Denmark’s outdated policies block international talent and slow down economic growth

Copenhagen needs a recruitment and retention plan to ensure access to the necessary international workers for companies facing a looming labour crisis. State-level bureaucracy and a special Danish opt-out rule on home affairs and justice policies from the EU are major obstacles that must be cleared to sustain economic growth. The upcoming European Elections present an ideal opportunity to address these barriers.

Sigrid Friis (right) is lead candidate for the social-liberal party (Radikale) in the European elections 2024. Mia Nyegaard (left) is the cultural Mayor of Copenhagen, also representing Radikale.

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Speaking English in Netto, H&M and trendy cafes is part of Copenhagen life in 2024. Meanwhile at international companies like Novo Nordisk and start-ups, English has been the main corporate language for many years. This influx of internationals is creating a major shift in the Danish labour market.

In 2023, there were 318,000 full-time employees with a foreign background working in Denmark – an increase of 114 percent since 2008. Combined, they created value to the tune of DKK 322 billion – or 11.5 percent of Denmark’s total GDP.

Many of them live in Copenhagen, but on a national scale, the number of internationals in the country is far from enough.

The fact is, the whole of Denmark is facing a labor crisis. By 2033, the economy will need an additional 130,000 workers.

The shortage is already causing problems in Copenhagen: in 2022, 34 percent of the capital’s businesses said that they could not fill a vacant position with qualified labour.

Many of these companies rely on international recruitment. Unfortunately, only 35 percent of the highly qualified international workers are still in Denmark after 5 years, and 35 percent of all international students leave Denmark once they have finished their education.

As Denmark has little chance of developing a sufficient workforce alone, we must attract qualified workers to the country to sustain growth. This requires political action. This requires a plan.

National and European barriers
First, we need to look at the barriers and how they can be removed.

At the state level, Denmark needs to make the entry process for international citizens as smooth as possible and minimize bureaucracy in case processing.

Enhanced cooperation among government authorities on the existing joint digital entry solution can help this.

Additionally, continued state support for initiatives and projects aimed at attracting foreign labour is crucial.

While the introduction of more flexible rules in January regarding the requirement for foreign workers to have a Danish bank account is a positive step, it is far from enough.

Lastly, we should remove the five-year rule for free Danish lessons. It makes little sense, if we want more internationals to learn Danish and feel included.

At the EU level, many great initiatives by the European Commission to address labour shortages are overshadowed by Denmark’s special opt-out rule on home affairs and justice policies.

As a result, not all EU solutions are applicable to Denmark, limiting our ability to fully benefit from these measures.

Different rules in Denmark
In 2021, the EU adopted the Blue Card Directive, designed to facilitate the entry and residence of highly skilled non-EU nationals. This directive aims to create a better labor market for internationals by granting them an EU-wide work permit. It also outlines clear conditions and rights for international workers and their families, supporting long-term stays and cross-border employment opportunities within the EU.

However, Denmark along with Ireland are the only member states, not participating in the Blue Card scheme, limiting our ability to welcome in much-needed talent.

As a result, non-EU employees working in Denmark find themselves at a disadvantage compared to their counterparts in other EU member states. They do not have the same minimum standards related to equal treatment, family reunification, and pathways to long-term residency—areas where the Blue Card Directive guarantees minimum rights and standards.

Another issue is the European Commission’s proposal for an EU talent pool, aiming to establish a recruitment portal for highly skilled employees from non-EU countries.

Once again, Denmark’s inability to participate due to the opt-out rule presents a significant challenge.

Consequently, Danish companies will find themselves in competition with the EU’s employee recruitment portal.

Despite Denmark’s attractiveness, this situation undoubtedly makes it an uphill battle for Danish companies in their recruitment efforts.

These barriers stand in the way since Denmark could easily capitalize on its positive image when it comes to international recruitment and retention.

According to a study from BCG, Denmark is the most attractive Nordic country for internationals, and is ranked 17th globally. This position most likely stems from our reputation for a modern work-life balance, safety, and trust as well as our green leadership regarding climate, sustainability, and biodiversity.

But at the national level there is need for more work on removing bureaucracy for internationals and their family, and for better coordination of initiatives by the various stakeholders working on attracting talent.

A national strategy for recruitment and retention is needed. Besides policy-changes, we need to start a movement for inclusion.

Workplaces, civil society organizations, and informal networks must also take responsibility for making internationals feel welcome and included in Denmark.

At a political level, we need representatives who will advocate not only for the rights of international workers in Denmark, but for equal treatment and family rights for all employees, regardless of their origin.

The upcoming European elections present an ideal opportunity for us to reassess our opt-out stance and consider its implications for attracting international talent and the international people that call Denmark their home.