The Danish model of ‘flexicurity’: experiences and lessons

Abstract

The success of the Danish economy in recent years has led to claims that the Danish employment system constitutes a unique model. Danish legislation provides for a low level of employment protection, allowing employers to dismiss workers with short notice. As a result, the Danish employment system has a level of numerical flexibility that is comparable to that of liberal labour markets like those of Canada, Ireland, the United Kingdom and the United States. At the same time, through its social security system and active labour market programmes, Denmark resembles other Nordic welfare states in providing a tightly knit safety net for its citizens. The Danish model thus illustrates a possible trade-off between a very flexible employment relation and a social protection system, which, combined with active labour market programmes, defends individuals from the potential costs of a low level of employment security. The model thus represents a genuine alternative to the widespread view that it is desirable to develop a high level of individual employment protection at the company level.