New scheme replaces Danish wage compensation for corona-hit firms

Denmark’s wage compensation scheme, introduced in the spring to pay employees' salaries on behalf of companies during the coronavirus crisis, has now expired.

New scheme replaces Danish wage compensation for corona-hit firms
Employment minister Peter Hummelgaard announces the original wage compensation scheme in March. Photo: Ida Guldbæk Arentsen/Ritzau Scanpix

The government, unions and employers’ representative organisations have reached a tripartite agreement on a new structure to replace the wage compensation scheme, which was designed to enable companies to keep as many employees on their books as possible through lockdown and related closures.

READ ALSO: Why Denmark is paying salaries for virus-hit companies

The agreement was announced by the Ministry of Employment late on Sunday, after the previous arrangement expired during the weekend.

“In essence, we have put together a better scheme so that work can be shared at companies,” employment minister Peter Hummelgaard said.

The agreement allows for companies to share their available labour between employees instead of making staff redundant. Staff sent home due to reduced hours will be able to receive unemployment insurance payouts (dagpenge) while retaining employment status, the ministry said.

“I am pleased that labour market partners are again taking responsibility and reaching an agreement the helps both staff and companies,” Hummelgaard said in a statement.

“We think it is important that wage earners who are sharing the work that a company can offer with others feel they are compensated and secure, rather than being given notice of redundancy,” he said, in referring to an increase in maximum payout provided for by the new agreement.

The deal enables unemployment insurance of a maximum 23,000 kroner per month, 20 percent higher than the normal maximum payout.

Hummelgaard said it was unclear how many companies would use the scheme.

“But our calculations estimate that 30,000 places of work will be encompassed (by the agreement),” he said.

The increased benefit payment will primarily by financed by employer contributions, the ministry said.

Employees who take part in the scheme will also not be using their regular right to unemployment insurance if they qualify for it.

The new scheme will take effect as soon as possible and will apply until December 31st. For “established” work-sharing schemes, granting of an extension of up to four months into 2021 will be possible.

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Labour shortage hits half of Danish companies in construction sector

A record-high shortage of labour at some Danish companies is exacerbated in some places by a lack of materials, according to new data.

A file photo of construction in Aalborg. As many of half of construction companies in Denmark currently report a lack of labour.
A file photo of construction in Aalborg. As many of half of construction companies in Denmark currently report a lack of labour. Photo: Henning Bagger/Ritzau Scanpix

The construction industry reports a lack of labour at around half of all companies, according to a survey by Statistics Denmark, based on responses from businesses.

In the service industry, which includes restaurants, hotels and cleaning, one in three companies reported a lack of workforce.

Some industries, notable machinery related businesses, also said they are short of materials currently.

The lack of labour is holding the Danish economy back, according to an analyst.

“Never before have we seen such a comprehensive lack of labour in the Danish economy,” senior economist Søren Kristensen of Sydbank said.

“It’s a shame and it’s a genuine problem for a significant number of the businesses which at the moment are losing revenue as a consequence of the lack of labour,” Kristensen continued.

“That is costly, including for all of Denmark’s economic growth. Even though we on one side can be pleased that it’s going well for the Danish economy, we can also regret that it could have been even better,” the economist said in a comment to news wire Ritzau.

Despite the lack of labour, businesses have their most positive outlook for years, according to Statistics Denmark.

The data agency based its conclusions on a large volume of responses from companies related to revenues, orders and expectations for the future.

The numbers are processed into a measure termer business confidence or erhvervstillid in Danish. The October score for the metric is 118.7, the highest since 2010, although there are differences between sectors.

READ ALSO: Are international workers the answer to Denmark’s labour shortage?