Unemployment benefits central to budget negotiations

Enhedslisten threatening to withdraw its support for the government’s 2013 budget unless something is done to help the thousands that stand to lose their unemployment benefits

The government is split about what to do with the estimated 30,000 Danes that will lose their unemployment benefits in 2013 when the former government’s unemployment reform kicks in.

The unemployment benefit allowance (dagpenge) is paid out by unemployment funds, A-kasser, that workers pay monthly dues to. The former government’s reform halved the length of time that workers can claim the benefit from four years to two and doubled the length of time they have to pay in to the system before being eligible from six months to one year.

The trade association of A-kasser, AK Samvirke, now estimates that more than 2,000 Danes will lose their dagpenge every month in 2013.

Far-left government support party Enhedslisten is now demanding that the government find the money to postpone the reform and is threatening not to support the government’s 2013 budget unless they do.

“If PM Thorning-Schmidt wants to pass a budget with us, she needs to help people find work and improve the conditions of the unemployed,” Enhedslisten's financial spokesperson Frank Aaen told Berlingske newspaper.

The unemployment reform was supposed to kick-in on July 1 this year but Enhedslisten managed to postpone the introduction by six months through last Autumn’s negotiations for the 2012 budget.

The Employment Ministry has said that postponing the reform an additional six months will cost 800 million kroner, money that Aaen thinks the government can easily find in next year’s budget – especially after they cut a deal with the opposition to agree to tax cuts in exchange for their support for tax reform.

The government is split on whether to support Enhedslisten's proposal, however, with coalition partners Socialistiske Folkeparti (SF) and Radikale (R) directly disagreeing with each other.

“SF thinks that in the autumn we need to try and find some practical solutions to this problem,” SF's political spokesperson Jesper Petersen told TV2 News. “We have to look at whether we can change the rules to help the many Danes that stand to lose their dagpenge.”

But the economy minister, Margrethe Vestager (R), has already expressed her opposition.

“Extending the point at which dagpenge ends only extends the point at which dagpenge ends,” Vestager told Berlingske. “It doesn't result in new jobs that draw people back to the workforce.”

PM Thorning-Schmidt (Socialdemokraterne) is caught between her two coalition partners and told Berlingske over the weekend that the trouble was finding the money.

“We have already postponed the unemployment reform by six months which was a good result,” she said, but added that she had a hard time making the sums add up. “It’s not about will but about finances.”

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