LABOUR MARKET Mini-report
Labour market Some of the attractive elements of the labour market in Copenhagen and the Øresund Region are: � A labour market of nearly 1.9 million people - the largest in Scandinavia. � Flexicurity – the Danish model offers one of the easiest and most flexible hiring and firing practices. This is combined with a strong public social security system. � A high concentration of well-educated labour. � Excellent foreign language skills. � Co-operative labour-employer relations. � Competitive labour costs. On the following pages an overview of the labour market in Copenhagen and the Øresund Region is provided with regard to: Size, participation and geographic mobility
Level of education
Foreign language capabilities
Labour costs and regulations (Flexicurity)
Labour force mobility
Recruitment and staff training
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Size, participation and geographic mobility The labour force in the Copenhagen Region amounts to approximately one million people. Taking into account the Øresund
Figure 1 - LABOUR FORCE PARTICIPATION RATES
Region, the total rises to 1.9 million people, thus constituting
the largest coherent labour market in Scandinavia.
The size of the labour force and the unemployment rates in
Copenhagen, Øresund and the whole of Denmark are illustrated in table 1.
The Netherlands United Kingdom
Labour force participation
Labour force participation is high in Denmark. This reduces the pressure on the labour market and helps to avoid labour short-
ages. In addition, the active enrolment of people in the labour
market ensures that the qualifications and skills of workers are
continuously updated. Few other European countries, including the other Scandinavian countries, have labour force participation rates as high as Denmark – 80.7 per cent as illustrated in figure 1. Denmark’s high participation rate is mainly a result of
Source: OECD Employment Outlook, 2010 Note: Labour force is defined as people between 15-64 years
a high participation rate for women. Geographic mobility in the Øresund Region The integration of the labour markets in the Øresund region is supported by major infrastructural projects in the area. The Øresund Bridge between Denmark and Sweden as well as other
Table 1 - Unemployment rates Copenhagen Region
Source: www.orestat.scb.se, 2010
large infrastructural projects enable fast and easy commuting between the two countries. Consequently, working in Denmark while living in Sweden has become much easier, and the administrations in both countries are continually working on ensuring further integration. As a result, the number of people commuting across Øresund has tripled since the opening of the bridge in 2000 (Øresund Committee and the Øresund Bridge Consortium). Not only is geographic mobility between Sweden and Denmark increasing but geographic mobility within the Copenhagen area is high as well. The high rate of mobility can be explained by the following factors: � Short travel time relative to travel distance from the outskirts to the centre of Greater Copenhagen due to effective infrastructure � Personal tax deduction for long-distance commuting � A financial advantage for people living in Sweden and work-
ing in Denmark.
Level of education The Øresund Region represents a true knowledge centre and a unique recruitment base for knowledge-intensive businesses. With its 14,000 researchers, 155,000 students and 12 higher education centres, the region constitutes the educational centre of Denmark as well as of Scandinavia. Denmark has one of the highest levels of educational achievement according to IMD’s world competitiveness yearbook. This testifies to a high availability of educated labour. Education continues to rank high on both the political and the corporate agenda in Denmark. Special emphasis is placed on lifelong learning, and there is an ongoing commitment to the continuous development of the skills base. This is achieved, for
TABLE 2 - HIGHER EDUCATION ACHIEVEMENT Country
Source: IMD, World Competitiveness Yearbook 2010
example, through on-the-job training, job mobility and vocational training.
A sound working culture is one of the building blocks for success in today’s competitive and dynamic business environment. Danish businesses are characterised by an easy-going corporate culture that allows for open and honest communication with short communication lines from upper management to the
Figure 2 - worker motivation Denmark Switzerland
individual employee. Danes are generally innovative and open to new ideas; they take responsibility and are quick to implement
new technologies and adapt to changes. The business environment is informal and top management’s willingness to delegate
authority is high. Sweden Germany Iceland 6,0
Source: IMD, World Competitiveness Yearboook 2010 Note: Executive Opinion Survey based on an index from 0 to 10, selected countries
Foreign language capabilities The foreign language capabilities of the Danish population are generally considered to be excellent. Most foreign companies as well as larger Danish companies have English as their corporate language. As shown in the figure below, Denmark is listed in the top rankings in the IMD’s language skills chart for 2010.
Figure 3 - Language skills Switzerland Netherlands Sweden
TABLE 3 - foreign languages
Source: European Commission, Europeans and their languages, 2006 Note: Scandinavian languages include : In Denmark : Swedish and Norwegian, in Sweden : Danish and Norveigan, in Finland : Swedish and Danish
Finland Norway Germany United Kingdom 0
Source: IMD, World Competitiveness Yearboook 2010 Note: Executive Opinion Survey based on an index from 0 to 10
Labour cost and regulations (flexicurity) tries in northern Europe. As illustrated in the figure below, direct wages (pay) are among the highest in Europe but benefit payments and employers’ contributions to social security are so low in Denmark that the total costs for employers are lower
Figure 4 - COMPARISON OF COMPULSORY SOCIAL CONTRIBUTIONS PAYED BY EMPLOYER EUR
than in countries such as Sweden, Germany and the UK.
The Danish social security system is financed through taxes.
per cent of salary and are thus considerably lower than in other European countries, see figure 4. COLLECTIVE BARGAINING SYSTEM Contrary to most other European countries, the Danish labour market is regulated by collective agreements covering approximately 80 per cent of all employees. The collective bargaining system implies that employers and employees must reach mutually binding agreements on labour issues satisfactory to both parties. In most cases, working con-
30,000 20,000 10,000 0
contributions paid by Danish employers are only a symbolic 2.1
or w Au ay st Ge ria rm a Be ny lg iu Ire m la n D en d m ar Fr k N et anc he e rla nd s Sp Sw ain ed en Fi nl an d
because of the higher tax rate. Conversely, the social security
Consequently, the general rates of pay are higher in Denmark
ly U K
Labour costs in Denmark are in line with those of other coun-
Mandatory benefits and social security**
Source: Mercer Human Resource Consulting 2009 Note: *National average earnings for a full-time employed person including pay for holidays and public holidays. **Including all standard employers’ costs for benefit programmes.
specific needs of each company and sector. The co-operative
ditions are negotiated at company level in accordance with the
nature of industrial relations combined with a well-functioning social security system translates into flexible hiring and firing practices and a co-operative labour force. The relatively high degree of flexibility is possible because most people are insured against unemployment and guaranteed a high level of social security when unemployed. This condition is the main principle of the Danish flexicurity model, which has been an inspiration to a number of European countries as a solution to their problems with unemployment. The concept of Flexicurity will be described below. The Flexicurity concept In practice, flexibility means that it is easier to dismiss workers in Denmark than in most other countries. The period of notice required varies according to the number of years of employment. Provided that the legal and agreed notices are observed, there are no costs for the employer in relation to laying off skilled and unskilled workers. In recent years, the concept of Flexicurity has been introduced in order to describe the particularly Danish combination of a very flexible labour market and social security. The concept is a hybrid between the Danish liberal approach to low employment protection and the comprehensive social security systems
TABLE 4 - FLEXIBILITY RANKING Country
Source: IMD World Competitiveness Yearbook 2010 Note: Countries are listed in IMD ranking order
that characterize the Scandinavian welfare states. The Danish model is a result of a long historical development and though the term â€œFlexicurityâ€? is new, it describes some deep-rooted characteristics of the Danish labour market. The Flexicurity model contains two important elements. Firstly, a flexible labour market characterized by easy hiring and firing practices and secondly, a generous welfare scheme with high benefits for the unemployed. The consequence of the interaction between the two elements of the model is that the Danish labour market is characterized by a high level of employment security as opposed to the high level of job security that characterizes the other Scandinavian countries. A high level of employment security provides security for a job but not necessarily for a particular job for a long period of time. This offers a basis for a high level of labour force mobility, which makes it easier for the employer to get qualified labour while also making it easier to lay off redundant labour. Flexible hiring and firing practices mean a greater willingness
to hire labour.
Labour force mobility
The combination of high degrees of flexibility and security on the
employment, the employee earns 2.08 days of paid holiday. It
labour market results in a high degree of mobility in the labour
is worth noticing that the above-mentioned requirements are
force compared, for instance, to both Sweden and Finland, as
legally regulated. Additional days of holiday may exist in some
shown in figure 5. According to the Economic Council of the
industries depending on collective agreements between employ-
Labour Movement (ArbejderbevĂŚgelsens ErhvervsrĂĽd), an av-
ers and employees. For many groups, an additional 5 days are
erage of 25-35 per cent of the Danish labour force change
employer each year.
Figure 5 - AVERAGE TENURE with SAME EMPLOYER In Denmark, the normal working week consists of 37 hours spread out over five days. Due to the collective bargaining sys-
tem, there is no upper limit to working hours in Danish legisla-
tion. However, EU legislation imposes a ceiling on working time, which is a weekly average of 48 hours. Although EU legislation
imposes a ceiling on working time, the Danish system is very
flexible when it comes to changes in working hours and it is consequently easy to adjust labour to meet unexpected changes in demand.
As regards holidays, 10 paid public holidays are always ob-
served in Denmark. This is not the case in Sweden if they fall
at the weekend. In addition to this, all employees have the right
to 25 days of holiday every year. Whether this is paid holiday depends on the duration of employment - for every month of
Source: OECD 2010
Recruitment and staff training larly for unemployed workers, are a high priority for the government as well as for firms in Denmark. The IMD ranks Denmark first in terms of prioritising employee training, as represented in the figure 6.
Figure 6 - PRIORITY GIVEN TO EMPLOYEE TRAINING Denmark Sweden Norway Switzerland Germany Austria Iceland Finland Romania 6,00
Source: IMD World Competitiveness Yearbook 2010 Note: Executive Opinion Survey based on an index from 0 to 10. A high scores indicates that employee training is of priority to the companies in the economy
Finally, staff training and the upgrading of qualifications, particu-