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Danish economy good enough to increase wages: analyst

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Danish economy good enough to increase wages: analyst
File photo: Lærke Posselt/Polfoto/Ritzau
15:11 CET+01:00
Denmark's economy is strong enough to carry wage increases in both the public and private sectors, according to the Economic Council of the Labour Movement (Arbejdsbevægelsens Erhvervsråd, AE).

The Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA) has advised against large pay increases being given to low wage earners in an upcoming round of negotiations between public employers and unions.

Large increases could spread to the private sector, the employers' interest group warned.

But Denmark's economy is strong enough to carry wage increases in both sectors, says Erik Bjørsted, AE's head economist.

“Wages have been surprisingly low in relation to unemployment levels. There is therefore room for larger pay increases to be given to attract workers,” Bjørsted said.

“We have very strong competition in the Danish economy which could cope with wages being a little higher,” he said.

Michael Ziegler, lead negotiator with the Local Government Denmark (Kommunernes Landsforening, KL) municipal representation group, who is also mayor of the Høje Taastrup Municipality, is open to the idea of higher wages in the elderly care sector.

Ziegler would consider wage increases as part of an effort to ease labour shortages in that sector, Ritzau reports.

But Pernille Knudsen, vice CEO with DA, has advised against excessive generosity.

“Giving higher wages when there is a labour shortage is not the first resource that should be turned to. Neither is it something we do in the private sector in industries with acute labour shortages,” Knudsen said.

“It is better to make use of other interventions to increase the labour supply,” she added.

Those measures include increasing the working hours of part-time employees and hiring people currently not in employment, Knudsen said.

Bjørsted agreed that wage increases did not have to be the first option for employers seeking to fill vacant positions.

“I don't think that the lack of labour supply is so widespread that wage increases should be resorted to as a first response,” the economist said.

“There are plenty of unemployed people and people on the edge of the labour market that can be drawn upon, just as there is foreign labour available,” he said.

READ ALSO: 'Refugees with jobs should be sent home': Danish MP

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