Denmark’s “flexicurity” welfare state model, buttressing its dynamic labor market, allows employers to hire and fire workers efficiently, according to the head of the Confederation of Danish Enterprise.

Danes’ talent is seldom wasted, as they continuously search for jobs offering better pay, autonomy and creativity, the confederation’s Chief Executive Officer Laurits Ronn said in an interview. As business managers can flexibly adjust the size of their enterprise, this ultimately raises the country’s macroeconomic productivity too.

The Danish economy has been flourishing largely on the back of its flexicurity, according to analysts.

In an age of hyper-globalization and digitalization, where the pace of change is beyond our ability to respond to it, they say flexicurity enables a smooth and efficient economic transition toward innovation and dynamism. 

“In the changing world of the ‘fourth industrial revolution,’ the Danish model ensures that the labor force moves quickly to seize new opportunities and prioritizes continuing education and training,” Ronn said. “Apart from this fundamental strength, another key positive is that when an agreement is reached between employers and employees, no strikes are allowed during the period of accord, typically lasting from two to three years, ensuring labor market stability.”

Ronn came to Korea in late June with a delegation of the confederation to learn about the country’s education, startups and digital progress, all areas he deems the two sides can better collaborate on. The confederation is Denmark’s leading institution strengthening networks across trade, information technology, manufacturing and services industries through expert advice and political representation. The business organization has more than 200 employees with offices in Copenhagen, Aarhus and Brussels.

With the increasing speed of globalization, automation and digitalization causing significant economic disruptions, how to properly educate and equip people to be ready for the emerging jobs is one of central concerns of policymakers and academics.

“Flexicurity” is ideal in this regard, the CEO said, adding his compatriots constantly adapt themselves to their new environment, profession and organization through learning.

“Companies are also more willing to take risks, knowing they can lay off workers when they fail,” Ronn expounded. “At the same time, workers are eager to search for better jobs, helped by the fact that there are so many openings in the economy.” 

The flexicurity entails labor market flexibility, social security and an active labor policy guaranteeing the rights and obligations of the unemployed.

Working hours in Denmark are among the most flexible in Europe. In contrast to most European countries, there are no restrictions on nighttime and weekend work, allowing firms to operate around the clock. The flexible hours also allow people to juggle both work and home life, which may explain why the Scandinavian society has balanced work and life and consistently tops the world’s happiness report by the United Nations.

Social security is financed by taxes paid by employees, unlike in many other countries where the system is largely supported by employers. Foreigners living and working in Denmark are largely covered by the Danish social security system.

Various unemployment benefits and training programs place higher tax burdens on high earners, while the benefits go to low and middle-income earners.

In contrast to most European societies, labor disputes in Denmark are reconciled on the basis of collective agreement between representative organizations of employers and employees, securing a high degree of consensus and few incidents of a strike.

The two sides are obliged to resolve any disagreements among themselves, and the state can intervene to a limited extent. Although neither the employer nor the employee is obligated to join their representative organization, workers have an interest in organizing themselves collectively, as some 70 percent of Danish employees belong to trade unions, particularly the blue-collar laborers. 

Saying Denmark had found that too much security can disincentivize people to work, Ronn argued policymakers should “design the system in a way that benefits for unemployment and work-related mishaps are a temporary solution between jobs.”

“Flexicurity done the right way enables change in the economy,” he added.

The Nordic nation’s key industries are clean technology, innovation and information communications technology, life sciences, maritime, design and agriculture and food. Ronn urged enhanced bilateral economic cooperation in the information technology sector, noting that geographical distance is increasingly attenuated by globalization and electronic commerce.

“Denmark is a front-runner in green growth and sustainable development, so Danish and Korean companies can mutually benefit in this area,” he said. As both societies face rapidly aging demographics, welfare for the elderly is another key area, he suggested, alongside lifelong learning and universal health care.

According to Invest in Denmark, the investment promotion agency under the Ministry of Foreign Affairs, Denmark offers unfettered access to the regional European Union market of over 100 million consumers; a well-educated workforce with a high proportion of university graduates and competent foreign language skills; minimal red tape and bureaucracy; and a prime gateway to northern Europe through airports, ports, roads and railways.

Denmark has been ranked the easiest place to do business in Europe by the World Bank and among the best places worldwide for business by the Forbes magazine.

By Joel Lee (joel@heraldcorp.com)