Political agreement: Benefits slashed for new unemployed graduates

New university graduates without a job will get much less.

This is after a majority consisting of the governing Social Democrats, supported by the Social Liberal Party, the Danish People’s Party and the Christian Democrats, signed a political agreement that cuts more than DKK 4,000 per month from the unemployment benefit rate for new graduates.

The rate will be lowered from DKK 13,836 to DKK 9,514 for new graduates under 30 who do not have children – after three months of  unemployment.

EU citizens are entitled to receive unemployment benefits if they are a member of a Danish unemployment insurance fund [in Danish = an ‘A-kasse’].

The agreement will have further consequences for new graduates: The period in which new graduates are eligible for unemployment benefit will be shortened from two to one year.

The latest initiative is part of a reform package that will shuffle large sums around the Danish unemployment benefit system. While new graduates will be hit hard financially, unemployed people who have spent several years on the labour market can look forward to higher benefits during the first three months.

Liberals and Conservatives may block the deal

However, it is an unusually fragile agreement that a narrow majority signed up to in the Ministry of Finance.

If the Liberal Party and the Conservative Party do not support the reduction in the graduates’ benefits, no further action can be taken in this election term at all. This is because the two parties are signatories to a wider deal on unemployment benefits.

There is no indication that the agreement will be passed without a battle. On Friday evening, the centre right parties criticised the government for raising benefits for the unemployed that are not new graduates.

This means that dramatic negotiations could be underway in the Danish parliament before a cut to the new graduate benefits takes place.

Boost to the humanities and social sciences

The initiative has been a long time coming. The Danish government announced on 7 September last year it would cut the benefits to new graduates.

At the release, Danish Prime Minister Mette Frederiksen presented the proposal with a message that going to work should not necessarily be fun. The idea is that new graduates will be less choosy in their job hunt when they are tight for money.

The analyses suggest that many people will find it hard to make ends meet. In an article in the magazine Akademikerbladet, a consumer economist from the bank Nordea Ida Moesby estimated that unemployed new graduates, as a result of the agreement, will be DKK 2,400 a month poorer than when they were on the Danish SU student grant.

The new agreement does have some positive elements from a student perspective: The amount you can earn in parallel to the Danish SU grant is increased by DKK 4,000 per month, and the parties have agreed to invest DKK 1.3 billion in the education system.

At the universities, an increase in the government taximeter subsidy to humanities and social science subjects that was introduced in 2010 will be extended.

This had Rector of the University of Copenhagen Henrik C. Wegener posting on Twitter Friday evening:

»Thanks for your willingness to maintain the finances of humanities and social science programmes. This is crucial to maintaining their quality,« he wrote.