- The Washington Times - Sunday, March 29, 2009

COPENHAGEN (AP) - Dennis Harmon lost his job, but that doesn’t mean he’ll lose his livelihood.

The veteran bricklayer is entitled to the maximum jobless benefits in Denmark: $594 a week. After taxes, that’s enough to cover rent for his two-room apartment outside Copenhagen, utilities and payments on his 1996 Opel Vectra.

“There’s not much left for fun,” mutters Harmon, a 40-year-old Dane whose surname is tattooed on his right forearm.

Even so, Harmon receives a level of compensation that people losing their jobs in many parts of the world can only dream of.

Robust unemployment compensation is a key feature of Denmark’s labor market model, studied so widely in recent years that it rivals Carlsberg beer and Lego toys among the Scandinavian nation’s most famous trademarks.



Called “flexicurity,” it combines flexibility for employers to hire and fire workers with financial security for the unemployed. And experts say it helps explain why both Danish businesses and workers are entering the global downturn in better shape than most of their Western peers.

“People here are not worried about losing their jobs to the extent that they are in the U.S.,” says Torben Andersen, an economist at the University of Aarhus, western Denmark. “If people get unemployed, it doesn’t mean they will have to sell their house. They know the unemployment coverage is there.”

Harmon’s allowance, financed by union fees and government subsidies, is more than three times what an average worker makes in Hungary. And it’s more than double the maximum jobless benefits paid by some U.S. states. The highest weekly unemployment compensation is $584 in New Jersey, $362 in Michigan and $240 in Arizona.

What’s more, Danes can collect their benefits for up to four years, although that’s rarely needed. U.S. benefits are capped at 59 weeks.

The flip side is that like in the U.S. _ but unlike most of Europe _ Danish companies can fire workers with little hassle. And as the recession cuts ever deeper, they’re taking advantage of it.

“We have closed down two plants in recent weeks, so I have been telling between 800-900 people that they will lose their jobs,” says Jan Winther, human resources director for Danish Crown, the world’s biggest pork exporter.

He says the notice period ranges from one to six weeks for blue-collar workers and one to six months for white-collar workers. The advantage of the Danish model, Winther says, is that it allows companies to adjust to market conditions.

“We’re not afraid of hiring, knowing we can sack them if the market goes down and that the government takes care of them,” he says.

Perhaps more surprisingly, the system also enjoys support from union leaders, who say a flexible labor market is needed to guarantee jobs in the future.

“Our goal in the union is not to defend people’s jobs but to make sure that their next job is available,” says Kristian Madsen, spokesman for the United Federation of Danish Workers, the country’s biggest union. “When I tell my American colleagues, they can’t really wrap their heads around that way of thinking.”

Denmark’s jobless rate has consistently been one of Europe’s lowest, and analysts give flexicurity part of the credit. At 4.3 percent in January, it was significantly below the European Union average of 7.6 percent.

And despite its high taxes _ nearly 50 percent of economic output _ the World Economic Forum also ranks Denmark as the world’s third most competitive economy, behind the U.S. and Switzerland.

Denmark’s success has not gone unnoticed in Europe. France last year adopted a plan inspired by the Danish model to make its labor market less rigid. The EU head office in Brussels believes flexicurity is key to making the 27-nation bloc more competitive.

“The crisis will be a test of the concept of flexicurity, but our analyses still suggest that it’s the right model,” says Chantal Hughes, a spokeswoman for the European Commission.

The buzz around flexicurity appears to have subsided, however, as the recession prompts European countries to go into damage control. France is now talking less about a flexible labor market and more about protecting jobs in the sputtering auto industry.

The Danish model may appear less attractive in a downturn, because “unemployment will rise faster in a Danish context than in countries with more job protection,” says Aalborg University professor Per Kongshoej Madsen, one of the first economists in Denmark to study the flexicurity concept.

Meanwhile, the pressure on the welfare system grows with the increasing number of people seeking jobless benefits. Denmark already spends more than any other European country on helping the unemployed: About 4 percent of gross domestic product is devoted to jobless benefits and an active labor market policy, according to EU statistics.

Danes have little problem with that. The welfare state is so deeply ingrained in Scandinavian DNA that no parliamentary party is against the system, although some argue about what level of taxation is needed to support it.

“On the right we would like to make sure there is incentive to work, but we don’t want people to live in absolute poverty if they don’t,” said Conservative lawmaker Charlotte Dyremose.

Still, the center-right government, in power since 2001, is trying hard to make sure people don’t abuse the dole.

Jobseekers must log on to the government’s job site at least once a week to show they’re searching for a job. They can also be pushed to switch to a profession where chances of getting hired are higher, or risk losing their benefits.

“Within the model of flexicurity we need to make sure the unemployed have skills in the areas that will need labor,” says Jens Sibbersen, manager of Denmark’s biggest unemployment office in Vesterbro, a working-class district of Copenhagen. “When we deal with the unemployed we try to divert them toward those areas.”

Harmon, the bricklayer, says many of his colleagues have been forced to switch trades. With construction at a standstill, about 30 percent of Denmark’s masons were out of work in January, according to union statistics.

“I already considered doing something else, but I can’t imagine what kind of job I would do,” he says. “The problem with other lines of work is that you almost get the same pay as when you’re unemployed.”

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