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Why does Denmark have so many job vacancies?

The number of job vacancies in Denmark is at its highest level for over a decade, according to new figures released on Thursday.

Why does Denmark have so many job vacancies?
File photo: Thomas Lekfeldt/Ritzau Scanpix

A total of 53,500 private sector vacancies were registered in the second quarter of 2021, an increase of 14,000 compared to the preceding quarter and the highest number in the 11 years the data has been recorded, according to Statistics Denmark.

Vacant positions now comprise 3 percent of all jobs in Denmark, according to the agency.

Meanwhile, figures from job website Jobindex show that vacancies at the end of August were at their highest level since February 2008, shortly before Denmark was hit by the global financial crisis.

As vacancies have soared over the summer, so has the number of people employed on the Danish labour market.

Unemployment is now close to dropping under the level it was at immediately prior to the Covid-19 crisis.

READ ALSO: Denmark wants migrants to work for welfare benefits

The two trends are evidence of Denmark’s emergence from the economic impacts of the coronavirus, according to Jeppe Juul Borre, senior economist at Arbejdernes Landsbank.

“It’s pleasing to see that the Danish economy has got moving so well,” Borre said.

“But the flip side of the coin is that more and more companies are reporting a lack of labour,” he stated.

The need for labour has become a politically discussed topic in recent weeks.

Earlier this week, the government presented proposals it claims will add to the number of workers on the market.

Those proposals include cutting the standard monthly unemployment insurance payment for new graduates as well as shortening the eligibility period.

The government argues this will encourage university graduates to take jobs sooner, including unskilled work outside their area of expertise, if necessary.

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

The overall welfare reform package will increase employment by 10,400 people by 2025, according to government expectations.

The Confederation of Danish Industry (Dansk Industri, DI) praised the government for looking for solutions to the problem but called for measures that tackle the lack of hands in the shorter term.

Businesses wanting to fill various positions are held back by limits on bringing in workers from abroad, DI has suggested.

The business interest organisation backs a reduction in Denmark’s pay limit scheme or beløbsgrænse, which sets a minimum wage which businesses must pay skilled non-EU nationals in order for the employee to qualify for a Danish work permit.

READ ALSO: Denmark’s proposal to recruit skilled foreign labour falls apart (2018)

“Businesses are really challenged by being unable to find the staff they need. That means they have to say no to orders, thereby denying Denmark economic growth,” DI vice director Steen Nielsen said.

“The government’s direction is good but it doesn’t solve the challenges we are facing here and now,” Nielsen added.

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TAXES

Why it pays to check your Danish preliminary tax return in January

Taxpayers in Denmark still have time to adjust their 2023 preliminary tax return (forskudsopgørelse) with Skat, the Danish Tax Agency, before too much or too little is deducted from January paychecks.

Why it pays to check your Danish preliminary tax return in January

Preliminary tax returns or forskudsopgørelser for the forthcoming year are released in November, meaning they can carry information over from the preceding tax year (the current year at the time of release). Tax years in Denmark follow calendar years.

If your circumstances have changed since last year, it’s therefore a good idea to update your preliminary tax returns for 2023 now.

It should be noted that taxpayers who do not pay the right amount of tax in the first month of the year can correct their preliminary returns later in 2023. This means the difference in tax paid in January would be spread across the rest of the year.

But if your circumstances have changed significantly since the last calendar year it makes sense to update now so that you are paying the correct amount of tax from the beginning of the new (tax) year.

READ ALSO: Forskudsopgørelse: Why checking your preliminary Danish tax return matters

“It’s never too late to go in and check your preliminary tax return. You can do that every day, all year round. It’s just important to do it now in relation to the paycheck for January,” Danish Tax Authority junior director Jan Møller Mikkelsen told news wire Ritzau.

Annual tax returns (årsopgørelser) in Denmark cover calendar years. They are released in March and finalised in late spring, meaning you have this period to correct the information on your tax return from the previous calendar year.

If you paid too much tax during the preceding year and didn’t adjust your preliminary return during the course of that year, you could therefore correct the final return the following spring to ensure you still paid the correct tax. Paying too much tax would result in a rebate, but the reverse applies if you pay under the correct rate for your circumstances, meaning you might receive a large bill further down the line.

Both of these scenarios can be avoided by adjusting the forskudsopgørelse during the ongoing tax (calendar) year.

When wages are paid into current accounts at the end of this month, it will be the first wage packet of 2023. That means now is the last chance to correct tax details carried over from 2022 to make sure deductions of income tax for the first monthly wage of 2023 are correct.

“We experience increasing numbers of calls from the public in January when people can’t understand why the first payment of the year is wrong,” Mikkelsen said.

“Now is the time to go in and check the preliminary tax return if you want to ensure the correct wages are paid in January,” he said.

The tax authority advises updating your preliminary return or forskudsopgørelse — a projection of your expected income for the year along with the deductions you’re eligible for — if your circumstances have changed in one or more of the following ways:

  • Changed jobs 
  • Been promoted or received a salary increase 
  • Taken on a mortgage 
  • Refinanced your mortgage 
  • Changed your commute 

Because a relatively large number of people refinanced their mortgages in 2023, this is an area that should be given particular attention for those affected, Mikkelsen noted.

You can change your preliminary tax return any day of the year by visiting the Skat website and signing in with your MitID. The agency can also be contacted over the phone or in writing for guidance on the preliminary return and other tax matters.

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