The many international employees who work in Denmark on a daily basis play a decisive role for the country's economy and labor market. According to the latest calculations from Dansk Erhverv, in 2023 foreign colleagues have contributed a whopping DKK 322 billion to Denmark's gross domestic product (GDP). This amount corresponds to 11.6 percent of the country's total GDP and marks an increase of DKK 67 billion compared to the previous year - a level that constitutes a new economic record writes Dansk Erhverv. The financial contribution from foreigners has thus become an indispensable part of the Danish economy and welfare model. In the same way, international employees have contributed to a positive balance on the public finances, where their net effect is estimated at over DKK 15 billion, corresponding to the costs of 25,000 nurses.
Brian Mikkelsen, CEO of Dansk Erhverv, emphasizes the importance of foreign labor and warns against a future in which Denmark risks a labor shortage. This article reviews the latest analysis from Dansk Erhverv and takes a closer look at why there is a need for legislative changes and strategic partnerships with countries outside the EU to ensure a sustained influx of labour.
Foreign Labor and Their Economic Influence on Denmark
The financial gain from foreign labor is significant, and the latest figures from 2023 highlight their critical role in the Danish economy. That foreign workers contribute DKK 322 billion to GDP shows how dependent Denmark is on these international colleagues writes Dansk Erhverv. Compared to the previous year, when the contribution was smaller, this increase underlines the importance of a continuous influx of qualified labor from abroad.
Contribution to Public Finances
In addition to their contribution to GDP, foreign employees also have a positive effect on public finances. With a contribution of over DKK 15 billion to the public coffers, they make it possible for Denmark to finance important welfare areas, including health and education. Brian Mikkelsen illustrates this importance by mentioning that these funds correspond to the salary of 25,000 nurses, which clearly shows how foreign labor supports the Danish welfare system.
Brian Mikkelsen's Statements: A Challenge for the Future
Brian Mikkelsen emphasizes that Denmark faces a significant demographic challenge. With an aging population and fewer young people entering the labor market, Denmark risks experiencing a labor shortage in the coming years. This demographic development will not only affect the business world, but also the entire society's ability to maintain the Danish welfare model.
"It is beyond any doubt that without the good foreign workforce we would have major problems in Denmark. It benefits all Danes," says Brian Mikkelsen.
He also warns that many of the countries Denmark has traditionally recruited labor from will soon face their own demographic challenges. This therefore requires proactive action on the Danish side to ensure that Denmark can also attract qualified labor from abroad in the future.
The need for reform and rule changes
In order for Denmark to remain competitive and ensure a constant influx of foreign labour, Brian Mikkelsen argues that there is a need for significant rule changes. Among other things, he points to the need to simplify and modernize the Danish case processing system and to change the rules for hiring foreign workers.
Proposal for reform measures
Brian Mikkelsen proposes a number of concrete changes that can make it easier for Danish companies to recruit foreign labour:
- Relaxed conditions for companies with a collective agreement: According to Dansk Erhverv, companies that have contractual employees should have easier access to hiring foreign employees. This could create a more flexible workforce approach, while maintaining Danish labor standards.
- Digitization and simplification of the case processing system: Mikkelsen points out the need for full digitization and simplification of case processing, so that the process of obtaining work permits becomes faster and less bureaucratic. This would save both companies and applicants time and resources.
- Simplification of the amount scheme: The current amount scheme, which sets minimum wage requirements for foreign workers, can be a barrier for some sectors. An adjustment of the amount scheme could make it easier to attract foreign employees to the industries where there is the greatest need.
- Abolition of the presumption rule: This rule can create unnecessary barriers for companies that want to employ foreign employees, and Brian Mikkelsen therefore believes that it should be abolished in order to facilitate the influx of labour.
Partnerships with countries outside the EU
As part of ensuring a stable and broad recruitment opportunity, Dansk Erhverv suggests that Denmark should establish partnership agreements with countries outside the EU, such as India and Brazil. This is already a strategy used by countries such as Germany and other European nations to secure their labor markets.
"Our desired scenario is that a system is created for certified companies so that they can recruit freely from all over the world on terms that match Danish standards," says Brian Mikkelsen.
This approach would give Danish companies a larger recruitment base and ensure that they have access to the workforce they need, while maintaining Danish labor standards.
Certified Companies: A Quality Assured Recruitment Method
A scheme for certified companies would mean that companies with employees employed under collective agreements could recruit foreign employees without the same restrictions as other companies. As long as these appointments maintain the same pay and working conditions as for Danish employees, the companies would have greater flexibility to cover their labor needs from countries outside the EU.
Consequences for the Danish Labor Force
However, an increased influx of foreign labor can also have challenges and consequences for the Danish labor market. Some Danes may fear that a larger proportion of foreign employees could lead to competition for jobs, or that it could put pressure on wages in certain industries. But according to Dansk Erhverv, foreign labor is predominantly an advantage for the entire economy, as they typically fill positions that would otherwise be unfilled.
Impact on Welfare and Social Economy
Foreign employees not only contribute financially, but also to the maintenance of welfare services in Denmark. Their tax contribution helps finance healthcare, education and social services, which benefits all Danes. Furthermore, foreign labor can contribute to innovation and knowledge exchange, which are essential for Denmark's continued growth and development.
Final Thoughts: A Necessary Investment in the Future
Denmark faces a significant challenge with an aging population and a pressured labor market. Without access to foreign labour, the country risks stagnating economically and finding it difficult to maintain the high standard of living and welfare that Danes are used to. It is therefore crucial that political decision-makers, the business world and society as a whole cooperate to secure the workforce of the future.
Brian Mikkelsen's call to act now is not only a reminder of the current situation, but also a call to think strategically about Denmark's future. By opening up the labor market and creating favorable conditions for foreign labour, Denmark can ensure that the country remains competitive and economically stable.
Denmark stands at a crossroads where action and reforms are required to ensure that the country can continue to attract and retain the best and most talented employees from all over the world. Without them, Denmark would face a serious challenge both economically and socially - and that is why foreign labor should be seen as an invaluable resource for Denmark's future growth and welfare.
Source: Danish Business
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