Elevator pitch
Denmark is often highlighted as a “flexicurity” country characterized by rather lax employment protection legislation, generous unemployment insurance, and active labor market policies. Despite a sharp and prolonged decline in employment in the wake of the Great Recession, high job turnover and wage adjustments worked to prevent long-term and thus structural unemployment from increasing. While many have been affected by unemployment, most unemployment spells have been short, which has muted the effects on long-term and youth unemployment. Recent years have seen a sequence of reforms to boost labor supply and employment, including measures targeting the young, the elderly, and immigrants.
![Gross unemployment rate and real wage
growth](/uploads/articles/404/images/IZAWOL.404.ga.png)
Key findings
Pros
Employment rates have recovered since the Great Recession.
No significant increase has been observed in long-term unemployment and youth unemployment has remained relatively low.
High job turnover rates ensure that most unemployment spells are short, which helps prevent a rise in structural unemployment.
Wage adjustment has been flexible and wage competitiveness has recovered since the Great Recession.
There are few working poor due to high minimum wages and a compressed wage structure.
Cons
A high share of youth enter the labor market with low qualification levels; this is especially challenging because there are few low-skilled jobs.
Immigrants from low-income countries have low employment rates.
Job turnover may be excessively detrimental to human capital accumulation.
Wage inequality is widening.
Average working hours are low.