Implemented under former Prime Minister Poul Nyrup Rasmussen in 1994 after unemployment reached a 25-year high of 13%.   When Rasmussen left office in 2001, unemployment was below 4%.

To increase Denmark’s economic competitiveness and reduce its unemployment rates by: 1) providing businesses with the flexibility to hire and fire employees according to market fluctuation while 2) ensuring employees are financially secure in times of unemployment.
 

Employer

The Employer has the flexibility to hire and fire employees according to its financial needs.  Employers can therefore lay off employees when the economy is down and hire employees when the economy is up without fear of recrimination from government or unions.  Such labor market liquidity aids economic efficiency.

Employee

80% of Danish workers belong to trade unions.  The unions engage in dialogue with employers and the government to protect the rights of the workers in the system.  As a result, the employee is well insured in preparation for periods of unemployment.  Unemployment benefits can be as high as 90% of the person’s previous income.  The benefits are funded by social security, which itself is funded by Denmark’s high taxes.  Benefits can be awarded for up to four years, and are conditional upon the unemployed person’s engagement in job training or acceptance of a new job.

Government

The Danish government keeps the labor market active.  It invests in job training, job-search centers, further education, and new jobs for those who are unemployed.  Its goal is to return unemployed people to employment as quickly and efficiently as possible.

Denmark’s relatively high taxes support an extensive welfare system, of which Flexicurity is a part.  The official Danish government website for Flexicurity does not provide specific funding details.