Although there was a slight drop in unemployment in Denmark in 2017. it did not affect the current percentage of the unemployment rate of 4.3%. Despite a small reduction in the number of the unemployed, the statistics show the total number of 116 400 full-time employees between September and October in 2017. This kind of situation actually shows that there is a problem among the unemployed to return to the job market although the opportunities have never been greater and statistics in Copenhagen in 2017 show that there is a short of labor in many industries and the situation on the labor market is no longer favorable for employees.
Denmark‘s labor market under pressure
According to the latest report including 33 countries, Denmark stands out as a country that‘s dealing with the greatest pressure on the labor market because it‘s facing a huge gap between the vacant job positions and the lack of employees for those positions. The score at the global skills index shows that all 33 countries included recorded a drop from 5.4 to 5.3, only Denmark increased from 5.8 to 6.4 in 2017. Denmark labor market is having a hard time to attract and retain the workers, especially in the high skilled positions. That‘s why they are trying to create a strategy to attract qualified foreign workers.
If we take a look at Denmark population statistics, we can notice that this seems to be the golden era for full employment and that everyone able and willing to work has a job in the times when the EU countries struggle to get out from the crisis. However, the situation is not that bright as one might think – there are many challenges that this country has to face in order to work soundly. As we already said, there is an insufficient number of industrial and technically advanced workers to fill vacancies, especially in the fields of IT sector, computer science, engineering, and mechanics, as well as profiles such as carpenters or electricians.
Majority of the companies are forced to cancel expansion projects and turn down new deals, and if this kind of state continues it will seriously affect Denmark economy. As the recent statistics show it is worst since 2011. Denmark produces a diverse range of goods and it has to boost each sector! The government is doing its best to stimulate labor supply allowing seniors to work longer and encouraging employment of the EU citizens even the refugees (most of which are qualified for the high skilled jobs). The government, however, tightened the policies for letting them in, unlike Germans who created training programs for refugees to enter the market more easily. In addition, some companies in Denmark have decided to open job positions abroad – they open satellite offices in foreign countries and they employ highly skilled workers.
The current economic situation in Denmark
Denmark‘s central bank is closely monitoring the situation in order to warn if the labor shortages start causing adverse side effects and inflation. Companies are raising wages to attract workers, but not everyone does want to work. For example, 92 000 Danes rather collect the benefits for the unemployed than work. The analysts say that Denmark‘s economy, as we already said, suffers the worst contraction since 2011 – Denmark GDP dropped for 0.6% compared to the previous 3 month period, the house prices are growing and the gross investments fell. Also, the exports have dropped a third quarter in a row, although the export market has always been strong and has been recording a constant economic growth. So it turns out that Denmark is not quite the utopia that it‘s created to be.
Although they provide generous benefits for their citizens like education, health, and childcare, and it‘s generally a good place to live, they face many difficulties. Besides a lower proportion of people working, they are also experiencing a rising debt level. Due to stagnant productivity and a shortage of skills. The citizens are also facing extremely high taxes that affect both the middle class and the wealthy population (extremely high value-added tax, the highest energy taxes in the world, extremely high car import duty etc.). Although they ‘try to infiltrate’ immigrants due to the lack of unemployed, Danish are xenophobic and their perfect model cannot be applied when it comes to immigration policies. The immigrants are not welcome and Danish do not express solidarity with the refugees seeking asylum in Denmark. Due to the discord between the principle and the practice, there may occur growing social problems on the horizon for the Danish nation.
Forecast for Danish economy growth
Danske bank forecasts show that there may be a risk of economic overheating in the years to come although the recovery will remain on the track due to strong domestic and global demand and an increasing labor force. However, the government promised to cut taxes for individual income earners as well as companies that are expected to give a considerable stimulation to labor supply. Prime Minister Rasmussen expects to have a buffer in country‘s budget of $5 billion by 2025. that will be spent on tax cuts, growth initiatives, and security. As they lag behind Sweden, the UK, and Germany, they plan to attract about 60 000 people to the labor market by 2025, expand gross domestic product and decrease the deficit. Is optimism justified in these uncertain times? Yes, if Denmark applies urgent job reforms to end the workforce shortage and avoid the decline of economic growth in the future. Raising the age for retirement, increasing the employment rate for foreigners, reforming the grant system for students, lowering the taxes will certainly attract more employees. These reforms should be conveyed as quickly as possible if the country wants to secure the future economic growth and sustainability of the Danish welfare state. There is a number of important issues that must be identified and Danish economic future depends on the government’s ability to maintain the growth in income conditions of social cohesion and macroeconomic stability.