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Danish private sector wages in ‘real’ increase

People who work in Denmark’s private sector are largely experiencing a ‘real’ increase in their wages, according to a new analysis by an interest organisation for employers.

Published: 15 February 2024 17:48 CET

Danish private sector wages in ‘real’ increase

Wage increases in Denmark's priuvate sector have outpaced inflation over the last year. Photo: Kristian Djurhuus/Ritzau Scanpix

A review from the Confederation of Danish Employers (DA), which represents 11 different private sector employers’ organisations, has found an annual wage increase of 4.9 percent compared with 12 months ago.

During that time, inflation in Denmark has dropped to around 1 percent.

This means that the ‘real’ wage increase – the increase in purchasing power after interest is taken into account – is positive.

An expert told news wire Ritzau that the final quarter of 2023 alone gave a real wage increase of 4 percent in Denmark’s private sector.

“It’s very high from ahistorical viewpoint,” senior economist Jeppe Juul Borre of Arbejdernes Landsbank said.

“Wages have reached their highest pace for 15 years. We have to say that the pace of the labour market with record high employment and collective bargaining agreements are making their mark on wage growth,” he said.

READ ALSO: Danish trade union members vote yes to new bargaining agreement

Real wages suffered in 2022 as inflation began to take hold in Denmark, but collective bargaining agreements the following sought to address the spending deficit felt by consumers.

“In the ten years prior to the decline in real wages, Danes as a whole have experienced their wages increasing faster than prices, and that they thereby got more for what they earned,” Borre said.

The analysis from DA comes ahead of a new round of talks over renewed bargaining agreements this spring.

Member comments

Anonymous - 20 February 2024 at 20:53 CET

Hi do the increased of wages apply to rengøring assistent ?
Ták
Anonymous - 20 February 2024 at 20:54 CET

Hi do the increased of wages apply to rengøring assistent ?
Ták

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Why are Danish experts recommending closure of all job centres?

Denmark’s job centres, which are responsible for administration of social welfare benefits for people seeking employment and of facilitating training and work placements under welfare lows, should be closed according to recommendations handed to the government on Monday.

Additionally, over half of the current rules related to unemployment benefits should be scrapped and 9 in 10 sanctions for people who fail to comply with criteria such as attending meetings or applying for a set number of jobs.

Denmark has two broad tiers for those out of work: dagpenge, which provides an income calculated on the person’s tax payments while in employment, and the more basic kontanthjælp.

Dagpenge is available to people who a paying members of a semi-private uninsurance provider called an Arbejdsløshedskasse or A-kasse, while kontanthjælp is available to everyone.

Both groups must comply with legal requirements related to job searching in order to receive the benefits they qualify for – these are administered by municipal job centres.

READ ALSO:

When the coalition government took office at the end of 2022 it stated that it wanted to save three billion kroner annually by reforming the municipal unemployment area and improving its efficiency – specifically by targeting job centres.

This has led to an expert group, appointed by the government, making six specific requirements – those announce on Monday.

The government is not obliged to follow the recommendations.

But the expert group says there is much to gain from closing job centres.

“There’s great potential in replacing the current one-size-fits-all system with a new approach where individual needs are in focus,” group chairperson Claus Thustrup Kreiner said in a press statement.

The six broad recommendations are as follows:

Fewer target groups and special rules
Individual programmes
More balanced sanctions system
Abolish job centres and introduce free organisation at municipalities
Give more influence to A-kasse and private interests
Results, not system-based approach

|Source: DR

“Our report includes recommendations for the biggest reform of the jobseeking area ever, and will make the system cheaper, simpler and more dignified without weakening employment,” Kreiner said.

The national confederation for trade unions, Fagbevægelsens Hovedorganisation (FH), criticised the costcutting element of the recommendations in comments to broadcaster DR, and also said it would reduce the options and rights of jobseekers.

“I thought this was about giving unemployed people more freedom to decide what they need,” FH chairperson Nanna Højlund said.

“But the expert group clearly sees it as being about allowing municipalities to do exactly what they want,” she said.

The Confederation of Danish Industry (DI) welcomed the proposals.

“The expert group has proposed a simplification of employment with fewer rules and benefit categories and with a large saving” DI deputy director Steen Nielsen said in a statement.

“That is a good idea because it’s difficult to run a job centre efficiently with the many different criteria and rules that must be met for each of the many categories,” he added.

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