22/05/2006 3:37:34 pm
Flexicurity. A good libertarian economist and blogger writes about the Danish flexicurity model. He claims that I have joined those who appreciate this model, though my own Briefing Paper about employment shows that Denmark is by no means a great job-creator.

What I like with the Danish model is the flexibility part. I think that de-regulation is a good reform example for other countries to follow. And I think that part is the main reason for Denmark having the lowest youth unemployment in Europe.

But Denmark′s overall economic growth and employment development has not been impressive. They too should do many more reforms. Perhaps the two other parts of the flexicurity model create more problems than they solve?

High contributions - 90 % - from the state to unemployed leads to high taxes. That, in turn, has a negative effect on job creation. And vast government programs for unemployed are likely to be less efficient than such services provided by private companies.

Denmark did one labour market reform right, but they could do two more: Flexible levels of contributions for unemployed and privatised job training.