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May 6th, 2013

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Unions and politicians are urging a rethink of the unemployment benefit system, dagpenge, in order to both encourage more people to work and to support those who risk falling out of the system.

Dagpenge is a generous unemployment benefit that is equivalent to around 17,500 kroner a month before tax. It can be claimed for two years if someone loses their job as long as they have been employed and paid into an unemployment insurer, a-kasse, for the previous year.

But today, the Danish metal worker’s union, Dansk Metal, proposed imitating the Swedish dagpenge model in which the benefit can only be claimed for 18 months but can be earned after only 13 weeks of work.

“As far as I’m concerned there’s nothing holy about the length that dagpenge should be allowed to be claimed,” Claus Jensen, the head of Dansk Metal, told Jyllands-Posten newspaper. “I have heard good things about the Swedish model [in which there is a] greater incentive to take a seasonal job. There’s less incentive to take a short-term job in Denmark because it takes too long to earn the right to dagpenge.”

Denmark’s second-largest union, HK/Danmark, says it supports Jensen’s proposal. So does the far-left party Enhedslisten (EL).

“The Swedish dagpenge model contains some very good points,” EL's labour market spokesperson Christian Juhl told Politiken newspaper. “Their model definitely has a different dynamic, especially the part that lowers the length of time it takes to earn it to three months. That’s very sensible.”

Juhl was opposed to shortening the length that dagpenge can be claimed however, arguing that it would only make the current crisis even worse.

The government this January implemented a reform of the dagpenge system, voted in by the former government, which halved the length of time it can be claimed to two years, and doubled the length of time it takes to earn it to a year.

As a result, around 23,000 people are expected to lose their right to dagpenge this year. Some may qualify for the far less generous unemployment benefit kontanthjælp, but many, especially those with assets and partners, will have to go without.

After the government refused to postpone implementing the reform, their compromise was to create an emergency jobs programme where employers could advertise jobs specifically for the long-term unemployed who had lost, or risked losing, their dagpenge.

The programme is regarded as a failure, however – a recent study by weekly newsletter Ugebrevet A4 found that only a small percentage of the advertised jobs actually went to someone who was long-term unemployed.

At its annual party conference this weekend, government coalition partner Socialistisk Folkeparti (SF) identified solving the dagpenge problem as a central ambition. Their response to Dansk Metal's proposal has so far been muted, however.

“I will not comment on the specific proposal, but this weekend SF decided that we need to address the problems facing the dagpenge system,” SF’s political spokesperson, Jonas Dahl, told Politiken. “We have always had a good line of dialogue with the trade unions and we have also heard their interesting contribution to this issue.”

Leading MPs for the ruling Socialdemokraterne (S) have also called for more to be done to address the dagpenge problem, for example by making it easier to earn the right to dagpenge by participating  in government-supported work and education programmes.

“When we created the emergency package, we thought it was the solution,” MP Bjarne Laustsen (S) told Politiken. “But now we are seeing the harsh reality, which is why we need to consider alternatives. Isn’t it a problem that so many people are leaving the system? We need to recreate the security in the system, and this is a simple and elegant solution.”

The third government coalition party, Radikale, announced today that they are opposed to Dansk Metal’s proposal to make it easier to earn the benefit. So too does libertarian think-tank Cepos.

“All you would need to do [to earn 18 months of dagpenge] is take a seasonal job at Tivoli, Legoland or as a paper boy for three months,” Cepos chief economist Mads Lundby Hansen told Politiken.

Hansen pointed to Finance Ministry figures that show that 2,000 fewer people would find jobs if  the length of time to earn dagpenge was reduced to 26 weeks instead of 52. He added that cutting the length of time that dagpenge can be claimed to a year would, on the other hand, result in 13,000 more people finding work.