Jacob Christensen

Even if the general rule “It ain’t over ’till the fat lady sings” still very much applies to industrial agreements in Denmark, there are a couple of things in the proposed agreement for industrial workers which merit attention.

Of most interest to me, there is the introduction of a system of severance payments which will guarantee laid-off workers a much higher compensation than the unemployment insurance. Even if there are some relatively tight employment conditions attached to the system and the severance pay will only be covering from one to three months of unemployment, it points to the fact that the cracks in the existing unemployment insurance are beginning to show – the replacement rate in the public unemployment insurance benefit is simply too low for most workers.

The severance pay follows a well-known pattern in Danish social policy: Unions have generally favoured universal benefits which would bridge the gap between workers and employees. When this failed, they have instead opted for collective bargaining with negotiated programmes in old-age pensions (from the late 1980s onward) and sickness benefits (from the 2000s). A second layer in unemployment benefits would be just another addition to the complicated system of social benefits.

What is slightly fascinating is that the employers – who have always resisted demands for their inclusion in the financing of unemployment benefits, especially for people who were laid off temporarily – have accepted the demand given the state of the labour market.

Oh, and my Swedish readers will note that the extended child leave is distributed with one week to each parent.