Why did wages in Denmark increase during the Covid-19 pandemic?

Wages in Denmark increased by an average of 7.3 percent between 2019 and 2021, new data from Statistics Denmark reveals.

Why did wages in Denmark increase during the Covid-19 pandemic?
Wages have gone up in Denmark since 2019 but inflation means real incomes are lower. Photo: Kristian Djurhuus/Ritzau Scanpix

Denmark’s labour market is still offering increasing wages as the demand for labour is high, with employment levels correspondingly high.

The average income in the country of 346,000 kroner per year in 2019 increased to 371,000 kroner in 2021.

The numbers are corrected for price changes, Statistics Denmark states.

Increasing employment is a key part of the explanation for the rise in average salaries, but some attribution can also be given to a 2020 government decision to release funding from the national holiday pay scheme, according to an analyst.

The decision was one of a number of measures aimed at bolstering the economy through Covid-19 lockdowns and restrictions.

Similarly, a tax-free one-off sum of 1,000 kroner was paid in 2020 to people receiving social welfare benefits such as unemployment insurance and parental leave.

But “even if we disregard the holiday money payouts, there has been a large increase in incomes,” Allan Sørensen, senior economist with business interest organisation the Confederation of Danish Industry (Dansk Industri, DI), said to news wire Ritzau.

The average income in Denmark has increased every year since 2012.

This does not mean that people in Denmark have larger disposable incomes than they had a decade ago, senior economist Niklas Praefke of the Ledernes Hovedorganisation, an interest group for managers and executives, told Ritzau.

“Inflation has, in a short amount of time, exploded to the highest level in 39 years and that eats up a large portion of our income. On its own, that will make real incomes for Danes fall significantly this year,” Praefke said.

EXPLAINED: What’s causing the highest inflation rate in Denmark for almost 40 years?

“Not only that, payment of frozen holiday money lapses this year, so that will mean incomes fall further compared with the two previous years,” he noted.

The holiday pay released under the Covid-19 scheme would have been paid to recipients when they retire or leave the Danish labour market, if the intervention had not been made. As such, those who chose to withdraw it early will not receive it when they retire or stop working in Denmark.

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Age charity wants Danish schools opened abroad to solve worker shortage

Age concern charity DanAge (Ældre Sagen) says Danish social care education programmes should be opened in foreign countries to address the chronic labour shortage suffered by the sector.

Age charity wants Danish schools opened abroad to solve worker shortage

Danish welfare courses that take place abroad are a potential solution to a serious lack of staff in elderly care, the CEO of DanAge, Bjarne Hastrup, told newspaper Berlingske.

Germany, Spain, India and the Phillippines are potential locations for the schools, according to the charity.

“And my question to politicians would be: ‘If you’re not going to do this, what are you going to do?’,” Hastrup told Berlingske.

In addition to giving students social care qualifications, the schools would also teach them the Danish language and culture, Hastrup suggests.

Nurses from India and the Phillippines should also be allowed to travel to Denmark and work in elderly care while waiting for the nursing qualifications to be authorised by Danish authorities, DanAge proposes.

READ ALSO: Why does Denmark take so long to authorise foreign medical professionals?

If the foreign nurses are denied authorisation, they should then be offered an alternative nursing qualification, which they would be able to study for in Denmark while continuing to work in elderly care, the charity said.

The proposal comes as DanAge on Thursday hosted a debate with Danish political party leaders at which it hoped to push for more political action on the sector’s labour shortage.

DanAge also wants au pairs – who can be granted temporary work and residence permits in Denmark under special au pair rules – to be offered a new work permit on expiry of their au pair contracts so that they can opt to stay in Denmark and work in the elderly sector.

Hastrup told Berlingske that the idea of training future staff in schools based abroad could be transferred to other areas of the health service which are also experiencing labour shortages.

It is unclear at the current time whether the charity’s proposals will garner political backing or momentum.

Danish work permit rules for non-EU nationals are restrictive, with one of the most popular pathways, the Pay Limit Scheme, requiring employers to pay a minimum wage high enough to prevent hires in many social care roles.

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