Back to Work. Denmark : improving the re-employment prospects of displaced workers.

156 Pages·2016·3.148 MB·English

by  OECD

Back to Work
DENMARK
Back to Work
IMpRovINg thE RE‑EMployMENt pRospEcts
of DIsplAcED WoRKERs
B DENMARK
a
c
Workers who are involuntarily displaced from their jobs can face long periods k
of unemployment. Wages also tend to be lower once they find a new job, especially to
when they are unable to find a new job in the same occupation as their W IMpRovINg thE RE‑EMployMENt
pre-displacement job or in occupations using similar skills. Helping displaced workers o pRospEcts of DIsplAcED WoRKERs
r
k
bana cimk pinotort awnot rckh qaulliecnkglye afnodr emminpilmoyisminegn tt hpeo ilniccyo. mThei slo ssesreiess t hoef yre fpaocert sa rper othveidreefso nree w D
E
empirical evidence from a comparative perspective on the incidence N
M
of displacement and the risk that displaced workers may subsequently face a long spell
A
of unemployment and large wage losses when re-employed. It also identifies the main R
K
labour market programmes providing help to these workers and assesses how adequate
and effective they are. Policy recommendations for further action are presented. IM
p
Nine countries are participating in the review: Australia, Canada, Denmark, Finland, R
o
Japan, Korea, New Zealand, Sweden and the United States. vIN
g
t
contents h
E
R
Chapter 1. Job displacement in Denmark and its consequences E
‑
E
Chapter 2. The Danish flexicurity model and institutional setup M
p
l
Chapter 3. Job displacement prevention and early intervention policies in Denmark o
y
M
Chapter 4. Income support as a safety net for displaced workers in Denmark E
N
Chapter 5. Effective re-employment support for displaced workers in Denmark t p
R
o
www.oecd.org/employment/displaced-workers.htm s
p
E
c
t
s
o
f
D
Is
p
l
A
c
E
D
W
o
Consult this publication on line at http://dx.doi.org/10.1787/9789264267503-en. R
K
E
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and R
s
statistical databases.
Visit www.oecd-ilibrary.org for more information.
IsBN 978‑92‑64‑26745‑9
9HSTCQE*cghefj+
81 2016 27 1 p

Back to Work: Denmark
IMPROVING THE RE‑EMPLOYMENT PROSPECTS
OF DISPLACED WORKERS
This work is published under the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of OECD member countries.
This document and any map included herein are without prejudice to the status
of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2016), Back to Work: Denmark: Improving the Re-employment Prospects of Displaced
Workers, OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264267503-en
ISBN 978-92-64-26745-9 (print)
ISBN 978-92-64-26750-3 (PDF)
Series: Back to Work
ISSN 2306-3823 (print)
ISSN 2306-3831 (online)
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli
authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights,
East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Photo credits: Cover © Bull's Eye/Imagezoo/Inmagine LTD
Corrigenda to OECD publications may be found on line at:
www.oecd.org/about/publishing/corrigenda.htm.
© OECD 2016
You can copy, download or print OECD content for your own use, and you can include excerpts from OECD
publications, databases and multimedia products in your own documents, presentations, blogs, websites and
teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given.
All requests for public or commercial use and translation rights should be submitted to [email protected].
Requests for permission to photocopy portions of this material for public or commercial use shall be addressed
directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du
droit de copie (CFC) at [email protected].
FOREWORD – 3

Foreword
OECD labour markets are dynamic. Each year, around 20% of jobs in a
typical OECD country are created or destroyed, and around one-third of all
workers are hired or separate from their employer. These large job and
worker flows are driven by a continuous process of labour reallocation, both
across industries and between declining and growing firms within the same
industry. This process is an important source of productivity gains, since
more productive firms expand at the expense of less productive firms and
earnings rise on average for workers who change jobs, particularly those
who voluntarily quit one job to move to another. However, high job turnover
also means insecurity for workers, especially those displaced from their jobs
because of market re-structuring. A common challenge facing
OECD governments is thus to nurture labour market dynamism, while
keeping the adjustment costs that are borne by displaced workers as low as
possible.
To address this issue the OECD Employment, Labour and Social Affairs
Committee is conducting a thematic review of policies to help workers who
lose their jobs for economic reasons or as a result of structural change to
move back into work. Nine countries participate in this review: Australia,
Canada, Denmark, Finland, Japan, Korea, New Zealand, Sweden and the
United States.
This report on Denmark was prepared by Michelle Marshalian and
Gwenn Parent, economists from OECD’s Employment, Labour and Social
Affairs Directorate, with contributions from Rune Vammen Lesner
(Aarhus University), under the supervision of Christopher Prinz. Statistical
assistance was provided by Sylvie Cimper and Agnès Puymoyen and editorial
assistance by Gabriela Bejan. Valuable comments were provided by
Mark Keese and Paul Swaim. The report benefited greatly from discussions
with Danish experts, officials, employer federations, trade unions, academics
and businesses during an OECD mission to Denmark in November 2013, as
well as from comments to a draft version provided by several ministries and
stakeholders.
BACK TO WORK: DENMARK – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016

TABLE OF CONTENTS – 5

Table of contents
Acronyms and abbreviations ......................................................................................... 9
Executive summary ....................................................................................................... 11
Assessment and recommendations .............................................................................. 13
Chapter 1. Job displacement in Denmark and its consequences ............................ 23
Incidence and characteristics of job displacement ...................................................... 24
Labour market outcomes following displacement ...................................................... 30
The aftermath of displacement: Changes in wages and job characteristics ................. 34
Can skills switches explain post-displacement earning losses? .................................. 41
Conclusion .................................................................................................................. 42
Notes ........................................................................................................................... 43
References ................................................................................................................... 45
Annex 1.A1. Supplementary figures ............................................................................ 48
Chapter 2. The Danish flexicurity model and institutional setup ........................... 51
The Danish flexicurity model through the crisis.......................................................... 52
Key actors of the flexicurity model ............................................................................. 55
The first flexicurity pillar: Flexibility for employers to adjust their workforce ............. 60
The second flexicurity pillar: Security for individuals through a solid safety net ............. 62
The third flexicurity pillar: A strong activation strategy ............................................. 64
Conclusion .................................................................................................................. 67
Notes ........................................................................................................................... 67
References ................................................................................................................... 71
Chapter 3. Job displacement prevention and early intervention policies
in Denmark .............................................................................................. 75
Early notification of potential displacements is crucial for an apt reaction ................ 76
How to prevent job displacement in Denmark? .......................................................... 80
Early intervention services to foster return to work .................................................... 85
Conclusion .................................................................................................................. 92
Notes ........................................................................................................................... 93
References ................................................................................................................... 95
BACK TO WORK: DENMARK – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016
6 – TABLE OF CONTENTS

Chapter 4. Income support as a safety net for displaced workers in Denmark .... 99
Displaced workers in Denmark are relatively well covered by income support ....... 100
Income support in Denmark as a means to mitigate wage losses .............................. 104
Preserving the sustainability of the Danish income support system ......................... 110
Addressing the remaining challenges of the Danish income support system ............ 113
Conclusion ................................................................................................................ 119
Notes ......................................................................................................................... 120
References ................................................................................................................. 122
Chapter 5. Effective re-employment support for displaced workers in Denmark ... 125
Activation with a dual management structure to strengthen job-search efforts ........ 126
Making active labour market programmes accessible and effective
for displaced workers ................................................................................................ 133
Maintaining and adapting a robust training system ................................................... 140
Conclusion ................................................................................................................ 146
Notes ......................................................................................................................... 148
References ................................................................................................................. 149

Boxes
Key policy recommendations ...................................................................................... 21
Box 1.1. Defining and measuring job displacement in Denmark............................. 24
Box 2.1. Steering local government behaviour through differential reimbursement
of intervention by the national government ............................................... 56
Box 3.1 Special measures to monitor labour market developments
during the economic crisis in Quebec ........................................................ 82
Box 3.2. Early intervention services in the case of collective dismissals ................ 86
Box 3.3. The use of the European Globalisation Adjustment Fund (EGF) in Denmark . 88
Box 3.4. Good practices from other countries ......................................................... 91
Box 4.1. Main elements of the 2013 social assistance reform ............................... 113

Figures
Figure 1.1. Labour turnover is high in Denmark and job displacement
represents only a small share of all job separations ............................ 26
Figure 1.2. Job displacement rates in Denmark and Sweden
are lower than in other OECD countries,
but Sweden was more resilient to the crisis ........................................ 27
Figure 1.3. Youth, low-skilled and workers working in the manufacturing sector
were particularly hardly hit by the 2008 crisis ............................................ 28
BACK TO WORK: DENMARK – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016
TABLE OF CONTENTS – 7

Figure 1.4. Displaced workers generally made more use of craft and physical skills
than other employees, also in Denmark ............................................................. 29
Figure 1.5. On average, in Denmark seven displaced workers out of ten
find employment within one year ....................................................... 31
Figure 1.6. Once laid-off, older workers, low-educated and long-tenured workers
struggle most in finding a new job after mass dismissal or firm closure ...... 32
Figure 1.7. Undertaking formal education after displacement
is a less frequent outcome for low-skilled than for higher-skilled workers.. 34
Figure 1.8. More than one displaced worker out of three bears an earnings loss
in the first year after their job loss of at least 10% ...................................... 35
Figure 1.9. Job losses induce unequal financial consequences ............................. 36
Figure 1.10. Older and low-educated Danish displaced workers bear
the highest cost of job displacement ................................................... 37
Figure 1.11. Job quality worsens following job displacement ................................ 39
Figure 1.12. Re-employed displaced workers shift towards elementary occupations,
professionals, or become services and sales workers .......................... 40
Figure 1.13. Displaced workers switch occupation but continue to use similar skills ...... 41
Figure 1.A1.1. Marginal effect of selected characteristics on the likelihood
of being displaced, 2000-12 ................................................................ 48
Figure 1.A1.2. Marginal effect of selected characteristics on the likelihood
of re-employment, 2000-12 ................................................................. 49
Figure 2.1. The global financial crisis affected the job market in Denmark
more than in other countries ................................................................ 53
Figure 2.2. Union density in Denmark is among the highest of OECD countries
although also declining over the past three decades ................................ 58
Figure 2.3. Employment protection of permanent workers in Denmark
is much higher for white-collar than for blue-collar workers ............. 61
Figure 2.4. Labour market spending in Denmark is the highest in the OECD ............ 65
Figure 3.1. Notice period durations vary a lot by skill level and industry............. 77
Figure 3.2. Labour market authorities were notified of a large number
of mass dismissals during the global financial crisis .......................... 79
Figure 3.3. Work-sharing acted as an important countercyclical measure
during the global financial crisis ......................................................... 81
Figure 3.4. The adjustment process of the Danish labour market
affected unskilled workers .................................................................. 85
Figure 4.1. Lower-paid displaced workers are less well insured
against unemployment ...................................................................... 101
Figure 4.2. Displaced workers are better covered by the income support system
than other dismissed workers, but a significant share is
without income support ..................................................................... 103
Figure 4.3. Severance pay plays a limited role in mitigating the financial impact
of job loss for blue-collar displaced workers .................................... 107
BACK TO WORK: DENMARK – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016
8 – TABLE OF CONTENTS

Figure 4.4. Both the income replacement rate and the payment duration
of unemployment benefits are high in Denmark
compared with other OECD countries .............................................. 108
Figure 4.5. Unemployment insurance in Denmark
successfully cushions the financial impact of a job loss ................... 109
Figure 4.6. The large increase in UI benefit recipients during the crisis
was mainly driven by displaced workers .......................................... 110
Figure 4.7. Several temporary extensions were implemented in order to smooth
the reduction in UI payment duration from four to two years ........... 112
Figure 4.8. Duration of UI benefit receipt increased significantly
during the GFC ................................................................................. 114
Figure 4.9. Displaced workers who are members of an UI fund have significantly
better re-employment prospects than those not insured .................... 117
Figure 5.1. Denmark remains the world champion of ALMP spending,
despite a slight decrease over the past decade................................... 127
Figure 5.2. Denmark finds itself among countries
with a more strictly administered unemployment benefit scheme .... 130
Figure 5.3. In the first year 10 to 15% of all still unemployed displaced workers
are in a labour market measure and in the second year 15 to 25% ....... 134
Figure 5.4. The majority of Danes participate in some form of adult education
every year .......................................................................................... 141
Figure 5.5. Spending on training in Denmark has gradually fallen
before the crisis but went up quickly again afterwards ..................... 143
Figure 5.6. Displaced workers access active labour market programmes
and formal education less often than jobseekers laid-off for other reasons . 145

Tables
Table 4.1. Characteristics of severance pay schemes in selected OECD countries..... 105
Table 5.1. The activation process is now tighter while duplication
was eliminated .................................................................................. 132
Table 5.2. Major active labour market programmes for displaced workers ....... 135
Table 5.3. Effects of active labour market programmes in boom and bust periods .... 140
BACK TO WORK: DENMARK – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016