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November 6th, 2012

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The government's emergency package to create 12,500 jobs in the new year, the akutjobpakke, passed this afternoon despite being roundly criticised by the opposition.

Opposition parties Konservative (K) and Liberal Alliance (LA) voted against the earmarking 115 million kroner of next year’s budget to finance the package. Venstre (V), the largest opposition party, elected to vote neither for nor against the package.

Around 38,000 Danes will lose their unemployment benefit, dagpenge, next year when a reform kicks in that halves the length of time it can be claimed, and doubles the length of time it must be earned. Only the unemployed who pay into unemployment insurers, a-kasser, are entitled to dagpenge. Otherwise they must claim the far less generous cash welfare benefit kontanthjælp.

The akutjobpakke is designed to tackle this problem by allowing the long-term unemployed to have first crack at some 12,500 'acute jobs' in both the public and private sector and by paying employers 25,000 kroner per job created specifically from someone who has run out of dagpenge.

But the plan was criticised by a number of different groups, including economists who argue many people will still fall through the gaps.

“Employers will choose the unemployed people who are best qualified,” Torben M Andersen, an economy professor at Aarhus University, told Politiken newspaper.

Andersen added that the government has calculated that only 12,500 extra jobs are needed for the least qualified unemployed, because the more qualified unemployed do not need as much help finding work. He argued, however, that it is actually the most qualified unemployed who will take advantage of the extra job offers.

“So there is a large number who would otherwise find work that will now get jobs through the akutjobpakke," Andersen said. "So there’s no guarantee that it’s the people who most need the jobs that will get them.”

Andrea Højbjerre, a labour market economist at the think-tank Kraka, agreed with Andersen’s appraisal.

“It is the strongest, those with the best skills, that will stand at the front of the queue when employers are filling the emergency positions,” Højbjerre told Politiken. “It’s uncertain that a bonus will get employers to employ those who have the hardest time getting a job because, for example, the have a low level of education.”

Even if the programme works, it may not even be legal according to LA's Joachim B Olsen, whose party voted against the plan on the grounds that it discriminates against the unemployed who do not lose their unemployment benefits.

“According to the law, you cannot discriminate based on whether people are a member of an association or not,” Olsen told Politiken. “But the emergency package proposal gives a bonus to employers who employ members of an association, in this case an a-kasse.”

While the employment minister, Mette Frederiksen (Socialdemokraterne), countered that the Employment Ministry and the Justice Ministry assured the government it was on safe legal ground, V’s reasons for not supporting the measure are altogether different.

V announced that they abstained from the vote because the programme wasn’t doing any harm, but also wasn’t creating new jobs.

“We don’t think the akutjobpakke hurts anyone,” V's finance spokesperson, Peter Christensen, told Ritzau. “But our message by abstaining is that this package will not solve the problem for the many unemployed Danes. Because it doesn’t.”

Christensen argued the plan does not improve the conditions for businesses that would in turn create new jobs. The akutjobpakke's 12,500 jobs, he added, are simply reserved jobs for those who lose their dagpenge, rather than new jobs created through economic growth.

V and K are instead in favour of extending the tax deduction for home improvements, the boligjobordning, that the government wants to abolish.

“We need to extend the boligjobordning that has created thousands of jobs in the construction and service sectors," Ellen Trane Nørby, V's political spokesperson, told Ritzau last week. “We risk that entrepreneurs and businesses will have to fire employees who have their jobs because of the boligjobordning.”

The construction industry’s lobby group, Dansk Byggeri, also supports extending the boligjobordning.

“It’s a terrible idea to abolish the boligjobordning,” Dansk Byggeri told Ritzau. “It has created 5,500 jobs across the country.”

It remains to be seen whether the government will agree to extend the boligjobordning in the ongoing 2013 budget negotiations, but V may not have done itself any favours by electing to not take a concrete stance on the akutjobpakke.

"Venstre has chosen a despicable political tactic over helping those people that face a serious situation at the start of the new year," Socialdemokraterne's spokesperson Magnus Heunicke told DR News.