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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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WORKING IN DENMARK

Can foreigners lose their Danish work permits if they take part in strikes?

Membership of a trade union in Denmark can occasionally result in your union requiring you to take part in industrial action by going on strike. But can that put foreign workers at risk of losing their work permits?

Can foreigners lose their Danish work permits if they take part in strikes?

Around two-thirds of people in employment in Denmark are members of a trade union.

Union membership forms a core part of Denmark’s “Danish model” by which the labour market regulates itself through collective bargaining agreements between the trade unions and employer organisations.

These agreements form the basis of salaries – rather than laws – and also ensure standards for working hours and vacation time under the agreements made in various labour market sectors.

As such, it’s common to be a union member in Denmark and foreign nationals working in the country are also likely to find it in their interests to join a union.

READ ALSO:

One aspect of union membership is that members may be required to participate in industrial action, such as strikes, blockades, or solidarity actions.

For example, the 2021 Danish nurses strike organised by the Danish Nurses’ Organisation (DSR), which represents 95 percent of nurses in Denmark.

“The nurses’ strike is an example of the results of unsuccessful negotiations on the renewal of their collective agreement,” Peter Waldorff, international consultant at FH, Denmark’s largest trade union confederation, told The Local.

In this case, he continued, DSR called the strike and decided which members would be required to withdraw from work to join the strike. As the strike continued from June to August 2021 (one of the longest strikes in recent Danish history), an increasing number of union members were called to strike until the dispute was resolved. 

In such a situation, it is conceivable that some of the workers asked to take part in the strike would be foreign nationals from countries outside of the EU or EEA, who need a work permit to take employment in Denmark.

READ ALSO: How can you get a work permit in Denmark if you are not an EU national?

Foreign employees who are union members would participate in the strike just as Danish members would.

Although the employees involved in the strike would stop receiving their salaries they would instead receive conflict aid from the union, “meaning the person would not need to receive dagpenge or other social aid,” Stine Lund, senior legal consultant at the Danish Society of Engineers (IDA), a trade union for engineering, science, and IT professionals, told The Local

That is an important distinction for internationals working in Denmark because receiving social benefits can impact the ability to fulfil work permit criteria.

The employer would also be required to re-employ all employees once the conflict is resolved, Lund added. 

According to FH’s legal department, Waldorff said, participation in legally-called industrial action should not affect work permits. 

The Danish Agency for International Recruitment and Integration (SIRI) confirmed this to be the case.

“Third-country citizens will not have their residence permit revoked on the basis of employment, if they don’t work at their employer due to the reason that they participate in a legal labour dispute during their employment. EU/EEA citizens residing in Denmark will not lose their right to reside in Denmark on the basis of participating in a legal labour dispute,” SIRI said in a statement to The Local.

Although foreign workers can be asked to strike, the likelihood they will have to remains relatively low.

“In Denmark, strikes are relatively rare,” Waldorff said.

In the academic labour market, collective agreement conflicts almost never happen, according to Lund.

“We haven’t been in a situation where that measure has been taken for many, many years,” she said.

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