This analysis shows that despite economic recovery and a significant decline in general unemployment from 2013 to 2019, the number of unemployed people who has recently graduated with a 5-year university degree has increased from approx. 4,000 to approx. 6,000 people. 30 percent of new graduates were unemployed in 2013, and that share has remained constant in 2019.
“Since 2013, the Danish economy has been growing and unemployment has declined from approx. 6% to approx. 4%. However, unemployment for new graduates has not moved. It remains at approx. 30%,” says Mads Lundby Hansen, Chief Economist at CEPOS.
“Looking at the number of unemployed new graduates, it has grown from approx. 4,000 people in 2013 to approx. 6,000 in 2019. It is a paradox that the number of unemployed graduates has grown so much during a period with shortage of labour,” says Mads Lundby Hansen, Chief Economist at CEPOS.
“The increase in the number of unemployed new graduates has occurred at the same time as more people have graduated. Thus, the unemployment rate has remained unchanged at 30 percent. Although the increase in the number includes more new graduates, it is a paradox that more people do not fill the many vacancies that exists in the Danish economy. Coop (a big Danish retail) has thus announced that they have room for all unemployed new graduates at Akademikernes A-kasse of over 6,000 people,” says Mads Lundby Hansen, Chief Economist at CEPOS.
“Unfortunately, the recent debate has focused on whether young people are lazy and whether job centres should be better at helping young people finding work. In this regard, the Minister of Employment has even talked about “rights and obligations”. This debate is like burying one's head in the sand. The newly graduated are able-minded and totally self-sufficient. They do not take a job at the local supermarket because a municipal official or minister calls for it. They do not want to do that as long as they get DKK 13,500 in unemployment benefits each month. But they will do so if the unemployment benefits are lowered from DKK 13,500 to, for example, DKK 8,000. Then a job at the supermarket like Netto becomes relevant. According to the economic model by Dagpengekommissionen (Commission for Unemployment Benefits), it will result in an additional 4,000 jobs (this also includes an effect from new graduates other than graduates with a 5-year university degrees),” says Mads Lundby Hansen, Chief Economist at CEPOS.
“I suggest lowering the unemployment benefit rates for graduates so that there is a greater reward in taking a job. Today, a new graduate can go straight from school to unemployment and get generous unemployment benefits for new graduates of DKK 13,500 per month. This generates a rise in income compared to the time at school with student grants. The rate should therefore be lowered to DKK 8,000 for individuals under the age of 30 with no dependants,” says Mads Lundby Hansen, Chief Economist at CEPOS.
“There are plenty of vacancies available. If these new graduates from the universities cannot find their first, second, third or fourth priority in the job market, then they must go further down the list and accept one of the many available jobs that are to be found. If it means serving at a café, helping out at a hotel or manning the till at the supermarket, then you have to do that while searching for the job you want. All this is brought about by reducing the unemployment benefits of new graduates. I have a hard time seeing why one should pity young people who have received the world’s highest student grant and a good tax-financed university education, because they have to take a job that many other Danes must take,” says Mads Lundby Hansen, Chief Economist at CEPOS.