The Nordic Economies
Denmark's Flexicurity
Denmark makes it easy for firms to hire and fire but gives laid-off workers generous benefits and active retraining.
A famous labour-market design.
Three parts
Flexible rules for hiring and firing, generous unemployment benefits and active labour market policies.
Result
Workers move between jobs with lower fear of unemployment.
Cost
The system is expensive and needs high employment and taxes.
Lesson
Protect workers, not particular jobs.
A layoff
A laid-off worker gets income support and training for a new field.
Assuming flexibility means insecurity
Support offsets the risk.
Key takeaways
- Flexicurity combines flexible hiring with benefits.
- It supports job transitions.
- It is costly.
- Protect workers, not jobs.
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