.

More in casual jobs

The job prize is the latest in a range of economic incentives aimed at long term unemployed people on benefit. In April 2016 a parliamentary majority introduced a cap on unemployment benefits and a so-called 225 hour rule which means people claiming unemployment benefit must work 225 hours a year in order to retain their full benefit amount. 

This seems to have had an effect: Since the introduction of the 225 rule there has been a considerable rise in the number of people who carry out some work while on unemployment benefit. Working only a few hours each week allows them to avoid having their benefits reduced. A recent analysis from the Ministry of Employment shows that 25 percent more people on unemployment benefit found work in the period from April to September 2016. 

Job centres in many Danish municipalities are working systematically to help long term unemployment benefit claimants and other vulnerable citizens find casual jobs. A new booklet from the Danish Agency for Labour Market and Recruitment, STAR, which is under the Ministry of Employment, aims to inspire job centres in all municipalities to work even more purposefully with helping citizens on the fringes of the labour market find casual jobs which are not backed up by public money support.      

“Experience shows that even a few hours can increase motivation and belief in work, and that municipalities to a greater degree should exploit the fact that there are many jobs in the Danish labour market which last for only a few hours,” reads the inspiration booklet, which is called “How do people on the fringes of the labour market find paid work?” 

Job café with perspective

The job centre in Denmark’s second largest municipality, Aarhus, has so far helped nearly 200 people find casual jobs with proper conditions. It has offered tailored help to find casual jobs for people on unemployment benefit who are ready to work, and to those on so-called resource pathways; measures aimed at helping vulnerable and disadvantaged people get ahead in the labour market.  

A job café is the central element in Aarhus municipality’s strengthened drive to help unemployment benefit claimants who are ready to work. The café helps people find concrete work opportunities via online search platforms, there is training in how to contact a business, in how to use networks while looking for jobs and help to write a CV and prepare for a job interview.

The job café is a voluntary measure, and people can apply to join via a job advisor or a job centre case worker. So far many people have wanted to join the job café, and many people return to get feedback on a job application they are working on or to prepare for a job interview, says Trine Thomsen at Aarhus municipality.

Sung is one of those who got help from the Aarhus municipality job café to find a casual job. He is 35 and is not ethnically Danish. For many years he has claimed various benefits, including being on a resource pathway. He lives alone, suffers from bipolar disorder and has periodically been abusing drugs. 

Talking to the job centre, Sung realised he was very motivated to use the language skills he had developed after five years at university and by interpreting for people in his own network. A job advisor at the job centre saw that Sung’s skills meant he had a chance to find paid part time work, and found a newspaper ad for a temporary job for a private interpretation firm. 

At the job centre job café Sung got help to write a job application and to prepare his CV. He sent an application and got an interview. Before attending, he got more help at the job café to prepare for the kind of questions the employer might ask him, and to find out how much he should tell them about his illness. Sung did the job interview and got the job.