The Danish Labour force several times has been praised for its combination of flexibility and security, a situation that is usually described with the term Flexicurity. In Denmark companies are free to adjust the number of employees according to market demands. At the same time workers are quickly retrained so as to remain unemployed for the shortest possible time. This enables the Danish companies to be amongst the most competitive in a variety of industries. Additionally, workers and other employees in Denmark enjoy good wages and social benefits. The aforementioned formula is achieved through concrete socio-economical procedures that can be fairly characterized as an important element of the Danish economy.
One of the most important elements of this formula is the well-organized educational system of the country that creates a highly skilled and well-educated workforce. Additionally the state invests heavily in retraining ensuring that skills and productivity are continuously improved and adapted to the needs of the companies. Therefore employees have increased opportunities either to find a job or to find a new job when unemployed. The good retraining opportunities also mean that industries which are short of labour or new industries do not have to wait a long time so as to find the necessary workers.
Additionally, companies can adjust the number of employees according to market demands and dismiss employees at very short notice. This is a unique and crucial point for the viability and workability of the Danish system, as it allows the companies to adjust to changing market trends without suffering losses. Moreover, it gives a further boost to the Danish entrepreneurship as it encourage companies to invest in new projects and do not get stacked with extra employees if the project fails. If an idea is to be tested, Denmark is therefore the ideal place to do so, as the population also has a significant purchasing power. The great mobility of labour is also demonstrated by the average length of service in a job in Denmark, which is just 4.8 years – the lowest in OECD.
The aforementioned system is applied in a consensus environment as major disputes and strikes in the labour market are very rare. Additionally, agreements are reached without the interference of the state. The reason is that Danish workers are among the most highly organised in the world – 75% belong to a union. As the employers are equally highly organised, the labour market enters into agreements without the need of state involvement.
The flexibility that the labour market of Denmark demonstrates can be also tracked to the Industrial policy of the country. The Danish industry structure is characterised by many small and medium-sized companies, with only a few very large companies.
This gives Danish trade and industry greater flexibility and the ability to adapt quickly to new or altered market conditions. Of course, this has as an effect a lower average productivity, as the value increment per employee is larger in big companies than small.
The Danish industry and labour structure is characterised by its flexibility. Denmark has many small and medium sized companies and a highly qualified workforce with mobility. It is indicative that the average length of service in a job in Denmark is just 4.8 years – the lowest in the countries of Organization for Economic Co-operation and Development (OECD). By using this system Denmark is one of the best countries to contact business and additionally it sustains a high level of social prosperity and equality.
Kyriazis Vasileios,
Epicos Newsletter Head Editor