For many years now, France has faced an incredible high and continued unemployment rate. At the beginning of the 90’s, Denmark lived quite the same situation but it has decided to set up a social model to face this problem: the flexicurity model. This device enabled to reduce fundamentally the unemployment rate in Denmark. In the 90’s, the unemployment rate was about 10% to reduce at 5% at the end of the 20th century. Nowadays, Denmark has a stable unemployment rate around 6%.
As Denmark succeed in reducing the unemployment rate, it seems interesting to understand how the Scandinavian model works.
The flexicurity term combines two paradoxical notions: flexibility on the work market for employers and a bigger security for the employees.
Through this article, we are going to answer questions about this model and his application. What are the characteristics of this social model? What were the factors that enable Denmark to have success? Is the Flexicurity model transposable in France?
A flexible work market
The Danish model is characterized by liberal vision of the work market. Indeed, a company can easily lay off an employee thanks to fast-track procedures. Unlike France, the Danish labor code is less complex and less rigid. This observation can be explained by the fact that there is a little state intervention, allowing companies to adapt the workforce to their needs. However, dismissals still have to be justified by the employer and be explained by serious or convincing economic reasons. Trade unions ensure that businesses respect this principle.
On average there is one in four Danish changes works every year. The most astonishing fact is that the employees are the ones choosing to leave at 72%. This can partly be explained because SME are very flexible and want to have skilled labor force, facilitating exchanges of workers between companies.
An individualized and qualifying job search assistance
Companies enjoy a large flexibility but in exchange the welfare state is highly involved in the monitoring and support for the unemployed. There is the Danish philosophy: to have the right to be helped in case of unemployment, people have to look for a job or undertaking training.
Retaining job seekers’ employability remains one of the priority axes of the Danish government. Indeed, the government does everything in his power to keep it that way. Actually, each year 2% of GDP is used for it employment policy, more precisely it serves to create qualifying and professionalizing training. That makes Denmark the world’s biggest spender in this area regarding it means.
Besides, the organization of employment agencies is very effective. An unemployed has an appointment with his counsellor at least once every two months. This meeting can be organized in order to check the job searches progress or to prepare a job interview. What’s more, to decline an offer, the unemployed must have good reasons. If there is no acceptable excuse, unemployment benefits are largely reduced until the acceptance of a suitable job.
High unemployment benefits
The Welfare state is very protective when an employee is laid off. Indeed, the unemployment benefit is very important. Danish unemployed are compensated to 60% of their income for two years, limited by a certain amount. However, before the reform of the unemployment of 2010, an unemployed could be compensated to 90% of their wage for 4 years.
Reforms created to preserve the social system
Several measures have been decided and now allow a restoration of the situation:
-reducing corporate taxes
-increasing the statutory retirement age (65 years old and then gradually to 67 years old)
-lowing the employment benefits (from 90% to 60% of the wages)
A social model which perfectly fits to the Danish society and environment
The Flexicurity model was implemented in Denmark thanks to several factors. First of all, it is important to consider the social and cultural environment to understand the Danish welfare state and the market behavior. Indeed, the Nordic educational system gives priority to group work and constant search of consensus. The importance of community is noticeable in the Flexicurity model.
Moreover, Danish unionization rate is very high. Indeed, 67% of employees are unionized, making trade unions very powerful, representative and responsible. Unlike French trade unions who evolve in a culture of conflict and opposition, Denmark ones are more turned to pragmatic and constructive unionization.
Denmark remains one of the countries with the highest tax burden and in which there is no minimum wage. It is noticeable that a two thirds of Danish people work in public service or receive their wages from the state.
Another particularity of Denmark is the versatility of it labor force compared to diversify and skill jobs gathered in a little territory. Those two factors are encouraging the Flexibility.
However, the Danish model seems to be hardly transposable in France as Flexicurity is to meet and accommodate to national realities. That being said, the actual government wishes is to develop a French Flexicurity.
We shall see very soon what the government will set up to achieve this long-awaited french flexicurity …