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January 7th, 2013

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The government is currently drafting plans to reform the welfare state’s last financial safety net, kontanthjælp, in order to reduce its cost and the number of people who rely upon it.

But getting people off kontanthjælp, which literally translates as 'cash help', is complicated, and the government has already backed down from its ambition to cut three billion kroner a year from the kontanthjælp bill by 2020.

Instead, employment minister Mette Frederiksen (Socialdemokraterne) on Sunday announced that the government’s reform would focus on preventing young people from ever having to depend on it in the first place.

“If you are a young person who receives kontanthjælp, but does not have an education, warning lights should flash because there is a very large risk that you will not move on from it,” Frederiksen told Jyllands-Posten newspaper.

Frederiksen argues that the problem Denmark faces is that too many people are unprepared for the labour market. There are many reasons this may happen, she said, including psychiatric problems, abuse, homelessness, alcoholism and family background.

“If you grow up with a mother who doesn’t have an educatio,n but receives kontanthjælp, there is a high probability that you will face great challenges in your life. This is fundamentally opposed to the idea of a modern welfare state that provides equal opportunity.”

According to Jyllands-Posten, 40 percent of the 150,000 kontanthjælp recipients come from families who also received kontanthjælp.

While the final version of the reform will not be ready for several months, Frederiksen has indicated that it will focus on reducing the number of people receiving kontanthjælp by improving the educational standards of young people, limiting the length of time that people receive the benefit, and targeting children from families who accept benefits in order to better prepare them for the labour market.

Her political opponents see the problem rather differently, however, with many arguing that there is currently insufficient economic incentive to work rather than receive kontanthjælp.

This position is tentatively supported by high-profile cases discussed in the media, such as Robert Nielsen, a self-confessed “lazy bastard” who has been on state benefits since 2001 because he is unwilling to take unskilled work.

Frederiksen’s position disappointed opposition party Venstre, which wants the government to stick to its ambition to cut three billion kroner from kontanthjælp as part of its economic plan for 2020.

“If the government does not want to save money by reforming kontanthjælp, it will have to say how it intends to make its 2020 economic plan add up,” Venstre spokesperson Ellen Trane Nørby told Berlingske. “Because savings will have to be made in education or other areas of welfare if it can’t make the sums add up.”

Liberal think-tank Cepos also criticised the government’s unwillingness to reduce the value of kontanthjælp.

“Stories like […] Robert’s clearly illustrate that kontanthjælp is often so high that there is no incentive to take an unskilled job,” Cepos managing director Mads Lundby Hansen wrote in an editorial for Berlingske newspaper.

According to Cepos, this autumn, there were 10,000 available jobs that employers were unable to fill, even though there were over 160,000 people available to do the work.

But far-left party Enhedslisten challenges the view that the high level of unemployment is due to an unwillingness by Danes to take jobs. It argues that there is a lack of jobs in many sectors of the Danish economy and that the unemployed should therefore not be punished for not being able to find work.

Enhedslisten’s position is supported by a study conducted by the trade union for metal workers, Dansk Metal, which could only find ten extra jobs for its members when shop stewards attempted to find extra jobs at their workplaces.

Enhedslisten has pushed to extend the length of time that the unemployed can claim the more generous unemployment benefit ‘dagpenge’ due to the problems facing the Danish economy. Starting this January, tens of thousands stand to lose their dagpenge and will be forced onto kontanthjælp once a reform of dagpenge kicks in that halves the length of time that people can claim it to two years.

Frederiksen argues, however, that simply changing the amount of money people receive in kontanthjælp will do little to change their fate.

"You cannot fix a complicated mix of social problems simply by handing out more money," Frederiksen said. "But God knows no one is better off if you give them less money. There are some people receiving kontanthjælp that are ready for the labour market and they need to start working. Of these, the youngest need to get educated. In these cases we shouldn't be afraid to make demands of capable people."

Fact Box | Kontanthjælp

Kontanthjælp is secured by the constitution as a unviersal right afforded to Danes who are unable to provide for themselves or their family.

To be eligible for kontanthjælp you must be:

> At least 18 years old and available to work. You lose your entitlement if you turn down a ‘reasonable’ job opportunity.

> Not have any savings or fixed assets greater than 10,000 kroner. Cars and apartments for example, count as assets that must be sold before accepting kontanthjælp.

The value of kontanthjælp varies depending on your circumstances (all amounts per month before tax):

> Under 25, living at home: 3,214 kroner

> Under 25, living alone: 6,660 kroner

> Under 25 with children: 13,732 kroner

> Over 25: 10,335 kroner

You are entitled to five weeks of holiday while receiving kontanthjælp

People under the age of 25 receiving kontanthjælp can be forced to take an education if they do not have one.

Depending on your age, you may be forced to accept work (aktivering) after between six and nine months of receiving kontanthjælp.