Could Denmark ease key work permit rule for foreigners?

Several political parties in Denmark have suggested they favour reducing a minimum salary requirement used to assess work permit applications.

Reports in Denmark suggest a parliamentary majority could favour a reduction of a key salary requirement used to grant work permits for non-EU nationals.
Reports in Denmark suggest a parliamentary majority could favour a reduction of a key salary requirement used to grant work permits for non-EU nationals. Photo by Christin Hume on Unsplash

Conservative parties and the Social Liberal (Radikale Venstre) party favour a reduction to Denmark’s pay limit scheme or beløbsgrænse, which sets a minimum salary which businesses must pay skilled non-EU nationals in order for the employee to qualify for a Danish work permit.

The government is currently negotiating with parliament over potential solutions to labour shortages.

Although previous attempts to reduce the pay limit scheme failed to make it through parliament, there now appears to be a potential majority in support of it, news wire Ritzau reports.

In 2019, the Social Liberals said they wanted to cut the minimum salary required for non-EU skilled professionals to qualify for working and residency permits (beløbsgrænse) from 417,800 kroner to 325,000 kroner per year.

The governing Social Democrats have opposed the change, arguing that it would make it less attractive for companies to hire from the Danish or EU labout markets.

But Prime Minister Mette Frederiksen suggested in her New Year speech that the government could now be prepared to reconsider the matter in light of the national labour shortage.

READ ALSO: Could small Danish companies become more likely to hire foreign staff?

News wire Ritzau reported on Wednesday that, along with the Social Liberals, some conservative parties also favour a reform to the pay limit system, suggesting a majority is achievable.

Business organisations have also long called for the minimum salary to be reduced to enable more skilled labour to be attracted from abroad.

Such a move also makes sense from a Danish perspective, an expert told Ritzau.

“If you reduce the (pay) limit, it will be easier to bring foreign labour from outside the EU to Denmark. What must be ensured is that this is done on the same (working) conditions we have in Denmark,” Roskilde University professor of Social Scences Bent Greve told the news wire.

Greve noted that previous experience with hiring from abroad showed several examples of successful integration.

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‘One in two’ tax inspections found social dumping at Danish companies

Visits by inspectors uncovered the practice of social dumping at over half of companies checked in Denmark last year, the Ministry of Tax said on Friday.

'One in two' tax inspections found social dumping at Danish companies

Inspections in 2022 at workplaces including restaurants, construction sites and agricultural and cleaning businesses turned up a large number of cases of social dumping.

Some 3,343 inspections were conducted during the year, scrutinising working environments and tax payments along with staff work and residence permits, the Danish Tax Agency (Skattestyrelsen) said.

Social dumping is defined by the EU as the practice whereby “workers are given pay and/or working and living conditions which are sub-standard compared to those specified by law or collective agreements in the relevant labour market, or otherwise prevalent there.”

This means that, in cases where the Danish authorities detected social dumping, foreign staff were working under poorer conditions than the law or relevant collective bargaining agreement provides for Danish nationals. This saves employers money because the labour costs them less.

The Tax Agency is responsible for checking Danish tax rules are properly complied with. As such, the checks by the Tax Agency checked tax aspects of potential social dumping breaches, with other authorities responsible for other areas.

The Tax Agency can detect social dumping by, for example, checking the amount of income tax or VAT (moms in Danish) paid at a company.

Companies were asked to regulate their tax payments at more than one in two inspections in 2022, according to the tax ministry.

“The new report from the Tax Agency clearly shows that there is an issue here and that the joint efforts from authorities are paying off,” Tax Minister Jeppe Bruus said in the statement.

Some 1.9 billion kroner has been raised by the state in tax demands made as a result of social dumping inspections since 2015.

Last year’s inspections enabled tax authorities to demand 317 million kroner, the highest figure since structured control of social dumping began in 2012. The prior year, 2021, saw demands for 311 million kroner issued as a result of the inspections.

“It’s crucial for the economy and cohesion in society that there is respect for the playing rules of the Danish labour market,” Bruus said.