Low unemployment rate becoming an hindrance to Denmark’s economic growth

Current rate of 4.8 percent is about as low as it can go without provoking inflation

Sankriti Malik

Normally, a country would be pleased to have a low unemployment rate. In Denmark, however, things are different.

Several companies are struggling to fill their positions as job vacancies have risen to an all-time high of 35,000, according to Danmarks Statistik.

Serious knock-on effect
In a written statement, Steen Nielsen, the deputy head of Dansk Industri, has commented on how these labour shortages are forcing companies to scale back production, which in turn is slowing down Denmark’s economic growth.

“The consequence is that every tenth company is losing orders, and that all of Denmark is therefore losing growth and prosperity,” he said.

Catch 22
As a result of the shortage, there were 32,000 job ads posted during the second quarter of this year – close to the highest level for eight years, according to Danmarks Statistik.

But even with all the gleaming opportunities waiting to be grabbed, it seems like Denmark’s economy cannot afford to employ any more people either.

The current unemployment rate stands at 4.8 percent, which is about as low as it can go without provoking inflation.

Working their way round the issue
The companies that can afford to offer a wage spike have already started doing so, while others have resorted to creating jobs abroad instead.

Denmark would appear to be learning that the Utopian idea of nearly full employment comes with unprecedented challenges.

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