Working time policy and paid leave arrangements : the Danish experience in the 1990s

With regard to the long-run increase in unemployment, trends in Denmark differ little from those in other European and OECD countries. In the last three to four years, however, Denmark has seen a very clear drop in unemployment from a peak of 12.4 per cent in 1994 to 7.7 per cent in 1997. The factors influencing this development have included stronger economic growth, a labour market reform conducted in 1994 and the increasing popularity of a range of programmes for early retirement or paid-leave arrangements. In this contribution, the author outlines the most important steps in working time developments in Denmark, concentrating above all on a description of the paid-leave arrangements which may be regarded as the most innovative component of Danish labour market policy in the 1990s. Paid-leave arrangements are programmes offering financial incentives to workers to take career breaks for purposes of childcare, further training or sabbaticals, etc. They are intended to encourage both employees and unemployed workers to leave the labour market for good or to take a career break. They are linked with the fixed-term recruitment of unemployed workers to the posts vacated. The article contains empirical findings concerning the assessment, take-up rates and employment effects of such paid-leave arrangements.