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January 11th, 2013

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The Employment Ministry will release new figures on Monday showing a dramatic increase in the number of people who are expected to lose their unemployment benefits in the first six months of this year.

This January, a reform of dagpenge system into force that reduced the length of time it can be claimed from four to two years, and doubled the length of time that it takes to earn the right to claim it to a year.

The Employment Ministry had previously estimated that between 7,000 and 12,000 people would lose their dagpenge, but that estimate has now been raised to between 17,000 and 23,000 people.

"The increased number reflects the fact that fewer people left the dagpenge system in the autumn compared with earlier," the Finance and Employment Ministries reported, adding that weakened growth forecasts mean fewer people are expected to find work this year.

Responding to the news, MP Johanne Schmidt-Nielsen from the far-left party Enhedslisten has demanded that the government introduce a guarantee that those set to lose their dagpenge are offered either a job or job training.

“The new figures show that the government has to wake up,” Schmidt-Nielsen told the Ritzau news bureau. “When the right-wing together with [Radikale leader] Margrethe Vestager reduced the length of dagpenge from four years to two years, their main argument was that the unemployed would find work on their own as soon as they lost their benefits.”

Without dagpenge, the unemployed have to rely upon the far less generous cash benefit kontanthjælp, which cannot be given to individuals with household assets worth more than 10,000 kroner. Many will end up having to sell their homes or cars before being able to accept the benefit as a result.

The government has been caught in a tight spot, because even though the reform was passed by the former centre-right government, one of the parties that helped pass it was current coalition partner Radikale.

The reform was planned to come into force in 2012, but was delayed after Socialdemokraterne won the 2011 general election and formed a government with the leftist Socialistisk Folkeparti (SF) and Radikale.

Ensuring the Radikale’s place in the government required a promise by SF and Socialdemokraterne to follow through with the reform despite Enhedslisten – which the government relies upon to form a parliamentary majority – strongly opposing the measure.

With thousands predicted to lose their dagpenge after the new regulations came into affect on January 1, the government was forced to find a way to support them without breaking their promise to follow through with the reform.

This led to the government to introduce a compromise programme that aimed to create 12,500 so-called akutjobs specifically for those about to lose their benefits, and open up greater educational opportunities.

The government expects all the jobs to be created by this summer, and despite nearly half being created so far, even the governmentment is admitting that the pace is too slow.

“The development demonstrates a clear need to ensure that educational opportunities we have made available are actually available for the whole affected group,” the economy minister, Margrethe Vestager (Radikale), told Jyllands-Posten.

Verner Sand Kirk, the chairman of unemployment insurance association AK-Samvirke, said the government had gravely underestimated the effect of the dagpenge reform.

“The analysis of the severity of the reform was a failure,” Kirk told Jyllands-Posten, adding that when the reform was passed in parliament in 2010, it was thought that only between 2,000 and 4,000 people would be affected.