Number of people receiving Danish unemployment benefit hits ten-year low

The number of people receiving Danish state income support for unemployment has decreased further since the beginning of 2019.

Number of people receiving Danish unemployment benefit hits ten-year low
File photo: Thomas Lekfeldt / Ritzau Scanpix

A total of 125,900 people received the basic form of welfare, kontanthjælp in Danish, at the end of the first quarter of this year.

That corresponds to a reduction by 3,400 during the preceding three months and 13,300 over 12 months, according to Statistics Denmark figures published on Tuesday.

The state welfare payment is distinct from the partially-privatized unemployment insurance system, dagpenge, which is accessed by paid membership of a provider known as an A-kasse.

But the figures do include the full range of state unemployment welfare, including that for those re-entering the job market and the reduced form for people granted asylum and their families (integrationsydelsen).

The total number of people receiving the welfare is now at its lowest level since 2009, according to Statistics Denmark. It has fallen sharply since 2015, when it was at around 175,000.

Reforms made by the outgoing government and its predecessor to Denmark’s welfare system have impacted the number of people who receive the benefits, according to Mads Lundby Hansen, senior economist with liberal thinktank Cepos.

The reforms include an upper limit on the amount a household can be entitled to (kontanthjælpsloftet), and a rule which states that after one year of unemployment, an individual must have worked 225 hours within the last three years in order to receive the full benefit.

A strong economy is also a key factor in the trend.

“It’s a positive thing that the number of people receiving (this benefit) fell again in March, and that we now have the lowest number since 2009,” Hansen told Ritzau.

The Economic Council of the Labour Movement (ECLM), a Danish economic policy institute and think-tank, also said the trend was a good sign.

“These are good times in Denmark. There’s competition for labour, which means there is opportunity for people on the margins of the labour force. The reforms played a very small role,” the organization’s senior economist Erik Bjørsted told Ritzau, noting a Finance Ministry report which found that the 225-hour rule and upper limit rule had directly resulted in just 450 people moving from welfare to employment.

Not of all those who have left the benefits system can be guaranteed to have found employment, Ritzau notes – they may be provided for by family or getting by through other means.

READ ALSO: One in ten wage earners in Denmark is a foreign national

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Labour shortage hits half of Danish companies in construction sector

A record-high shortage of labour at some Danish companies is exacerbated in some places by a lack of materials, according to new data.

A file photo of construction in Aalborg. As many of half of construction companies in Denmark currently report a lack of labour.
A file photo of construction in Aalborg. As many of half of construction companies in Denmark currently report a lack of labour. Photo: Henning Bagger/Ritzau Scanpix

The construction industry reports a lack of labour at around half of all companies, according to a survey by Statistics Denmark, based on responses from businesses.

In the service industry, which includes restaurants, hotels and cleaning, one in three companies reported a lack of workforce.

Some industries, notable machinery related businesses, also said they are short of materials currently.

The lack of labour is holding the Danish economy back, according to an analyst.

“Never before have we seen such a comprehensive lack of labour in the Danish economy,” senior economist Søren Kristensen of Sydbank said.

“It’s a shame and it’s a genuine problem for a significant number of the businesses which at the moment are losing revenue as a consequence of the lack of labour,” Kristensen continued.

“That is costly, including for all of Denmark’s economic growth. Even though we on one side can be pleased that it’s going well for the Danish economy, we can also regret that it could have been even better,” the economist said in a comment to news wire Ritzau.

Despite the lack of labour, businesses have their most positive outlook for years, according to Statistics Denmark.

The data agency based its conclusions on a large volume of responses from companies related to revenues, orders and expectations for the future.

The numbers are processed into a measure termer business confidence or erhvervstillid in Danish. The October score for the metric is 118.7, the highest since 2010, although there are differences between sectors.

READ ALSO: Are international workers the answer to Denmark’s labour shortage?