The unemployment benefit dagpenge has been a major political issue over the past five years. Photo: Thomas Lekfeldt/Scanpix
The release of recommendations from the so-called ‘Dagpenge Commission’ on Monday is the latest salvo in a political fight that has been fought over the past five years.
See also: Unemployment scheme overhaul proposed
Denmark’s unemployment benefit known as dagpenge (literally 'day money') is a voluntary unemployment benefit administered via state-subsidized private organizations known as a-kasser. The benefit pays a maximum of 17,918 kroner ($2,731, 2,402 euros) per month.
In the early 1990s, an individual could receive the benefit for as long as nine years, a time frame that was gradually cut down to four years in 1997.
In 2010, the previous Venstre government attempted to shore up holes in the public budget by taking aim at Denmark’s generous unemployment benefit system.
Supported by the Danish People’s Party, PM Lars Løkke Rasmussen halved the amount of time unemployed individuals could receive dagpenge from four years to two and doubled the amount of time one must work in order to qualify for the benefit from 26 to 52 months.
“It is in every way historic that we with one agreement specifically pay the bill for the economic crisis and take on tomorrow’s challenges in a way that will allow us to seriously focus on growth and increasing employment,” Rasmussen said in touting the deal.
His main political rival, the then opposition leader Helle Thorning-Schmidt of the Social Democrats, had a much different take on it saying that the Venstre government was “stabbing regular workers in the back” with the deal, which she characterized as “un-Danish”.
At the time, the then employment minister, Inger Støjberg, said that the changes would only cause a few thousand people to lose their right to the unemployment benefit each year. Those projections turned out to be all too low, but more on that later.
“That's just the way it is”
Thorning-Schmidt campaigned in 2011 on a vow to roll back the previous government’s changes to the dagpenge system, a campaign promise backed by the Socialist People’s Party. But after the election, when those two parties formed a three-way coalition with the Social Liberals (Radikale), the latter successfully insisted on keeping the changes to the system.
The then leader of the Social Liberals, Margrethe Vestager, famously said that if more people fall out of the system “that’s just the way it is”, a line that earned her ‘quote of the year’ honours in Politiken newspaper.
The parties agreed to delay the implementation of the key parts of the reform for six months, but the controversial dagpenge overhaul was eventually implemented largely as designed by the previous government. That political defeat, and frustration from left-wing supporters and Denmark's powerful labour movement, would haunt Thorning-Schmidt’s four years in the prime minister’s office.
With the new dagpenge rules, some 34,000 individuals lost their right to the benefit in 2013 alone and as many as 60,000 individuals have now fallen out of the system, well above those initial projections. Of those, only an estimated 20 percent ended up in salaried positions according to the Danish Agency for Labour Market and Recruitment. The majority ended up on less generous public benefits like kontanthjælp or the student stipend scheme SU.
As the political fight over the benefit continued to rage unabated, the Social Democrat-led government decided to set up a commission in June 2014 to look at how to improve the dagpenge system. The commission’s task was to modernize the system and find a way to keep more people in it while not increasing its costs.
While the commission continued to work on its plan, Thorning-Schmidt called for a new election in June 2015. Dagpenge was a prominent theme in the campaign, though overshadowed a bit by immigration issues.
Voters ultimately showed Thorning-Schmidt the door and Rasmussen reassumed the PM’s office. In his opening speech to parliament, he said that the reasoning behind the 2010 overhaul was solid and that he wanted to “respect the foundation” of the previous changes.
On Monday the commission was to formally end its 15 months of work with a set of recommendations for dagpenge changes, but it’s a fairly safe bet that the five years worth of political fighting over the unemployment system will continue.