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Trade, Industry and Labour Market
Since the mid 1990s, the Danish economy has been characterised by an upturn in many important areas. Unemployment has dropped to the lowest level for 35 years. Inflation is among the lowest in the EU area. There is a significant surplus in the balance of payments and in the public finances. The result of this development is that a formerly considerable net foreign debt has been paid off. The public sector has experienced a significant decline in public debt in recent years.
The public sector is the largest sector in Denmark with a 26.7% share of production. The photo shows an operation team at Amager Hospital in Copenhagen in November 2007. Photo: Lars-K. Crone.
The positive development which has characterised the Danish economy should be seen in the context of a number of factors. In the late 1980s, the economic policy was tightened considerably. This resulted first in a balanced budget and later in a surplus in the balance of payments after many years with chronic deficits. The price was a significant increase in unemployment until 1993. By then, not only the balance of payments, but also the public finances had improved so much that it was possible to exploit the freedom of action that had been achieved to introduce an economic policy which started an economic upturn that eventually became self-reinforcing. The associated increase in the rate of employment was presumably a major reason why it became politically possible to introduce a series of reforms in the labour market policy in the mid 1990s.
Compared with most other EU countries, Denmark has a very high rate of labour force participation and a high percentage of employment. The high level partly reflects that the public sector in Denmark undertakes many of the tasks in relation to care for children, the sick and the elderly, which in some other countries are the responsibility of the family.
The development in employment and unemployment is closely connected with the economic development described in the next section. This is followed by an account of some of the main conditions on the Danish labour market.
Peder J. Pedersen
Professor, dr.oecon
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that more than 33 pct. of employed Danes work in the public sector? In 1960 the share was around 10 pct.
Statistics Denmark
