The facts: Kontanthjælp reform

The government presented today a reform to the unemployment benefit kontanthjælp. Here is a brief explanation of the benefit and some of the key changes resulting from the reform

Background information:

Kontanthjælp is the least generous unemployment benefit and is guaranteed to all Danish residents according to the constitution.

 

Individuals cannot have savings of more than 10,000 kroner in order to accept kontanthjælp. Recipients are often asked to sell their assets, including vehicles and property, before being granted kontanthjælp.

 

Married couples have a duty to provide for each other. If one partner earns over a certain threshold, the other cannot claim kontanthjælp.

 

Under-25s normally receive a maximum 6,767 kroner per month before tax.

 

Over-25s normally receive a maximum 10,500 kroner a month before tax.

 

Those that are pregnant, have children or suffer from mental illness can receive higher rates, while under-25s still living at home receive a lower rate.

 

Under-25s without an education can be forced to take an education in exchange for receiving kontanthjælp.

 

Kontanthjælp recipients are divided into three tiers. Individuals on the first tier are considered ready for the labour market and are forced to search for work and take work that comes available. The second two tiers are considered unprepared for the labour market and make up the vast majority of kontanthjælp recipients. Much less is demanded of these two groups.

 

135,000 people receive kontanthjælp. 50,000 are aged under 30 and 90 percent of these have no post-secondary education.

 

The reform will result in the following changes:

 

Under-30s without an education who are ready for the labour market will stop receiving kontanthjælp. Instead they will be forced to take an education and receive a lesser benefit equivalent to the student grant SU (5,753 kroner a month before tax).

 

Under-30s with an education will receive a lower rate of kontanthjælp equivalent to the student grant SU.

 

Under-30s not ready to take an education will continue to receive kontanthjælp as long as they continue to take steps bringing them closer to an education.

 

The expectations and duties for all kontanthjælp recipients will be increased and the three-tiered system will be abolished. Those who can work will be made to take community service work until they find work.

 

Unmarried couples living together will be treated like married couples and lose the right to kontanthjælp if one of the partners earns over 30,000 kroner a month before tax.

 

Increased focus on providing individually catered solutions for all kontanthjælp recipients with special focus on those with problems that keep them far from the labour market, as well as single parents.

 

With the reform, the government aims to save 368 million kroner in 2014 and one billion kroner by 2017. Some 2,500 people are expected to move into the labour market in 2014 due to the reform and 1,000 more are expected to take an education.

 

This article was updated on 26/2/2013 to correct an erroneous figure about how much a couple's partner must earn before they lose the right to kontanthjælp.

 

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