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Last Updated: Monday, 27 March 2006, 14:15 GMT 15:15 UK
Danish labour model may help EU

By Oana Lungescu
BBC News, Copenhagen

Cans of Carlsberg beer
Danish business: Probably the best model of flexibility?
Denmark's ranking among the most competitive countries in the world and an unemployment rate of just 5% are attracting attention in the European Union.

The EU is interested to see whether Danish "flexicurity" - balancing flexibility for employers to hire and fire with social security and training for employees - is a model for the rest of Europe.

The Carlsberg brewery in the centre of Copenhagen, guarded by four massive stone elephants, is probably one of Denmark's best known symbols.

Fifty thousand bottles of beer are filled here every hour. But its vast bottling plant may soon fall silent. There are plans to move it to a much cheaper location 200km (124 miles) from the Danish capital.

That is too far for machine operator Heidi Lyngsaa, 38, one of 200 people who stand to lose their jobs at the world-famous brewery.

Like most Danes, Mrs Lyngsaa has already changed employers quite a few times, so she is not that worried about finding herself on the labour market once again.

"We have to be cheerful," she says, "and just keep looking".

Taking chances

Mrs Lyngsaa has got a few reasons to be cheerful. For the next four years, her unemployment benefit could be as high as 90% of her current wage. She would like to become a gardener or a carer for the elderly, so she is bound to get extra training too.

To finance this generous safety net, Danes pay very high income taxes of up to 60%.

Cheap Polish workers might threaten the collective bargaining system and the wage levels on the Danish labour market
Soeren Kaj Andersen
lecturer

There are duties, as well as rights. Mrs Lyngsaa would risk losing her benefit if she refused a job within two hours' travel from home.

And on the first day after she is fired, she has to register with an employment office. There is a big one not far from the brewery, an open-plan area with counsellors and computers linked to a country-wide job net.

Soeren Jensen lost his job as a sales manager two months ago. As he searches on the computer, the 32-year-old gets 22 hits.

"At least five of them look promising, so that's a high percentage," he says.

Every year, Denmark loses more than 250,000 jobs. But it creates just as many, so both employers and employees are willing to take chances. One of the keys to Denmark's success is that business and trade unions are marching to the same tune.

French students clash with police
French labour market reforms have brought massive protests

Like the royal guards, parading daily with their tall bear-skin hats and black uniforms, collective bargaining is a century-old tradition. Eighty percent of Danes are trade union members.

The consensus works so well that when the centre-right government tried to cut unemployment benefits for highly skilled workers, it was employers who protested that the plan would upset the social balance that keeps Denmark competitive. So it was quietly shelved.

Geographically, Denmark lies between Sweden and Britain, and it is also a mix of Sweden and Britain in the system, Verner Sand Kirk explains with a chuckle: "We have the Swedish security and the British flexibility".

A top official at Denmark's employment ministry, Mr Sand Kirk has been spending a lot of time lately meeting colleagues from the rest of Europe and even China, all seeking to import the magic "flexicurity" mix.

Protests

The French government claims it was flexicurity that inspired its hugely controversial youth labour law, but Mr Sand Kirk is not sure they got the balance right.

"The point is that if you only take the flexibility and not some of the security, it's difficult to implement it and to get it through at home," he says.

Students are protesting in Denmark too. But it is a modest affair compared to the French mass rallies, and the reason is cuts in university budgets. However, it is a sign that more reforms are under way, in response to major challenges ahead.

Soeren Kaj Andersen, who teaches sociology at Copenhagen University, thinks globalisation could lead to jobs moving out of Denmark. Then, there is EU enlargement.

"Cheap Polish workers might threaten the collective bargaining system and the wage levels on the Danish labour market," he says.

But he believes the biggest challenge over the next decade might be to get Denmark's immigrant community - who currently have much higher unemployment rates than the average - onto the labour market to counteract the dwindling of the working population due to ageing.

Investment

Denmark's problems are no different from those of Europe as a whole. While its solutions cannot be exported wholesale, they could inspire the rest of the EU.

Former Prime Minister Poul Nyrup Rasmussen, who cut unemployment from 13% to 5% in the 1990s through flexicurity, now leads the European Socialists.

He hopes to see a "coalition of the willing" in Europe, national governments willing to invest in the same focused areas - education, active labour market policies, getting mothers back to work - over the next three to four years.

"We can use each other to create more growth to make a sort of a European convoy where we move in the same direction and do it in the same amount of years," he says.

Brussels has no power to impose any social model on national governments. But with a stagnant economy and 19 million unemployed, there is an increasing awareness that Europe has to break some of the old mould or risk coming to the end of the line.


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