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Integration and the Danish Labor Market: The Future of the Welfare State

What do immigration and parisitology have in common? In June 2000, Ph.D. candidate Isam Saeed discovered a dangerous parasitic worm in a fox that had been killed by traffic. What is the connection? Mr. Saeed is an Iraqi immigrant. After fleeing political persecution in his native country, Mr. Saeed found his way to Denmark which at that time was one of the few states accepting Iraqi refugees. After spending eighteen months learning Danish, Mr. Saeed wound up interning at the Center for Experimental Parisitology, which took him on as a Ph.D. candidate after recognizing his value--his broad and extensive experience in Iraq uniquely qualified him for the job.

He is a perfect example of successful integration--one of the most controversial issues in Danish politics--and also a rare example. Though Mr. Saeed was a skilled and specialized scientist when he emigrated, he found many obstacles in his path towards becoming a member of Danish society. For most immigrants, the path is much harder. 

Since the early 70’s, Denmark has all but closed its gates to immigration, allowing only those people who are granted political asylum, those who have direct family members living in Denmark and those who have special qualifications. Many Danes worry that their high tax payments might go into unemployment checks of recent immigrants--people who are not even “Danish”. Others feel that the unique culture of their country would be forever lost with too much foreign influence, making Denmark into a smaller version of the United States--without a single defining language or society. Still others argue that successful immigration and integration is vital for the economy and that newcomers more often than not become supporters of the welfare system, rather than burdens on it. 

And what happens to immigrants once they become citizens? The debate about integrating recent immigrants into the workforce is a contentious one. Unemployment is far higher among this group than the general population--17% to 18%--indicating that integration, for whatever reason, is not working. A recent OECD report ranked Denmark as one of the worst countries for integrating its immigrants.  

This group not only includes first generation immigrants, but second and third as well and illustrates the difficulty of becoming a part of Danish society. There are generally two groups of immigrants: those who entered in the very early 70’s and before to satisfy the high demand for workers and those who entered because they were fleeing their native countries. The integration debate was pushed into the political limelight when second generation immigrants who were not integrated began forming an underclass of marginalized Danish citizens, suffering from crime, poverty and unemployment.

There are three major factors contributing to the difficulty of integration: first, ethnic discrimination against recent immigrants remains a problem--employers may be more likely to hire a native Dane than a first or second generation immigrant. Second, cultural factors such as difficulty with the Danish language and the extensive paperwork necessary for a job make it harder for people to integrate. Lastly, economic factors such as insufficient training, relatively high wages, low demand for unskilled labor and the generous Danish welfare system (which may encourage unemployment) all contribute to the problem. 

In this debate, Danish unions command a powerful position: about 80% of Danish workers are unionized, major unions maintain close political ties and all workers are subject to their wage agreements. Recently, there has been a significant effort by politicians and union leadership to support integration by adopting policies similar to affirmative action and having special staff who are trained in dealing with discrimination issues.

The umbrella organization for many unions in Denmark, particularly those representing blue-collar workers, is Landsorganisationen i Danmark (LO). LO has recently adopted a number of programs to assist recent immigrants who are integrating into the Danish workforce. “The basic ideology is that the easiest way to integrate people is to have them work,” said Jette Lykke Jensen, Union Advisor to LO, “If this happens, I think the problem will for the most part solve itself,” suggesting that the workplace is a natural place to learn the Danish language and culture.

LO is dealing with the integration issue on several fronts: one initiative started six months ago sets aside 300 trainee positions for ethnic minorities. Another program identifies 400 Danish adults who will serve as mentors to recent immigrants. Other efforts of LO focus on building closer ties to the ministries of labor and education on the issue of discrimination. LO itself has created a policy of hiring approximately 6% minority employees, setting an example for member unions.

“There is discrimination. Young people who are not Danes can have trouble getting internships. Many new immigrants don’t get into vocational training,” Jensen said. “Also, we find that a significant number of recent immigrants want to work in areas where there is little demand in Denmark.” There are other problems as well. It is difficult to identify minority groups eligible for these programs because Denmark does not collect ethnic data from residents. Additionally, most of LO’s programs are new, making it difficult to assess their effectiveness.

Ms. Jensen is quick to point out that discrimination is not the only factor preventing integration, “Language and education are big factors. Education is probably the biggest. The labor market is changing rapidly and the demand for unskilled workers is almost gone. This is a big problem especially for the refugees. For example, Somalis who came to escape the problems of their native country are having trouble because many of them do not have comparable education.” 

Dansk Arbejdsgiverforening (DA), the employers’ confederation in Denmark, has a similar opinion. In a recent report, DA found that the work frequency of immigrants is 43% for women and 63% for men, compared to 74% and 84% for the rest of the Danish population. Like LO, DA supports programs to aid recent immigrants seeking work. Much of this effort is driven by economics--DA estimates that the shrinking labor pool and strong economy will create a strong demand for skilled workers. If this demand is not met, wages could be driven up, increasing inflation pressure.

Apart from discrimination and cultural barriers, there are two general economic explanations why integration remains difficult. First, the gap between the lowest and highest wages in Denmark is relatively narrow. This means that people who have low potential productivity--because they have trouble with the language, have a lower level of education, lack job skills or other similar reasons--have difficulty finding jobs. This is not as much a problem for countries such as the United States where the minimum wage is lower and the job market tighter. In general, minimum wage and unemployment are directly proportional, meaning that states must choose their poison. Denmark, with its high minimum wage, tends to create relatively higher unemployment. This tends to fall on less productive workers meaning that a disproportionate number of unemployed are recent immigrants. 

One controversial solution advocated by Mehmet Necef, Professor at Syddansk University’s Center for Middle East Studies, is to allow workers to directly negotiate their salaries with employers, without being subject to collective wage agreements. This would mean that they could accept lower wages than the agreements allow and thus become employed more easily. Professor Necef argues that employers who might have prejudices against immigrants will hire them for a lower wage, giving them the opportunity to prove themselves.  Naturally, labor unions are strongly opposed to such measures. “We don’t want to create an underclass of working poor,” said Jensen, “That is one of the big problems with the United States.” Such a solution would be politically unlikely, since there is a strong will in Denmark to keep the unique Danish social welfare system.

The second economic obstacle to integration is that welfare benefits for unemployed workers may have created incentives not to work. The very fact that Denmark’s social benefits are so generous might be making it too easy for people to remain unemployed. For example, an unemployed couple with three children under ten paying 5,000 DKK in monthly rent will earn about as the same as if one of them got a job earning 180,000 DKK a year, because social benefits decrease as income goes up. Thus, there is not an overwhelming incentive for a family in this situation to begin working. Professor Necef sees structural changes in the welfare system, rather than affirmative action and ethnic quotas, as the key to integrating recent immigrants. 

Others present a very different view. Jan Hjarnoe of the Danish Center for Migration and Ethnic Studies sees discrimination as the one major obstacle. Mr. Hjarnoe blames the stereotypes of immigrants--an economic burden or a threat to social welfare--as the main problem. These stereotypes, he claims, are created by the media. “All you have to do is look at a recent Vilstrup survey. One out of three construction employers said they would not hire someone of a different ethnic background, even if there was a shortage of workers,” said Hjarnoe. Instead of reforming the Danish welfare system, Mr. Hjarnoe suggests stronger policies, in both the public and private sector, to get more ethnic minorities into the workforce. He supports the government’s recent policy to favor firms that adopt “ethnically conscious” hiring policies such as affirmative action. However, his view does not address other obstacles immigrants face to integration such as a lack of education, problems speaking Danish or lack of jobs.

Lars Christensen of the Danish Ministry of Economy emphasizes the role of education over the need to fight discrimination. “For example, the average Turkish immigrant has three to four years of education and difficulty speaking Danish,” said Christensen. Education in such cases is difficult, given that the average Dane has over nine years of school. This disparity is what prevents them from being competitive on the labor market, rather than simply the unwillingness of employers to hire ethnic minorities. In general, the government sees education and job training as the real solutions, believing that discrimination will dwindle as more ethnic minorities enter the workforce.

Nina Smith, Professor of Business at Aarhus Business School and head of the Center for Research in Social Integration and Marginalization, cautions against seeing education as a panacea: “It is in the right direction, but it is simply utopian to think that we can use education to solve the problems concerning integration of immigrants. We have to make some structural changes as well.” Professor Smith emphasized the complexity of the issue, suggesting (like Professor Necef) an examination of possible structural changes to Denmark’s social system. “It has to be a lot easier to get into the labor market. The immigrants are going to keep coming and in higher and higher numbers and we simply cannot educate them all so they’ll be qualified for a job. It is just impossible.” She points to the importance of getting new immigrants working as soon as possible: “We have to integrate them through labor and not only through education. We need structural changes of the welfare system whether we like or not. What we do now is not enough.”

Politically, recent economic trends have created support for integration. With unemployment hovering around 5%, the job market in Denmark is tight. If the economy continues to grow, the demand for workers will not be satisfied unless more can be found. There are two ways to address this problem. First, immigrants living in Denmark can be integrated into the Danish economy. This would provide some relief to wage pressure. Second, more immigrants can be allowed in. Although this second option is not close to becoming a reality, there has been discussion among politicians to open the gates. “The attitude is shifting,” said Jensen, “According to many Danes, we need more immigration to fill the demand.” 

There is a backlash as well. A movement to further limit immigration has received increasing support in Denmark, as well as Europe in general, particularly in countries such as France and Austria. In Denmark, the Dansk Folkeparti has taken this role. Morgens Camre, in a letter to Politiken summed up their view: “The Danes constitute a tribe, complete with a sense of belonging and a feeling that our society is something unique. ...Globalization, the open borders and the economic possibilities, which are the reasons that the foreigners come here, threaten our homogeneity.” This view exemplifies the stereotypes Mr. Hjarnoe criticizes and, though not the opinion of the majority of Danes, is a growing trend in the political discourse.  “...although the foreigners only comprise 4% of the total population, they have caused a significant increase in theft and violent crimes. ...The Danes do not feel a personal hatred toward the individual refugee, but they do not want their foreign cultures in Denmark, simply because they--from their oppressed women to high birth rates to knife homicides--do not belong to our country and our time.” 

Although Mr. Camre’s views are extreme, this political movement in general represents the growing concern for the future of the welfare state, not only because of immigration but because of globalization, an aging population and uncertainty about the role of Europe in the years to come. As immigrants are an obvious challenge to this system--far easier to attack than globalization or the elderly--they are an easy target. Politicians like Joerg Haider and Pia Kjaersgaard speak on behalf of people who are afraid of losing their social benefits and argue, in a simplistic way, that this can be prevented if immigration is stopped. This political movement is coming from both sides of the political spectrum. The leftist anti-European movement, Junibevaegelsen, played off the fear of immigrants to sell their message against the EU: “Welcome to 40 million Poles?” said one of their campaign posters. The push for closing borders is not a matter of political ideology, it is a matter of fear.

These two political changes are developing side-by-side: on one hand, there is support for more immigration to satisfy the increasing need for workers. On the other, there is increasing fear that Denmark will not be able to maintain its unique welfare system and culture if too many immigrants arrive. A rise in inflation or new refugee crisis could bring this debate to the boiling point. It could be that the Danish welfare state inherently creates these problems--at some level, it becomes a question of have and have not between nations. While Denmark remains a small wealthy country, the pressure of immigration continues to grow. “...we will run into some major problems in the future,” said Necef, “I think it is wrong that the debate about the immigrants is only about discrimination when the problems have a much deeper root, namely the [inherent] problems of the welfare state.” 

Perhaps Denmark’s social system, by its very nature, is not geared to helping marginalized members of society. For the “weak” immigrant, with little education and few skills, the road to integration is a long and difficult one.  In the case of a 45 year-old refugee who comes to Denmark with three years of school, training and education are a daunting challenge. If he opened up a small store, making a modest profit, perhaps after years of hard work he could become integrated into Danish society.  Perhaps he keeps his shop open 14 hours a day and accepts all sorts of economic hardships to save money. This is the one way he can compete in the Danish workforce, as few employers are likely to hire him. The Danish welfare system is not designed for the immigrant with little education or training. The ones who successfully integrate do so outside of the organized labor market, but only if they possess outstanding amounts of motivation and courage to facilitate their own way through.

The question remaining on many people’s minds is whether Denmark will be able to remain “Danish” forever. Will it be able to keep its generous social system and unique culture or will it become a country of many ethnicities and languages, perhaps with a wider income gap. In other words, will Denmark start looking like the United States or will it remain as it is. Will people like Mr. Saeed continue to be rare or does he mark the beginning of a larger trend of non-Danish scientists making important discoveries for Danish institutions. The problems with integration remain formidable: the presence of ethnic discrimination, the difficulties of not speaking Danish, the generous welfare system that may encourage unemployment, the elevated wages that disadvantage unskilled workers, the need for extensive training and education, and the stubborn political opposition to immigration all contribute to Denmark’s low integration rating by the OECD. Furthermore, how can Denmark justify more immigration if it can not even integrate the minorities it already has? Even if proposed solutions such as better job training and affirmative action or even structural changes in the welfare state are effective, the road to better integration is a long and difficult one and will no doubt confront Denmark for years to come.


Articles and Books:

“Arbejdsmarkedsrapport” Dansk Arbejdsgiverforening 2000 

Camre, Mogens “Vi oensker ikke de fremmede” Politiken 21 April, 1998

“Handlingsplan om etnisk ligestilling” Arbejdsministeriet March, 2000

“Iraker fandt dvaergbaendelormen” Dansk Veterinærtidsskrift 16 June, 2000

Necef, Mehmet Ümit “Indvandrere, arbejdsmarkedet og dansk nationaloekonomi” Information om indvandrere, 1. 3 (1998)

Necef, Mehmet Ümit “Positiv særbehandling eller liberalisering?” Information om indvandrere, 3. 3 (2000)

“Trends in International Migration” OECD 1999 Report


Mehmet Ümit Necef, Syddansk Universitet

Jette Lykke Jensen, LO

Nina Smith, Handelshoejskolen i Aarhus

Michael Hjarnoe, Syddansk Universitet

Lars Christensen, Oekonomiministeriet 

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Denmark Denmark 2000


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