What do Denmark’s proposed welfare reforms mean for foreign residents?

Denmark’s government on Wednesday presented proposals to reform rules on certain types of social welfare including the two main forms of unemployment benefit, dagpenge and kontanthjælp.

What do Denmark’s proposed welfare reforms mean for foreign residents?
Denmark's government on Tuesday presented proposals to reform unemployment welfare.Photo: Philip Davali/Ritzau Scanpix

Among the proposed changes are a reduction in the monthly payments and eligibility period for dagpenge for newly graduated students.

Proposed rule changes could also see language requirements for foreign students who remain in Denmark to look for work after completing their studies.

What is the difference between dagpenge and kontanthjælp?

People not currently in employment can qualify for welfare payouts known in Danish as dagpenge, funded in part by the state and in part by membership fees, by joining an A-kasse or unemployment union.

Non-A-kasse members can apply for ‘social assistance’ or  kontanthjælp, the lowest level of benefit. It is only available to those over 30 years old, who are legally resident in Denmark, and who have no other means of support.

EXPLAINED: Should I sign up with a Danish union and get unemployment insurance?

What changes are being proposed?

New university graduates who do not have children could receive as much as 4,000 kroner less per month in dagpenge, according to the proposal presented by the government on Tuesday.

Specifically, the rate would be reduced from 13,815 kroner to 9,500 kroner monthly, or 12,000 kroner per month for persons over the age of 30.

This would not apply to people with children, who qualify for 15,844 kroner per month, an amount the government does not want to change.

Dagpenge is usually calculated based on previous incomes or tax payments for people with earlier connection for the labour market, but this is not the case for those who have just completed their studies, hence the standard rates.

In addition, the period in which new graduates are entitled to the regular dagpenge rate will be decreased from two years to one, in a move designed to encourage recently-educated people to take jobs more quickly, including unskilled roles.

People who receive dagpenge are already obliged to meet a number of requirements including applying for a set number of jobs weekly, always being available to start work and regular contact with job centres.

“Newly educated people have just received a good education. This must be used on the labour market, not in unemployment,” Prime Minister Mette Frederiksen said during the presentation of the proposal on Tuesday.

“Maybe you won’t get your dream job immediately. But that is not crucial. (What’s crucial) is to create value,” she added.

How does the proposal affect foreign residents?

International students are likely to be impacted by the proposal if they want to remain in Denmark to begin their careers after graduation. That is because the government wants to introduce language criteria to the dagpenge rules.

According to the proposal text, new graduates will be required to meet certain language criteria in order to be eligible for dagpenge, although no further detail as to the criteria is given.

The rules, which would not apply to people in employment, would limit access to the dagpenge system for foreign nationals who have recently completed their studies in Denmark, the government said.

What else is being proposed?

Students should be better rewarded for working during their studies, according to the government.

As such, an increase is proposed to the limit to which students can earn from part time jobs without a corresponding reduction to the state student grant, SU.

Meanwhile, people encompassed by integration rules could see their access to the kontanthjælp system curtailed, under the proposed reforms.

Danes and Denmark residents with a so-called “integration obligation” (integrationspligt) could be required to undertake mandatory work for 37 hours weekly in order to qualify for the kontanthjælp benefits.

That work could include “for example, going down to the beach to pick up cigarette butts or plastic”, employment minister Peter Hummelgaard said at Tuesday‘s briefing.

The exact work would be organised by local municipalities, Hummelgaard also said.

“The most important thing for us is to get people out of the door,” he said.

The requirement would apply to people who have not passed the prøve i dansk 2 language test or sixth grade in the national school system.

Persons would have to have received kontanthjælp benefits in three of the last four years, or be in receipt of the lower “selvforsørgelses- og hjemrejseydelse” (self-provision and repatriation benefit) given to many refugees, in order to be encompassed by the mandatory work requirement.

Around 20,000 people, thought to primarily consist of women with backgrounds in the Middle East, North Africa, Turkey, Afghanistan and Pakistan, are estimated to be those who would be impacted by the rule.

Pensions are another area in which changes are proposed, with the government planning to scrap a deduction in state pensions for people whose partners are still working.

That would increase the incentive for partners to remain in work, according to the proposal.

What is the reaction to the proposal so far?

The National Union of Students in Denmark (Danske Studerendes Fællesråd, DSF) accused the government of turning its back on students.

“(The proposal) is built on a myth that the dagpenge rate is so high that young people don’t want to get a job, because it’s not financially beneficial. But that’s not the reality we are hearing. The challenge is that it’s enormously difficult to get on to the labour market in many sectors,” DSF chairperson Mike Gudbergsen told news wire Ritzau.

Gudbergsen called instead for better incentives for businesses to hire new graduates.

The Red-Green Alliance, a left wing party which props up the government, strongly criticised the plan to introduce mandatory work weeks for people in the integration system, saying it was “tantamount to state-backed social dumping”.

“It’s an incredibly poor proposal and I believe we should go in a totally different direction and help people into real jobs with union-sanctioned wages instead,” Red Green Alliance political spokesperson Mai Villadsen told Ritzau in a written comment.

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For members


What you need to know if you lose your job in Denmark

It's not fun to lose your job, but Danish laws and collective agreements give you a number of rights and there are steps you can take to help insure yourself against the possibility of being out of work.

What you need to know if you lose your job in Denmark

Denmark is currently experiencing a labour shortage and low unemployment. Many companies and sectors are calling for additional foreign labour to meet their recruitment needs, something the government appears to be willing to take steps to accommodate.

Of course, none of these things mean individual companies might not be experiencing headwinds or that the situation can change. There are various kinds of business needs that could be the catalyst for a restructuring, such as financial hardships or pending mergers. This can also mean that some employees will lose their jobs.

If you do lose your job in Denmark, you are covered by certain aspects of the law. It is also a good idea to think about taking the necessary measures — such as A-kasse membership — that can protect your from some of the financial implications of unemployment.

Notice periods 

If you are covered by the Salaried Employees Act (Funktionærloven), then you are entitled to certain notice periods before any significant change happens to the terms of your employment.

You can see in your contract whether you are a salaried employee (funktionær), but generally, the term applies to staff who have been employed for over 1 month and work more than 8 hours weekly, on average.

Sectors in which staff are considered funktionærer include business and administration, purchasing, selling, technical and cleaning services; and management and supervision. In short, people who work in offices, sales or purchasing or certain types of warehouse jobs are likely to be covered.

Areas which may not be covered include factory work or craftsmanship, nor are people hired through temp agencies (vikarbureauer) covered by the act.

The notice periods provided by the Salaried Employees Act cover things like notification of termination of employment or significant changes to your job duties. 

The amount of notice that you are entitled to is determined by how much seniority you have, as follows:

0-6 months of employment

1 month’s notice

6 months to 3 years

3 months

3 years to 6 years

4 months

6 months to 3 years

3 months

6 years to 9 years

5 months

More than 9 years

6 months

When you have worked at the company for 12 or more years, you are also entitled to additional compensation (Danish: fratrædelsesgodtgørelse) if you are let go from your job, per the Danish Salaried Employees Act.  

The compensation is 1 month’s salary after 12 years’ employment and 3 months’ salary after 17 years of employment.

It is possible that your company will also provide other additional payments due to restructuring activities. This varies from company to company and is not part of the Danish Salaried Employees Act. 

Should I join an A-kasse?

Membership of an unemployment insurance service provider, an A-kasse (arbejdsløshedskasse) is the first step to keeping your income steady while you begin the process of finding new employment. Finding a new job is a task the A-kasse itself can assist you with.

It can be difficult to figure out which A-kasse to join and while some are cheaper than others, it’s not just about paying an insurance premium. In the event that you become unemployed, it’s good to have an A-kasse that is an appropriate fit for your background, so that they can better help you with your plan to get back into the workforce.

A-kasser are private associations which have been authorised by the Danish state to administer unemployment benefits. The state regulates the requirements for receiving benefits while the A-kasse administers the benefits.

If you are interested in A-kasse membership, you must apply to the A-kasse of your choice, either as a full-time or part-time insured member. A-kasse members pay a tax-deductible monthly fee, which gives them the right to receive unemployment benefits (dagpenge) should they become unemployed.

There are a lot of rules that you’ll have to familiarise yourself with, including when you will be allowed to apply for benefits and how long you can receive them for. Members must meet certain eligibility requirements to receive unemployment benefits, which include being a member of an A-kasse for at least 12 months.

According to Denmark’s digital self-service website, one must also have earned at least 246,924 kroner (2022) in the past three years for full-time insured and 164,616 kroner (2022) for part-time insured. You also have to have worked for a certain period of time within the last three years, which varies depending on whether you were insured as full-time or part-time.

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

What else should I keep in mind?

In general, the Danish labour market system is not primarily based on laws, as you may be used to from other countries, but on agreements and negotiations, primarily collective bargaining agreements or overenskomster between trade unions and employer associations. You may have heard of the concept ‘the Danish model’ (den danske model) referred to in this regard.

A large proportion of people who work in Denmark are therefore trade union members.

Collective bargaining agreements cover many aspects of Denmark’s labour market, from wages to paid parental leave. 

A lesser-known fact about the Danish labour model is that employees covered by collective bargaining agreements won’t have to negotiate general employment terms – regardless of whether they are trade union members.

There are large central agreements in both the public and private sectors. Therefore, employees whose contracts are regulated by a central bargaining agreement won’t individually have to negotiate general terms of employment, like working hours or a minimum salary. 

The particular collective agreement upon which your contract is based may be mentioned in your contract, and if it isn’t, you can ask your employer. 

READ ALSO: What is a Danish collective bargaining agreement?