The Danish government has implemented a major reform of its unemployment system, aiming to reduce bureaucracy and empower local municipalities. A key element involves relieving local authorities of the responsibility for running job centers, allowing for greater local flexibility in managing unemployment benefits and support services.
The reform is projected to save up to 2.7 billion kroner, representing a substantial cut in government spending. This significant reduction in expenditure highlights a governmental shift towards decentralized management.
The reform introduces several changes for unemployed individuals:
While several opposition parties support the reform, the Socialist People’s Party (SF) opposed certain aspects, particularly the reform of unemployment insurance funds, and withdrew from negotiations.
Experts note that the decentralized system may lead to varying approaches across different regions of Denmark. While the fundamental task remains the same, this reform signals a potential shift in the overall approach to employment support.
Denmark’s unemployment system, under which people who receive welfare payments while out of work are required to attend job centres and meet certain criteria, is set to undergo major downsizing after a new reform was presented on Wednesday.
The headline element of the new reforms to Denmark’s employment welfare programme is arguably the decision to relieve local authorities of the obligation to run job centres.
Under current rules, people who receive unemployment or sick pay benefits in the form of payments such as dagpenge and kontanthjælp are required to attend regular job centre meetings with employment consultants, alongside other obligations which include sending a set number of job applications each week.
Local municipalities, kommuner in Danish, are responsible for the operation of the job centres and determining whether individual criteria are fulfilled for eligibility for the benefits, but they will be given greater freedom under the reform.Â
The government will relieve municipalities from obligations to run job centres at all, meaning they can use an entirely different structure and system locally if they so wish.
Up to 2.7 billion kroner will be saved by the reform, slashing government spending on the area by over a quarter, according to the text of the agreement which was presented on Wednesday by Employment Minister Ane Halsboe-Jørgensen.
Describing the changes as a “huge reform”, Halsboe-Jørgensen said it was “not easy” for “politicians to stop micromanaging from Christiansborg [parliament, ed.].”
“But that’s what we’re doing and I’m pleased about that,” she said.
Because municipalities can now close job centres and organise approval of unemployment benefits individually, results could vary in different parts of Denmark according to experts.
“Municipalities are currently required to have a job centre, although these already vary somewhat in structure. After the reform, municipalities will be free to organise the system themselves, but the task remains essentially the same,” Flemming Larsen, Professor at the Department of Politics and Society at Aalborg University, told news wire Ritzau in a written comment.
"If nothing else, this can signal a willingness to rethink the approach to employment support," he added.
New regulations will secure a system with fewer obligatory interviews, fewer rules and fewer sanctions, the government said.
In addition to the changes at job centres, people on sick leave who have a job to return to will no longer need to attend municipal interviews if their sick leave is shorter than 26 weeks. Â
Municipalities will also be able to exempt up to one in four unemployed people from interviews if they are considered self-reliant. This means they would not be subject to mandatory interviews during the first six months of unemployment, but would remain eligible for benefits.
Several opposition parties including the Social Liberal Party (Radikale Venstre), Liberal Alliance, the Danish People’s Party, and the Conservatives have agreed to vote for the agreement, while the Socialist People’s Party (SF) walked out of negotiations on Tuesday in protest over elements of the plan including the reform of unemployment insurance funds (a-kasser).
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