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The Labour Market Triangle

Employment Protection, Unemployment Compensation and Activation in Europe

Edited by Paul de Beer and Trudie Schils

Currently, European governments are being challenged to find an optimal social policy strategy that fosters 'flexicurity’, whereby a flexible, well-functioning labour market is achieved, whilst protection for workers is maintained. This fascinating book presents an in-depth study of the particular combination of unemployment insurance, employment protection and active labour market policies prevalent in seven European countries. The editors explore the formal laws and regulations, as well as the administration and implementation of social policy, paying special attention to the role of the social partners. The country comparison shows that the combination of social policy instruments is important to labour market performance, but that multiple optimal mixes already seem to exist.
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Chapter 3: Denmark

Per Kongshøj Madsen


Per Kongshøj Madsen INTRODUCTION1 In recent years, Denmark has drawn a lot of international attention. The highest employment rate in the EU, the low level of unemployment and an overall positive macroeconomic performance have made Denmark stand out in Europe. Furthermore, Denmark shows some interesting traits when it comes to the country’s combination of the well-known basic building blocks of a Nordic welfare state with some characteristics of more liberal market economies. Has the country found a third road between a flexible labour market on the one hand and security and welfare for its citizens on the other? Or in the words of the Organisation for Economic Co-operation and Development (OECD): Denmark provides an interesting combination of high labour market dynamism and relatively high social protection – the so-called flexicurity approach. Underlying the success of the Danish model is the combination of flexibility (a high degree of job mobility thanks to a low level of employment protection), social security (a generous system of unemployment benefits) and active labour market programmes. The Danish model of flexicurity thus points to a third way between the flexibility often attributed to deregulated Anglo-Saxon countries and strict job protection characterizing southern European countries. (OECD 2004, p. 97) Under the heading of the Danish ‘model of flexicurity’ the story about Denmark is often cast in terms of a well-functioning relationship between unemployment insurance, employment protection legislation and active labour market policy in the following configuration: ● ● A flexible labour market with a high level of external numerical...

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