Employment & public sector


Public sector employment (full-time and part-time) has been relatively steady at more than 800,000 a year this first decade, making up around 38% of total full-time (28% of full-time and part-time) employment, whereas private sector employment has risen by over 300,000 since the 1990s to slightly over 2 million in 2007 (full-time and part-time). With the information based partly on payments to the Arbejdsmarkedets Tillægspension pension fund of all employees and insured but unemployed members of an unemployment fund in Denmark, full-time employment is calculated at over 2.3 million persons in the third quarter of 2007. The increase in the fourth quarter of 2007 from a year ago in the number of employed persons was 1.0% and the amount of hours worked was 2.9% higher.

The share of employees leaving jobs every year (for a new job, retirement or unemployment (unempl.:15% of job leavers)) in the private sector is around 30% (of 1.25 million), at more than 300,000 - a level also observed in the U.K. and U.S.- but much higher than in continental Europe, where the corresponding figure is around 10%, and in Sweden. This attrition can be very costly, with new and old employees requiring half a year to return to old productivity levels, but with attrition bringing the number of people that have to be fired down. Productivity increased at an average of 2.3% a year in 2004, 2005 and 2006, recently being revised upward from an average of just 0.9% and previously with a too high employment level estimated. The upward revision is good, because a high wage economy like Denmark's with very few valuable natural resources needs to be highly productive, or efficient, and innovative to compete with other countries for a market share in the global economy. However, according to OECD, the distortions imposed by a combined marginal tax wedge of 70% (60% income tax plus 25% VAT, not counting elevated excise duties on certain goods) are hurting productivity and in turn the country's competitiveness.

Public sector reform

To gain synergies through economies of scale (critical mass) (greater professional and financial sustainability) and big item discounts and to offer a wider array of services closer to the public (be a one-stop place of access to the public sector not unlike the unitary councils), it was deemed necessary to merge the municipalities and other administrative entities in the public sector. This would also help alleviate the financial problems of depopulation due to limited job opportunities, high unemployment and aging and make introduction of new information technology more affordable. With the tax burden at around half of GDP, a survey July 2008 found that 81% of Danes are of the opinion that the public sector can deliver more service for the same money, harnessing the advantages of the recent reform. Mainly from 1 January 2007, the new center-right government streamlined the public sector extensively by decreasing the number of administrative units drastically in the different tiers of government, that is, in the number of city court circuits (from 82 to 24), police districts (from 54 to 12), tax districts (before 2007 the responsibility of the municipalities; after that part of the central government Ministry of Taxation), reshuffling tasks among the three government levels and abolished the counties in Kommunalreformen ("The Municipal Reform" of 2007), thereby reducing the number of local and regional politicians by almost half to 2,522 (municipal councillors) (council elections November 2005;reduced in the 2009 elections to 2,468;in 2013 to 2,444) (1978: 4,735;1998: 4,685; reduced somewhat in council elections November 2001 (Bornholm)) and 205 (regional councillors) (1998: 374) respectively. Before 1970 (a previous reform in effect from 1 April that year) the number of councillors (both categories) was around 11,000 in around 1,000 parish municipalities (sognekommuner), being supervised by their county, and market city municipalities (købstadskommuner), the latter numbering 86 (including Bornholm whose county as an exception supervised the county's 6 market city municipalities (of 22 in total)) and not being part of a county but being supervised by the Interior Ministry. This distinction (having independent municipalities not being under county supervision) ending (except for Copenhagen, Frederiksberg and Bornholm (2003–06)) with the reform of 1970, the term municipality (kommune) replaced the previous two terms, which are now never used except for historical purposes. The number of municipalities had been reduced when during the period from April 1962 to 1966 398 municipalities merged to form 118 voluntarily. The number of municipalities was the highest in 1965, at 1345, of which 88 were market city municipalities, including Copenhagen and Frederiksberg, and 1257 were parish municipalities . Many of the 275 municipalities after 1 April 1974 built large city halls to consolidate the administration, thus, changing the cityscape of Denmark. It also consolidated other municipal enterprises and the purchase of goods and services from the private sector, as will some of the present 98 municipalities over time.TV2 (Denmark) reported 24 September 2007, that SKI, a mutual purchasing service company for central government, regions, and municipalities, made purchases of 140 billion DKK (almost 9% of GDP) of goods and services in bulk every year, prompting private sector companies to complain over razorthin profit margins and that for instance innovative (but expensive) products and energy efficiency sometimes were better than a very low price.