Flexicurity – A Magic Formula

When foreigners speak about the Danish Model, they are often thinking mainly of the Danish labour market, which many see as having a magic formula. In itself, the situation is indeed curious. Workers and other employees in Denmark enjoy
good wages and social benefits. Nonetheless, Danish companies in many industries are among the most competitive
on the world market. How is that possible? The answer contains several elements:

● Danish workers are among the most highly organised in the world – 85% belong to a union. As the employers are
equally highly organised, the labour market enters into agreements without state involvement. It also disciplines itself
through a specially developed labour law system. This ensures robust agreements, which moreover cover several years, and
few working days are lost due to conflicts. However, a judgment at the European Court of Justice at the end of 2006,
which prohibits in practice compulsory union membership, has now resulted in some members leaving the established

● A unique and crucial point is that Danish employers can fire employees at very short notice. This allows the companies
to adjust to changing market trends without suffering losses. Those losing their jobs do not suffer either, as the state
suddenly appear – now with unemployment benefit which is not very different from the wages.

● Moreover, the unemployed have a good chance of finding another job quickly, as Denmark invests heavily in further education and retraining. The good retraining opportunities also mean that industries which are short of labour or new industries
do not have to wait a long time for the necessary workers.

● The unions are aware of Denmark’s position as an export nation. Their wage demands on behalf of the members are
reasonable, so as not to jeopardise the striking competitiveness of Danish goods.

● The employment rate for women is exceptionally high, perhaps the highest in the world: 73.1% in 2005 as against
79.4% for men. In other words, as a rule both man and wife have full-time jobs in Denmark. This enriches the labour market
with a lot of talent and initiative, which would otherwise have remained in the kitchen and nursery. The massive
female employment has become possible through the equality of the sexes and the public childcare system which allows both
parents to work a full working week of 37 hours without worrying about who will look after their children.

● Foreigners who find work in Denmark say that with this system it is possible to “be a complete person” and “make one’s
family life cohere”. Denmark is regarded as a good employer. The great adaptability of the companies, without affecting the
employees’ security, has been nicknamed flexicurity. Foreign delegations often visit the country to study the model.


One thought on “Flexicurity – A Magic Formula

  1. Some negative aspects can also be pointed out when talking about the Danish flexicurity model. For example, negative incentives for the employers to invest in the continuing/further education and training of their employees have been pointed out. It is also important to keep in mind that the Danish model is costly – the tax burden in Denmark is heavy because of the need to finance the country’s high spending on labour market programs and unemployment benefits. This implies that the Danish model may not be suitable for countries facing high unemployment and budgetary difficulties. Nonetheless, certain key aspects of the Danish model could usefully be implemented by other countries.


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