Flexibility and security: an asymmetrical relationship?
when it comes to a lower-level decision making structure, thus strengthening the liberal aspects of
legislation at the expense of protection (ibid.).
Economic rationality and the fear that labour market developments will destroy macroeconomic
balance have always been the primary foundation of the Danish labour market policy. During the
years of economic crisis, the right to employment and financial support became central elements in
labour market policies. Denmark developed one of the most generous and expansive unemployment
insurance systems in the world (managed by the unions) providing 90% replacement rate after 1 year
(or 26 weeks in the past 3 years) of service.68 Growing concerns about the impact that the unemploy-
ment insurance schemes would have on the willingness and the ability of the unemployed to re-enter
the labour market, soon resulted to a shift in policies: after the mid-1980s, passive policies were sup-
plemented by active measures, focussed on continuing education and supplementary training, in an
attempt to make the workforce more flexible (Larsen, 2004). As structural unemployment was rising,
the prevailing employment and support schemes came under heavy criticism, eventually leading to a
new policy shift in the 1990s. Rather than curtailing unemployment benefits (such an initiative would
face strong political opposition), the labour market reform act in 1994 was instead heavily oriented
towards stricter eligibility criteria, shorter duration periods and individualised activation measures.
Job rotation schemes were introduced, to provide job opportunities for the unemployed and training
opportunities for those already at work.
These initiatives proved very successful and unemployment was halved in 5 years, a development
that has been labelled as the “Danish miracle” (Larsen, 2004). 69 Since then, the 1994 reforms were
adjusted several times towards more activation of the unemployed persons and tougher conditions
for receiving the unemployment benefit. In 2003, new labour legislation was introduced giving more
emphasis on training, especially for the low-skilled and the unskilled. However, the attempt to reduce
unemployment benefits for the highly paid employees met with fierce resistance from the unions
and was soon abandoned, indicating that there still persist considerable political barriers to more
comprehensive cuts (Bredgaard et al., 2005). Overall, as several scholars observe, during the past 15
68 The offset of this system was that the unemployed could remain on the insurance system almost indefinitely (Larsen,
2009).
69 Nevertheless, there are still unresolved marginalisation and social exclusion problems on the Danish labour market:
about ¼ of the active population of working age (mostly immigrants and refugees) are excluded from the labour
market and become benefit recipients (see Bredgaard et al., 2005).
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