Effects of the Danish Employability Enhancement Programmes

The Danish Ministry of Labour reformed labour market policy in 1994. The reform should be seen in the context of a labour market which is characterised by a triangle of a) liberal labour market policies, b) a high level of income protection, and c) strong activation measures. These three elements combine to provide flexibility for enterprises, income security for workers and a mechanism to strengthen the ability and will of those who are out of work to re-enter employment, instead of relying on income transfers.

The main aim of the reform was to encourage people to take part in employability enhancement programmes and quickly re-enter the labour market, rather than draw benefits. Following the reforms, unemployed people were only entitled to one year on benefits before having to take part in an activation measure, as against four years previously. The maximum period a person could receive unemployment benefit was also cut from seven years to four years. Finally, people could not return to unemployment benefit after completing an employability enhancement measure, but had to rely, if necessary, on (albeit generous) social security benefit.

These changes, combined with stricter rules concerning availability for work, and the introduction of the right and duty to be activated, have improved the functioning of the labour market. There has been more active job seeking, fewer people receive unemployment benefits, skills have been upgraded and structural unemployment has decreased.

Owing to the high costs of activation measures, the Ministry of Labour developed new methods of measuring their effects. The most important results and conclusions of the effect analysis are:

• The right and duty to participate in employability enhancement programmes has a motivating effect on an unemployed person's job seeking, and thus contributes to increasing the number of unemployed persons who find work.
• Employability enhancement programmes generally upgrade qualifications.
• Activation early in the unemployment period entails a risk of retaining the individual in employability enhancement programmes rather than regular employment.
• The considerable financial resources which are invested in active labour market policy have improved public finances, both short-term and long-term, by reducing structural unemployment.

One result of this employability enhancement strategy has been that the number of persons being marginalised in the labour market has halved since 1993. The effects of the Danish Employability Enhancement Programmes and the innovative methods of analysing them were presented and assessed in the peer review meeting held in Copenhagen on 2nd and 3rd April 2001. Finland, Greece, Luxembourg, the Netherlands and Portugal took part in the meeting.

Weblinks

• www.am.dk

Participating independent experts

• Anders HOLM

  Denmark
  University of Copenhagen Department of sociology
• Robert ARNKIL

  Finland
  Social Development Compny Ltd.
• Athena PETRAKI KOTTIS

  Greece
  Athens University of Economics and Business
• Jean SCHOOS

  Luxembourg
  Jongenheem asbl - Luxembourg
• Luis Gomes CENTENO

  Portugal
  Centre Interdisciplinar de Estudos Economicos (CIDEC)
• Marjolein PETERS

  The Netherlands
  EIM Business & Policy Research