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Unemployment down in Denmark but analysts predict more without work

The number of people without work in Denmark fell slightly in October, with the total of 75,200 lower than September’s figure by 200.

Unemployment down in Denmark but analysts predict more without work
The job centre in Frederiksberg. Unemployment numbers are currently holding but analysts say they will rise in 2023. Photo: Mathias Eis/Ritzau Scanpix

The data from Statistics Denmark therefore show a marginal decrease, which does not translate to a percentage drop in employment according to the agency.

That means 2.6 percent of Denmark’s workforce is still currently unemployed.

“The small drop in October is due to 300 fewer non-activated [not in return-to-work programmes, ed.] and 100 more activated jobseekers,” Statistics Denmark said.

Unemployment appears to still be trending downwards, which analyst Brian Friis Helmer of Arebejdernes Landsbank said was surprising.

“We have an economy that actually looks good but we have sky-high inflation and dreary economic forecasts. So it’s surprising that both unemployment and employment still seem to be withstanding this headwind,” he said.

But it is a matter of time before unemployment begins to creep upwards, according to senior economist Tore Stramer of the Danish Chamber of Commerce (Dansk Erhverv).

“The more forward-looking key metrics for the labour market have unfortunately begun to wobble considerably in recent months,” Stramer said.

“The number of available job notices has fallen by around 22 percent since February and the number of redundancy notices has meanwhile increased to the highest level since the coronavirus crisis in 2020,” he said in a written comment to news wire Ritzau.

The economist said he expects unemployment to go up by between 25,000 and 50,000 by the end of 2023.

An additional 20,000 people could lose their jobs in 2024, he said.

The construction and hospitality sectors could be amongst the most vulnerable,” he said.

Another analyst, Sydbank senior economist Søren Kristensen, also told Ritzau he believes unemployment will go up but said a slight cooling down of the labour market might be beneficial. Denmark is currently experiencing a labour shortage in several sectors.

“But we are concerned this might be a case of more than just a cooling-off,” he said.

“We expect a fall in employment figures of more than 60,000 persons during the course of 2023. They won’t all show up as being unemployed persons but we could easily end up in a situation where interest and inflation combine to catapult the number of unemployed people to over 100,000,” he said.

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WORK PERMITS

EXPLAINED: Why Danish businesses want to scrap bank account work permit rule

The Confederation of Danish Employers is pushing for an end to a rule that means the salaries of foreign employees must be paid into a Danish bank account.

EXPLAINED: Why Danish businesses want to scrap bank account work permit rule

What is the background to the banking rule? 

The rule was first introduced in 2017 by the Liberal (Venstre) Party minority government, but was then extended by the Social Democrats to cover practically all employees working in Denmark from outside the European Union. 

When the rule was proposed, the government said requiring all payments to be made to an account in a Danish bank would “strengthen the possibilities for Danish Agency for International Recruitment and Integration (SIRI) to check if an employee is in fact receiving the salary promised in their employment contract”. 

Under the rule, a bank account needs to be set up within 90 days of the residence permit being granted or the employee entering Denmark. 

Why is it a problem? 

It can take months for a new arrival in Denmark to get a Danish bank account, as they first need to get a residency permit, then a CPR number, a Danish address, access to the MitID digital identification service, and a health insurance card. 

As a result, business organisations have argued that bureaucracy means they can sometimes go for months without a salary.

“For employers, it is extremely stressful to have highly educated and highly qualified employees they would like to retain in their new position, but they cannot pay their wages,” Rikke Wolfsen, head of the Danish immigration practice at EY, told the Politiken newspaper. “As for the employees, companies have told us that some just say, ‘well, I can’t do that, this. There are other countries in the EU where I avoid all that hassle’.” 

According to a survey by the Confederation of Danish Industry (DI), 84 percent of Danish companies said that international employees had problems getting a Danish bank account. 

Søren Kjærsgaard Høfler, a consultant at DI, argued in comments to Politiken that SIRI could check that the right salary was being paid through the Danish Tax Agency’s digital reporting system, eIndkomst, making the extra security of requiring Danish bank accounts unnecessary. 

In addition, he said he knew of no other country that had a similar requirement. 

Who wants to get rid of the bank rule? 

Denmark’s three major business organisations, DI, the Confederation of Danish Employers, and the Danish Chamber of Commerce are all calling on the new three-party coalition to remove the rule in reforms to work permits expected to be announced later this month. 

“We have set something up which is quite simply pointless,” Erik Simonsen, deputy director of the Confederation of Danish Employers told Politiken, calling on the government to “remove this sort of thing, which only serves to make life more difficult.” 

Høfler said that DI “supported the companies in saying that we do not see any sense in this rule”. 

The Liberal Party, one of the three parties in Denmark’s new ruling coalition, has given its support to scrapping, or at least reforming, the rule. 

“Of course, we must take the messages we receive from the business community seriously when it comes to the fact that they do not think this makes sense”, Christoffer Aagaard Melson, employment spokesman for the Liberals, told Politiken. 

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