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KEY INSIGHTS

DEMOGRAPHIC

CHANGES october 31, 2016

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welcome TO aarhus symposium

Focus 2016 WHY SHOULD I GO? To engage in a discussion with three speakers on the current demographic changes in the Danish economy

WHERE SHOULD I GO? The S-building, Fuglesangs Allé 4, Aarhus BSS

WHEN SHOULD I BE THERE? Date: Monday, October 31, 2016 Time: 15.30 - 20.00

what should i bring? Bring the QR-code you received on your e-mail as your ticket


aarhus symposium FOCUS 2016

CONTENTS 01

Agenda

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THE THEME OF AARHUS SYMPOSIUM FOCUS 2016

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Interview with Allan Lyngsø Madsen

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Interview with Torben Tranæs

DEMographic changes

Chief economist, lo

Professor and executive director of research, sfi

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Interview with Troels Bjerg

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presenting the moderator

Regional CEO Northern Europe, ISS A/S

thomas bernt henriksen

Premium partner Of AArhus symposium 2016


AGENDA

AGENDA 15.30 – 16.30

Arrival – Meet Dong Energy

16.30 – 16.45

Welcome to Aarhus Symposium Focus 2016

16.45 – 17.00

Presentation by ALLAN LYNGSØ MADSEN

17.00 – 17.15

Presentation by TORBEN TRANÆS

17.15 – 17.30

Presentation by TROELS BJERG

17.30 – 18.00

Break with refreshments

18.00 – 19.00

Panel Discussion

19.00 – 20.00

A BITE TO EAT AND NETWORKING

AARHUS SYMPOSIUM FOCUS Aarhus Symposium Focus is an inspiring and enlightening event that takes place on Monday evening in the week of Aarhus Symposium. The purpose of Aarhus Symposium Focus is to engage leaders of today with leaders of tomorrow in a discussion on Denmark’s most important challenges.

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Before its renaming in 2016, the event was known as Battle of the Economists. This year, we are looking forward to welcoming you to the very first Aarhus Symposium Focus. Join us on October 31, 2016.


the theme of aarhus symposium focus 2016

DEMOGRAPHIC CHANGES

HOW WILL WE WORK, AGE, AND LIVE? Is the Danish economy powerless against changing demographics? Denmark is facing the power of demographics. Within the Danish economy, increasing longevity creates major challenges for the welfare system and the labour market. Outside the Danish borders, international demographic changes add further complexity to these issues. The Danish economy will inevitably have to adapt to these shifts in the demographic composition, but how?

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ooking five years ahead, the generation entering the Danish labour force is smaller than the retiring generation. This clearly puts pressure on Denmark’s fiscal situation. In fact, already by 2017, Danish employment will, at its structural level, be creating problematic conditions for businesses. Especially the potential shortage of skilled labour poses a serious challenge to the growing Danish economy. Which actions do business leaders need to take now to prepare for this shift in labour availability? How do legislators create the best conditions possible for future growth while addressing these demographic challenges? Nonetheless, these challenges cannot be fully contained within the Danish economy. Efforts to maintain a solid foundation for future growth

must also incorporate demographic shifts on an international level. High labour mobility across borders is central to this discussion, as labour markets are constantly altered by migration patterns. If Danish businesses are able to leverage the high mobility to secure an inflow of skilled labour, this may create new opportunities for growth. However, is the Danish welfare system flexible enough to cope with these structural changes – or is the power of changing demographics too strong? At Aarhus Symposium Focus 2016, we have invited three speakers within the field to elaborate on these important questions. In an economic discussion, they will elaborate on how we will work, age, and live in the future. We encourage you to join the discussion on October 31, 2016.

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Presenting the speakers Of Aarhus symposium focus 2016

SPEAKER AT AARHUS SYMPOSIUM FOCUS

allan lyngsø madsen Chief economist, lo

We are pleased to welcome Allan Lyngsø Madsen, Chief Economist at the Danish Confederation of Trade Unions, LO, to Aarhus Symposium Focus 2016. Allan Lyngsø Madsen’s career started in the Economic Council, whose primary objective is to provide independent analysis and policy advice to Danish policymakers. Allan Lyngsø Madsen’s great interest in providing policymakers with economic counselling has served as a guiding star throughout his career. Before being appointed Chief Economist at LO, Allan Lyngsø Madsen held various positions at The Danish Metalworkers’ Union, Dansk Metal. Here, he served as the Head of Department for Labour Market Policy, actively advising policymakers based on research within labour economics. He later became the Chief Economist at Dansk Metal, a position he held for four years before joining LO in 2015. Allan Lyngsø Madsen obtained his Master’s degree in Economics from Aarhus University.

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Presenting the speakers Of Aarhus symposium focus 2016

Education must adapt to

demographic shifts

As part of the preparations for Aarhus Symposium Focus 2016, we conducted an insightful interview with Allan Lyngsø Madsen. As the Chief Economist of the Danish Confederation of Trade Unions, LO, he shared his thoughts on the demographic changes within the Danish economy.

What is the biggest demographic challenge to the Danish economy today? Throughout the interview, Allan Lyngsø Madsen focuses on the composition of qualifications within the Danish labour force. There is no real reason to be nervous about the ageing of the population, he says, as many actions have already been taken to solve this: “The Economic Council as well as the Welfare Commission addressed this issue years ago, and we have seen welfare reforms been made to fix this problem. However, one key issue remains: The composition of the labour force,” Allan Lyngsø Madsen explains. A shortage of skilled labour, in particular, constitutes a challenge for the composition of the Danish labour force, a shortage which is linked to the issue of an ageing workforce, according to Allan Lyngsø Madsen. “A large percentage of the retiring generation

are carpenters, industrial technicians, electricians, and other types of service employees. This actually means that the supply of vocationally trained labour is decreasing dramatically,” he elaborates. What are the economic implications of a lack of vocationally trained labour? According to Allan Lyngsø Madsen, the shortage of well-educated labour for the service industries has great implications for growth in Danish productivity. He explains: “We need to be an economy with high wages so people can live good lives. But the only way of maintaining this high wage level is by heightening the level of productivity: this is a main issue”. The question is, how do we solve this issue? According to Allan Lyngsø Madsen, productivity and education are closely related: “It’s one thing to increase THE Article CONTINUES ON THE NEXT PAGE

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Presenting the speakers Of Aarhus symposium focus 2016

productivity, but the challenge is to do so and still maintain a narrow income distribution in the future”. This is where education plays an important role. Allan Lyngsø Madsen points out how a narrow income distribution in the Danish society must be based on a narrow distribution of qualifications. He states: “Having our politicians investing in education: that is the core issue. We need to have quality within our educational system - not only quantity”. How should we handle immigration? Allan Lyngsø Madsen’s focus on qualifications leads him to elaborate on the increased immigration to Denmark. The inflow of many low-skilled people from undeveloped countries puts pressure on Danish wages, a point on top of the agenda at LO. Allan Lyngsø Madsen describes how a two-year programme for refugees has been created as an initiative to face this challenge. The aim is that the two-year

programme will, through apprentice wages, introduce new inhabitants in Denmark to the labour market by raising their general qualifications.

We must increase the qualifications of these new members of our labour force rather than lowering wages in general in the economy.

What is your take on Allan Lyngsø Madsen’s points about the distribution of qualifications within the economy? Do you think Denmark will be able to increase productivity while maintaining the relatively equal distribution of income? Join the panel discussion on how we will work, age, and live on October 31, 2016.

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During the programme, twenty weeks are devoted specifically to education, an important aspect to Allan Lyngsø Madsen. He notes: “Along with teaching them Danish, some of these people do have an educational background, which we can build on”. To him, there is only one solution to the current situation: “We must increase the qualifications of these new members of our labour force rather than lowering wages in general in the economy,” he concludes.


Presenting the speakers Of Aarhus symposium focus 2016

SPEAKER AT AARHUS SYMPOSIUM FOCUS

Torben Tranæs Executive Director of Research, SFI

We are excited to welcome Torben Tranæs, Professor and Executive Director of Research at the Danish National Centre for Social Research, SFI, to Aarhus Symposium Focus 2016. Torben Tranæs’s areas of research include labour market relations, migration and integration as well as welfare and income distribution in Denmark. Prior to joining SFI, Torben Tranæs served as the Director of Research at the Rockwool Foundation’s Research Unit from 2003 to 2015. Torben Tranæs’s excellent research and numerous publications have made him a very well-respected voice in economic debates in Denmark and internationally. Today, Torben Tranæs also serves as Co-Chairman in the Danish Economic Council. Torben Tranæs holds a Master’s degree and a Ph.D. in Economics from The University of Copenhagen, where he has also been an Associate Professor for 6 years.

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Presenting the speakers Of Aarhus symposium focus 2016

Immigration, a challenge

for fiscal stability? Immigration is the key issue in the discussion on demographic changes, according to Torben Tranæs, Executive Director of Research at the Danish National Centre for Social Science, SFI. In an interview, Torben Tranæs willingly shared his insights on how we will work, age, and live in the future.

WHAT IS THE BIGGEST DEMOGRAPHIC CHALLENGE TO THE DANISH ECONOMY TODAY? Torben Tranæs answers our question without hesitation: “In terms of demographics, the biggest economic challenge we are currently facing is the question about immigrants and refugees”. The inflow of low-educated people from poorer countries will bring down GDP per capita, and this challenges Danish fiscal sustainability, Torben Tranæs explains. Responding to internal demographic shifts in order to secure long-run fiscal sustainability has been the main focus of politicians for the past decade. However, many issues relating to immigration still remain unsolved. “If we leave out the issues related to immigration, our long-term fiscal sustainability actually looks quite good,” Torben Tranæs notes, and continues: “This is why I think the issues relating to immigration and refugees is the biggest demographic challenge that our economy is facing”. 7

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The size of this challenge depends on different aspects. It makes a clear difference how many immigrants will get a job and what kind of job they get. On this background, Torben Tranæs elaborates on the movementsof labour from countries close to Denmark: “Refugees and immigrants from poorer countries in the Middle East are competing for the same types of jobs as workers from Eastern European countries. What we see is that in the competition for employment, immigrants from, for instance, Romania perform better than, say, Syrians”. This can also be seen from a point of financial independence. “Most Romanians working in Denmark earn almost all their income themselves,” Torben Tranæs notes. He continues: “For Syrians, however, total income consists of only a third earned through employment, and two thirds from social benefits. This is the case, although their income level is actually the same. There are good reasons for this difference, but it still illustrates the competition for jobs that refugees face”. Although


Presenting the speakers Of Aarhus symposium focus 2016

Torben Tranæs is quite nuanced in his views on immigration, he does emphasize the fiscal challenges immigration causes: “Of course, it is beneficial that people from Eastern Europe come to Denmark to work. However, it is a problem if Danish residents do not get some of these jobs - from a fiscal point of view”, Torben Tranæs explains.

and also making it easier for companies to hire immigrants and refugees. “In principle, facing the immigration problem from both the demand and supply side is the right approach. However, there may still be too many bureaucratic barriers from the firms’ perspective for this to have a large effect,” Torben Tranæs notes.

How should we tackle immigration?

If the high inflow of immigrants from poorer countries continues, we will see more income inequality in the economy.

More than twenty immigration and integration reforms have been carried out since the beginning of the millennium. Torben Tranæs mentions two different main approaches that have been deployed over the past years: “One way of making immigration reforms is by controlling who enters the country. We have seen this, for instance, when the rules for family reunification were regulated”. Recent initiatives have taken a different approach. Policymakers have sought to lower social welfare benefits while making the institutions in the labour market more compatible by lowering the minimum wage for newcomers. In this way, Torben Tranæs explains, regulators are both creating larger incentives to work

If these challenges are not addressed, they will have consequences, according to Torben Tranæs: “If the high inflow of immigrants from poorer countries continues, we will see more income inequality in the economy and more welfare dependences. This will potentially mean higher taxes, less social security or less public service, also for people who are higher up the income ladder, so indirectly it is likely that everyone will experience a welfare effect from increased immigration”, Torben Tranæs concludes.

Which implications do you believe will result from increased immigration? How ought Danish policymakers solve the challenges of integration? Join the panel discussion on how we will work, age, and live on October 31, 2016.

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Presenting the speakers Of Aarhus symposium focus 2016

SPEAKER AT AARHUS SYMPOSIUM FOCUS

troels bjerg regional ceo noRthern europe, iss a/s

We are pleased to welcome Troels Bjerg, Regional CEO Northern Europe at ISS A/S, to Aarhus Symposium Focus 2016. Troels Bjerg has held various international positions at German Daimler AG before joining ISS in 2009. Today, Troels Bjerg is part of the Executive Group Management at ISS, one of the world’s largest facility service companies, and the Regional CEO of more than 80,000 employees in Northern Europe. Among other positions, Troels Bjerg is a member of the Board of Directors at Ejner Hessel Holding A/S as well as a member of the Central Board at the Confederation of Danish Industry, DI. Troels Bjerg holds a Bachelor’s degree in Business Administration from Copenhagen Business School and a Master of Business Administration from IMD Business School in Switzerland.

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Presenting the speakers Of Aarhus symposium focus 2016

Productivity essential

for future growth

During the preparations for Aarhus Symposium Focus 2016, we asked Troels Bjerg to share his view on the demographic changes in the Danish economy. As the Regional CEO of Northern Europe at ISS, the demographic development in Denmark and the rest of Northern Europe, is of high interest to Troels Bjerg. In an inspiring interview, Troels Bjerg gave his take on how we will work, age, and live in the future.

What is the biggest demographic challenge to the Danish economy today? Troels Bjerg believes that today’s biggest Danish demographic challenge consists of two main issues: “Firstly, we have a relatively small part of the population actually being part of the labour market. This is challenged further by the fact that a large generation is retiring in these years. Secondly, the inflow of many immigrants and refugees constitutes a challenge as we, the society, have not found out how to include these people properly in the workforce.” Troels Bjerg calls for political action to ensure a sustainable labour force growth to the benefit of the Danish economy overall. He hopes that steps will be taken to move more people away from welfare de-

pendency and into the labour market. “The overall labour force is simply too small and just not growing at the moment,” Troels Bjerg says. However, focusing on the size of the labour force alone will not be sufficient to solve Denmark’s demographic challenges, according to Troels Bjerg. He believes an increased focus on productivity is the key to ensuring future growth of the Danish economy. In Troels Bjerg’s opinion, the general mind-set about economic growth and productivity needs to change as a new generation enters the labour force. “In my mind, the low growth in productivity is really an issue of complacency. If we do not feel the need and the urge to improve productivity, then we also lack the drive necessary for doing so.” He continues: “In the Danish THE article CONTINUES ON THE NEXT PAGE

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Presenting the speakers Of Aarhus symposium focus 2016

economy, we need to put more pressure onto ourselves to resolve the demographic challenges we are facing. If we do not succeed with this important task, we will see the Danish economy move down the OECD list, which could put our entire welfare model under pressure. We should not take our current status for granted! Complacency, for any company or economy, is the greatest danger of all”. How should we handle immigration? To Troels Bjerg, integration is another key focus point when discussing demographic changes in the Danish economy. While calling for political actions to create more incentives to work, Troels Bjerg also believes businesses have an important role to play in the integration process. He explains how ISS cooperates with the job centres helping local municipalities in the process of integration. “By being introduced to the labour market, getting a job, any newcomer will be provided with the best opportunities for picking up Danish. We offer language programmes for new workers because

we find language skills to be very important. Language and playing an active part on the labour market are the keys to successful integration”, Troels Bjerg says.

Complacency, for any company or economy, is the greatest danger of all.

Do you think Troels Bjerg is right when he says low productivity growth is a result of complacency? How do you think the Danish economy can succeed in leveraging labour generated by immigration? Join the panel discussion on how we will work, age, and live on October 31, 2016.

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Troels Bjerg points out how ISS uses several different approaches in the process of getting more immigrants and refugees into the labour market. The new members of the Danish labour force are not only hired for service jobs as the company also seeks to get more foreigners into management positions. “A number of these people coming into our country are very resourceful and they have quite strong academic skills which they cannot put to use for various reasons. We have management and talent programmes, where we try to build on these competencies, as these people are a very strong source of talent for Denmark and for ISS,” Troels Bjerg concludes.


Presenting the MODERATOR Of Aarhus symposium focus 2016

MODERATOR AT AARHUS SYMPOSIUM FOCUS

THOMAS BERNT HENRIKSEN

OP-ED EDITOR, DAGBLADET BØRSEN

We are excited to welcome back Thomas Bernt Henriksen as the moderator of Aarhus Symposium Focus 2016. Thomas Bernt Henriksen is the Op-ed Editor at Dagbladet Børsen, where he focuses on linking new economic research to the current political agenda. In this way, Thomas Bernt Henriksen combines his education within economics and his research experience with his excellent talent for communications. Thomas Bernt Henriksen has previously served as the Council Director for the European Council of Economists. He joined Børsen in 2002 from a position as First Vice President in Danske Markets at Danske Bank. Thomas Bernt Henriksen holds a Master’s degree in Economics from the University of Copenhagen. Due to his educational background as an economist and his journalistic experience, Thomas Bernt Henriksen will make sure to guide us through the discussion and presentations of Aarhus Symposium Focus 2016 in an enlightening way. We are looking forward to Thomas Bernt Henriksen’s participation on October 31, 2016.

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Aarhus Symposium Focus 2016: Key Insights