Prime Minister Helle Thorning-Schmidt (Socialdemokraterne) has caved in to pressure to help the thousands of Danes who stand to lose their unemployment benefits, dagpenge.

The dagpenge reform that was passed under the former government halved the length of time the benefit can be claimed to two years, and now tens of thousands are expected to lose the benefit this year as a result. The PM is offering those who lose their dagpenge the option of accepting a benefit equivalent to the less generous unemployment benefit, kontanthjælp.

"Our latest estimate is that as many as 30,000 unemployed risk losing their dagpenge this year," Thorning-Schmidt said at a press conference announcing the new dagpenge solution today. "That creates uncertainty for thousands of families, which is unacceptable to the government."

Unlike those already on kontanthjælp, people transferring from dagpenge won’t be obliged to take an education, nor will they have to live off their spouse’s income or their own personal savings before accepting the benefit.

Significantly, however, the proposal does not change the rules for either how much work is needed to qualify for dagpenge, or how long it can be claimed once unemployed.

As part of the government's plan, entitled 'A new and better phase-in of dagpenge reform', a special education support will be extended through the end of the year for those who have used up their dagpenge. As of 1 January 2014, a temporary 'job market support' will be introduced that will give scaled-back financial support to those who have used up their dagpenge: those without children will receive 60 percent of the maximum dagpenge level, while those with children will receive 80 percent. 

Those who will run out of their dagpenge benefits in the first half of 2014 will be entitled to the 'job market support' for up to 15 months, but the combined period in which an individual can receive dagpenge, the education support or the job market support can not exceed four years. 

Before the reform took effect in January, the government introduced an emergency jobs package that was intended to find jobs for the long-term unemployed who risk losing their benefits. The initiative has been roundly condemned as a failure and today’s announcement by Thorning-Schmidt is seen as an olive branch following a week of pressure from the political left-wing to find a new solution.

Before the announcement, political spokesperson for far-left party Enhedslisten (EL), Johanne Schmidt-Nielsen, welcomed the government’s attempt to help the unemployed.

“Everyone knows that the dagpenge situation is our top priority and the government knows that we want a solution before July 1,” Schmidt-Nielsen told Jyllands-Posten. 

But Enhedslisten, traditionally strong supporters of immigrants' rights, may be less pleased to hear that the government plans to finance the reform in part by cutting money from Danish language courses for adult foreigners. The new dagpenge solution will also be financed by asking members of unemployment insurers (a-kasser) to pay an additional 80 kroner a month before tax in 2014. That contribution will fall to 10 kroner a month in 2015.