[Opinion] The Danish Employment Model

“I would hire ten times more employees than now if firing employees was easier.” said the president of a leading Korean asset management company. If this becomes a reality, it would be bad news for those who barely landed jobs, but good news for the unemployed. Dismissal of a “misfit” is good for both job seekers and the company, and also for the dislocated person himself because he might get a better job opportunity. “We made firing workers easier for companies, which in turn increases hiring,” said Danish Prime Minister Anders Fogh Rasmussen proudly on his recent visit to Korea.

The Organization of Economic Cooperation and Development reviewed labor policies worldwide for 12 years and concluded that flexibility in the labor market is a key to job creation. Denmark implemented policies known as “flexicurity,” merging a flexible labor market with job security that provides the unemployed with job training programs to educate them in skills in demand by industries. Thanks to “flexicurity,” one in three unemployed in Denmark finds a new job within a year. As a result, the country’s unemployment rate is at its lowest level in over 30 years, standing at 4.5 percent

The Danish policy is getting attention of Cheong Wa Dae, which has been preoccupied with copying Swedish and Dutch labor market institutions.

However, it is feared that the presidential office might emulate the antiquated Danish policies featuring a bloated public sector and hefty taxes instead of modeling the “flexicutiry” program. According to the Economist, although Danish flexicurity is highly praised abroad, it is difficult to emulate. For one thing, it said, “The Danish model is based on a century-old habit of dialogue between employers and unions that is not easily exportable to other countries seeking a quick fix.”

Prime Minister Rasmussen emphasized negotiations between labor and management should be done voluntarily. If there is government intervention, it is very limited. Danish government has cut unemployment benefits to reduce people overly dependent on social welfare, and added 34,000 new jobs by vitalizing the private sector. In April, President Roh Moo-hyun visited Busan Job Security Center and pledged assistance for job support, which includes measures such as categorizing center counselors as public officials or making industrial complex to provide jobs. His plan seems feasible, but creating jobs from the public sector not from the private sector is not the Danish labor model.

Kim Sun-deok, Editorial Writer, yuri@donga.com