For members


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

Denmark’s low unemployment rate is creating recruitment challenges for Danish companies. A recent government initiative aims to resolve the issue, but some say it overlooks the importance of international labour. 

Are international workers the answer to Denmark’s labour shortage?
Business organisations have called for Denmark to do more to enable companies to draw on skilled foreign labour. Photo by Darth Liu on Unsplash

On September 10th, Denmark became the only European nation with no Covid-19 curbs. Denmark is also one of only six European Union countries whose economy has surpassed pre-pandemic levels, reports Statistics Denmark. And, it is one of only four EU countries where unemployment is now lower than before the pandemic, according to recent figures from Eurostat.

Although this sounds like a hat trick of good news for Denmark, the country now faces a new challenge: maintaining economic growth while facing a severe labour shortage.

Earlier this month, Statistics Denmark announced that the number of job vacancies in Denmark reached its highest level in more than a decade. Data from the Danish Agency for Labour Market and Recruitment from the month of June show 22.5 percent of companies’ recruitment attempts were in vain. 

“It is gratifying that unemployment is falling rapidly in Denmark, but it also means that there will be fewer people taking vacancies,” said Steen Nielsen, head of labour market and policy at Danish Industry (Dansk Industri, or DI), an organisation representing approximately 18,500 companies across Denmark. 

“Without more employees, we will very soon experience a significant slowdown in economic growth,” Morten Granzau, DI’s deputy director, said.

What is Denmark doing about the labour shortage?

When Denmark’s government announced its 2022 budget proposal August 30th, critics claimed the proposal didn’t do enough to resolve Denmark’s labour shortage. Little more than one week later, the government announced a new initiative, Denmark Can Do More (Danmark kan mere I) that aims to increase employment by more than 10,000 people by 2030. 

The initiative consists of several efforts to increase Denmark’s labour force. It cuts the standard monthly unemployment insurance payment and shortens the eligibility period for new graduates to encourage them to join the labour force, requires some migrants to work a minimum of 37 hours per week to receive welfare benefits, and incentivizes employees to work past retirement age, among other policy changes.

It is the first in a series of reform proposals that aim to increase growth and employment in Denmark, according to the Ministry of Finance (Finansministeriet). 

Although Denmark’s business community says the initiative is a good start, it falls short of resolving Denmark’s labour shortage – especially in the short-term. DI, the Danish Employers’ Association (Dansk Arbejdsgiverforening), and the Danish Chamber of Commerce (Dansk Erhverv), among others, have expressed this concern and reiterated the important role of international labour.

“With just over 10,000 more sets of hands, the government only offsets what it has already lost in the workforce,” said Jakob Brandt, CEO of SMVdanmark, an organization representing 18,000 small and medium-sized companies in Denmark. For example, the 16,000 applicants for Denmark’s early retirement scheme and the 25,000 new public sector jobs created since the start of the pandemic.

According to hospitality trade association HORESTA, Denmark’s hotel and restaurant industry alone is short-staffed by 12,000 people. Recent data from Statistics Denmark shows that four out of five hotels and two-thirds of restaurants experienced labour shortages in August.

“The problems are of such a magnitude that we can not solve it alone with the people who are already in this country,” Kirsten Munch, political director at HORESTA, said.

What role does international labour play?

Within the same week the initiative was announced, the leaders of Denmark’s liberal, conservative, and far left parties all expressed the importance of foreign labour in resolving the shortage. 

Sofie Carsten Nielsen, leader of the Social Liberal (Radikale Venstre) party, said foreign labour may be the fastest way to alleviate the urgent need for labour. “We know how it works, and it does not take long negotiations,” Nielsen said. “Giving companies better access to pick up skilled labour outside Denmark and outside Europe is low-hanging fruit.”

One suggestion to attract foreign labour is to reduce the salary requirements for skilled non-EU nationals to qualify for Denmark’s Pay Limit Scheme (beløbsordningen), a visa scheme only currently available to those with a minimum annual salary of 445,000 DKK. 

“[Reducing the Pay Limit Scheme minimum compensation] will make us more competitive in terms of attracting the foreign workforce that many other countries are also longing for at the moment,” said Brian Mikkelsen, CEO of Dansk Erhverv.

However, the now-governing Social Democrats have continued to oppose the reduction of the Pay Limit Scheme‘s minimum salary requirement.

Minister of Employment Peter Hummelgaard said the party is “generally pleased” with the current arrangements for recruiting qualified foreign labour, but are open to adjustments if they prove necessary in the future.

“It is the government’s first priority to ensure that the unemployed who are already in Denmark have the opportunity to get a job,” Hummelgaard told The Local. “If there are areas that are not possible to cover with Danish labour, we must of course turn our attention to the EU and next to third countries for qualified foreign labour.”

The Danish People’s Party (Dansk Folkeparti) has also expressed opposition to reducing the scheme’s minimum salary to prevent underpaid labor and social dumping.

“Dansk Folkeparti prioritises finding or creating jobs for the group of unemployed people in Denmark who are able to work before importing a workforce from other countries,” Bent Bøgsted, the party’s labour market spokesperson, told The Local.

The anti-immigration party believes Denmark’s unemployed workers could meet current needs, albeit with some upskilling.

“Unfortunately we see employers favouring cheap labor from non-EU countries and Eastern Europe instead. …This is unacceptable,” Bøgsted said.

Will attracting international labour be included in future initiatives?

After the “Denmark Can Do More” initiative was announced September 7th, several parties in the country’s parliament continued negotiations on additional reforms to reduce the current labour shortage, along with industry stakeholders. 

“We (DI) are part of those discussions and though we don’t know what will come of those discussions yet, it’s clear that the government and other parties of parliament recognise the need for international labour as one way to solve that,” Søren Kjærsgaard Høfler, a political consultant in global mobility at DI, told The Local. 

“Though DI appreciates the suggested reforms we see a need to act now, since the situation on the labour market calls for action right now,” Høfler added.

Any additional policy changes may be included in the financial act coming out later this autumn. 

 “Whether we bring workers into the labour market sooner, keep them longer, or bring in foreign labour with fewer hurdles, everyone wants to make sure there is enough labour for Danish companies to thrive,” Høfler said. “Some problems can be resolved through structural changes in Denmark’s own labour market, but we also know international labour is crucial. It’s not either/or; it’s both/and.”

Updated September 21st, 2021 to include comment from Danish People’s Party and on September 22nd, 2021 to include comment from Social Democrats.

Member comments

  1. Reducing labor rates is the fastest way to put downward pressure on all labor rates as companies will always select cheaper foreign workers over more expensive nationals. This scheme is why real wages in the USA have reminded stagnant for years, pre-COVID, as citizens struggle to compete for jobs taken by immigrants, many illegal. Currently the US is suffering a labor shortage as well but a lot of that is due to political decisions which do not require any work from those receiving public assistance. Data indicates that low skilled workers if their family is included receive more in public assistance than they produce for a net loss! If this scheme is ever implemented there will be no going back. The solution may be short term contract workers who must leave at the end of their contract and can not bring family members or if they do they are not eligible for any financial assistance . And if they do not depart at the end of their contract the employer is fined.

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For members


Dagpenge: How Danish unemployment benefit rules are set to change

New rules for dagpenge, the uninsurance benefits which you can qualify for through membership of private insurance funds known as A-kasser, take effect on May 1st.

Dagpenge: How Danish unemployment benefit rules are set to change

The new rules mean that the monthly benefit for certain groups is increased during their first three months of unemployment.

However, people who graduate from higher education after May 1st and are looking for work will receive less than they did under the outgoing rules, once they have received dagpenge for three months.

A language requirement will also be introduced for new graduates and the period in which they can claim dagpenge will be reduced from 2 years within a 3-year period, to 1 year within a 2-year period.

The new rules for dagpenge were adopted by a majority in the Danish parliament in January this year. The specifics of the changes are outlined in further detail below.

READ ALSO: A-kasse: Everything foreigners in Denmark need to know about unemployment insurance 

For employed or self-employed people, the maximum amount of benefits you can receive under dagpenge system goes up on May 1st, from 19,728 kroner to 23,449 kroner per month.

This applies in the first three months of unemployment, after which the rate returns to the regular amount. It should also be noted that these rates are the maximum you can receive, but you may get less. This is because the rate cannot be more than 90 percent of your former income.

Certain conditions must be met for you to be immediately eligible for dagpenge after losing your employment, and to receive the new higher rate. You must have been an A-kasse member for four continuous years at the time you became unemployed, and have been in employment for a total of two of the last three years.

You must also have had an income that would qualify you for a higher rate than the regular 19,728 kroner per month, based on the payouts being 90 percent of your regular income.

Recent graduates see their cover significantly worsened under the new rules, but it’s worth keeping in mind that the changes apply only to people who register as ledig (unemployed) having completed their studies after May 1st 2023, and therefore begin claiming dagpenge after this date.

People who registered into the system before the new rules came into effect are still encompassed by the previous rules.

For those who are ledig nyuddannet (“unemployed, newly graduated”) on May 1st or later, the benefit rate will be reduced after three months of unemployment.

The period of eligibity for dagpenge is now 1 year within a 2-year period. Until now, the eligibility period was 2 years within a 3-year period. A language requirement has also been introduced, which has not been the case up to now. This is explained in more detail below.

The reduction in the monthly rate after three months does not apply if you have children and are a sole provider for them, and the reduction is less if you are over 30 years old.

This means the rates for new graduates (who graduate after May 1st and then register as job seeking) are as follows:

  • First three months: 14,106 kroner, or 16,177 kroner for parents solely providing for children
  • After three months: 9,700 kroner (under 30); 12,253 kroner (over 30), 16,177 (parents solely providing for children)

Once six months have passed since you graduated, your rate can be reassessed, potentially giving you a better rate based on it being 90 percent of your previous income. You must have worked for at least three months for an income assessment to be made.

Language requirement

The new language requirement, mentioned above, applies to graduates who receive employment benefits from May 1st onwards.

You fulfil the language requirement if you have passed the Dansk 2 language test (or completed 6th grade at a Danish elementary school). Dansk 2 is the final exam in the national Danish language school system, which all foreign nationals who move to the country can attend.

If you did your degree in Danish, you have already met the requirement. You can read a list of degrees and educational programmes which fulfil the criteria here.

If you do not meet this requirement, there are other ways in which you can remain eligible for unemployment benefits.

These are related to the number of working hours you have accrued and the length of time for which you have had full or partial A-kasse insurance cover.

In short, you need to have worked 600 hours (400 if partially insured) spread across 12 different months within the last two years to be considered as having a strong enough connection (tilknytning) to the labour market to qualify for benefits.