Denmark eyes looming skills shortage as economy picks up

Copenhagen / AFP

After a lacklustre recovery from the 2008 financial crisis, Denmark’s central bank has warned that the labour market faces a squeeze as unemployment falls, the population ages and young people shun vocational jobs. At Technical Education Copenhagen, traineeships for another 20 to 30 lorry drivers could probably have been found if only people were interested in them, according to Anders Wendelboe, a head of education at the vocational training college.
In a country where work-life balance is highly valued, a wrongful perception that the job came with irregular working hours was putting some people off, he speculated.
“Young people today would like to have leisure time, they would like to have a family,” he said. A lack of skilled workers was also threatening growth at Teccon Form, a company in the western town of Holstebro making tools for injection moulding, employing around 20 people. “There has probably been too much focus on having a university education,” chief executive Michael Nederby lamented. “There has been a slightly higher status around that, and we are fighting against that,” he said, adding that he had been forced to raise salaries to compete with other employers.

Central bank warning
Denmark’s central bank last week warned that the country was technically at full employment and that the economy could be hit if the country did not find ways of growing its labour force.
“Unemployment has now reached its ‘structural level’ … There are, so to speak, no labour reserves among the unemployed,” it said in a quarterly report.
“There are already signs of pressures in the labour market. The clearest indications are reporting of labour shortages in both the construction and manufacturing sectors,” it added.
Seasonally adjusted unemployment stood at 4.2 percent in July, according to data from Statistics Denmark based on the number of people on unemployment benefits and in labour market activation programmes.
The number rises to 6.2 percent under the so called ILO (International Labour Organization) measure, which is used to compare unemployment in different countries.
Denmark was badly hit by a burst property bubble during the 2008 financial crisis and growth has lagged the economies of neighbouring Sweden and Germany. The country’s central bank believes economic output will edge up 0.9 percent this year and 1.5 percent in 2017.

No quick fix
“The problem is the greatest among vocationally trained labour with technical skills, such as electricians, industry technicians and mechanics,” said Steen Nielsen, head of labour market policy at the Confederation of Danish Industry.
A previous reform raising the age of retirement, as well as using foreign labour — mostly from other EU countries — would help plug the skills gap in the short term, he added. Still, as Denmark’s population ages, that is unlikely to be enough.
“A shift is taking place in the labour market,” said Stine Pilegaard Jespersen, the head of labour market and education policy at the Confederation of Danish Enterprise.
“More elderly are leaving the labour market … and the young who are coming in are much less likely to have a vocational education than those who are leaving,” she added.