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Migration and integration of immigrants.

Immigration could offer one way for Denmark to expand its labour supply, thereby lowering the dependency ratio, at least for some time, and easing the task of ensuring fiscal sustainability (see Chapter 1). However, these beneficial effects are obtained only if immigrants are in work. Yet a significant proportion of immigrants have found it quite difficult to get work in Denmark, while the country has been relatively unattractive to high-skilled foreigners. Furthermore, the structure of the economy not only makes it difficult for low-skilled foreigners to gain a foothold in the labour market, but also provides generous social benefits that have caught many of the least skilled immigrants in a benefit trap. A heightened appreciation of these problems, including a tighter focus on the economic situation of the immigrants already present, have underpinned the main changes in policies on immigration in recent years.

This chapter first sets out the trends in immigration since the early 1960s and the key demographic characteristics of the foreign population. The next section reviews the entry policies that currently apply for those immigrants from outside the European Economic Area. The recent changes affecting each main type of entry -- asylum seekers, family reunification and highly skilled immigrants -- are set in an international context and linked back to the authorities' wish to better integrate those immigrants that are already in Denmark. The challenges of integration are discussed in the following section. The government's ultimate goal is that foreigners participate in economic activity on an equal footing with native Danes. Such an ambitious goal will obviously not be reached quickly or easily, and the authorities consider the critical intermediate objective to be getting more immigrants into jobs as a prerequisite to their future economic success. The measures already put in place go in the right direction, and the concluding section makes some suggestions as to how policies might be improved further.

Immigration patterns

Denmark has not traditionally been a popular destination for immigrants: immigration is a relatively recent phenomenon and has involved several distinct waves:

-- Before 1960, the few foreign-born residents came almost exclusively from other Nordic countries, Germany and the United Kingdom.

-- From 1960 to around 1974, Denmark permitted companies to recruit a significant number of workers from abroad, mostly from Turkey, Yugoslavia and Pakistan, in response to labour-market shortages.

-- Since 1985, de facto refugees and asylum seekers have become significant. They have come especially from Sri Lanka, Iran, Iraq and Lebanon, and also in the 1990s from the Balkan states, Afghanistan and Somalia.

-- As the earlier groups have become more established, entry for family reunification purposes has expanded: in the past few years these entrants have exceeded the flow of asylum seekers (Figure 18). Around half of the family reunification permits issued in 2001 involved spouses, of which almost one-quarter provided entry for people under the age of 24.

As of 1 January 2002, there were almost 332 000 foreign born ("first generation") immigrants and 99 000 descendants ("second generation"] living in Denmark, amounting to close to 8 per cent of the total population. Three-quarters of them came from less developed countries (LDCs), with more than half of these having arrived in the last 10 years. Most immigrants are aged between 25 and 49; while most descendants are younger than that (Figure 19). The current age structure, along with significant differences in fertility rates, means that the proportion of immigrants and descendants is projected to almost double over the next 20 years, according to estimates prepared by the DREAM group (see Chapter I) for the Task Force on Integration established by the Ministry of the Interior and Health and now placed under the Ministry of Refugee, Immigration and Integration Affairs. Overall, the growing proportion of immigrants and descendants over time suggests that any associated difficulties are likely to become more imp ortant if not addressed. Denmark's immigration trends can also be set in an international perspective. As a small country, it admits significantly fewer foreigners in absolute terms than many larger countries, but foreigners as a percentage of the population is around the middle of the OECD range while the inflow of migrants per 1 000 inhabitants increased significantly between 1985 and 2000 (Figure 20).

In contrast to a number of other European countries (see, for example, OECD, 2003d), Denmark does not appear to have a significant number of illegal immigrants and illegal immigration is generally assessed to be almost entirely limited to the construction and entertainment sectors. This is probably for two main reasons:

- It is generally difficult for illegal immigrants to find work, as the social partners monitor, and if necessary, sanction employers using illegal workers or under-paying legal immigrant workers (Hjarno, 1996). Also, the widespread use of the unique civil registration number in public and private sector administrative systems makes it quite difficult for people to function in Denmark without one.

- The traditional ease with which someone arriving in the country could claim financial assistance means that there is no economic advantage in remaining clandestine.

Labour force participation is a key indicator of progress towards becoming integrated into society. Denmark is well known for its high overall participation rates, especially amongst women, but immigrants are significantly less likely to participate in the labour market (see Chapter 1). This gap stands in contrast to a significant number of other OECD countries, where foreigners are either more likely to work than nationals, or where their participation rates are only slightly lower (Table 14). A closer look at the data for Denmark illustrates how much this depends on country of origin: well under half of some nationalities are active on the labour market (Table 15). Participation rates are higher for groups that have already spent a longer period in Denmark. Indeed, those who have spent more than 10 years in Denmark have a participation rate around double that of those who have been in the country two years or less. However, the significant shifts in the mix of migrants over the last decade caution against e xpecting that time alone will produce the same improvements for more recent arrivals. (36) Another key element in determining the degree of labour force participation is age at arrival. This relationship probably reflects increased exposure to the Danish education system and stronger language skills, as well as a greater flexibility and willingness to adjust to the Danish working environment among young people (Figure 21).

There are also quite different patterns of reliance on public transfers for those who are of working age but outside the labour force (Table 16). Almost one in five males is receiving income support through activation measures, cash benefits etc., and more than one in four women are receiving this type of support or maternity pay, while a dramatically smaller fraction of native Danes and immigrants from more developed countries is drawing such benefits. This has a double fiscal effect: not only are these people not adding to tax revenues, but they are also drawing public expenditures.

Entry policies

The strong increase in immigration over the past decade, together with relatively weak integration of the earlier cohorts of immigrants from some LDCs, has led to a reconsideration of entry policies. The shift in policies was motivated in large part by three factors:

-- a belief that Denmark had become a magnet for low-skilled asylum seekers because of both easier entry and more generous public income support than provided by most other countries (see Box 2);

-- a concern that entry procedures made it particularly difficult for firms to recruit highly skilled immigrants;

-- a realisation that economic and social integration of the foreigners needed improvement and that until the backlog of poorly integrated migrants had been effectively dealt with, adding more newcomers with a low probability of success would make the task more difficult.

In response, the rules governing entry have been changed incrementally since around 1998, with a series of legislative amendments to tighten both entry and integration requirements. (37) In contrast to a number of other countries, Denmark does not operate quotas for any category of immigrants, nor does it make more than a technical distinction between residency and work permits: (38) for practical purposes most legal residents can work.

Asylum seekers

Faced with the sharp increase in asylum seekers over the 1990s, Denmark enacted a new law on entry from 1 July 2002 (Annex VIII). Reflecting this, there was a sharp drop of around 50 per cent in the number of applications for asylum in Denmark in 2002, whereas overall applications to the European Union remained stable, and countries such as Sweden and the United Kingdom registered strong increases. Denmark also stood out as having the highest rate of recognition (i.e. granting refugee status to asylum seekers) of all industrialised countries over the decade to 2001 (Figure 22), dramatically higher than the European Union average. The new rules adopted in the Aliens Act 2002 bring Denmark more closely into line with other countries' practices, even as a number of other OECD countries are also tightening their rules. In a further development, the European Union has now reached agreement on a common set of rules to be applied concerning asylum, both to provide clear protection to those who genuinely need it and to prevent "asylum shopping" by those seeking to take advantage of variations in treatment between different EU destination countries.

Another element that has changed in Danish policy towards refugees is increased emphasis on the option of sending refugees home if the situation in their country of origin becomes safe once again. For refugees from Afghanistan, a common concrete repatriation plan had been adopted by the European Union during the Danish presidency. The Danish Board of Immigration had concluded in mid-2002 that for many Iraqi asylum seekers it was no longer dangerous for them to return to Iraq, (39) although this judgement has since been suspended. These two countries alone accounted for around 40 per cent of asylum seekers between 1998 and 2001. At the same time, new rules on granting permanent residency (which once granted, protects the immigrant from being repatriated) operate to provide a stronger incentive for refugees to make every effort to integrate. It is thus a requirement for obtaining permanent residence that the immigrant completes an introduction programme, passes a Danish language test and has no overdue debt to public authorities. Furthermore, in March 2003 the government put forward a bill which inter alia implies that permanent residence can be granted earlier than after seven years of legal residence in Denmark, if the applicant is well integrated into Danish society and can support himself. On the other hand, the Repatriation Act 1999 allows for the possibility that the cultural and economic gap to be bridged for some immigrants and refugees is so large that their best option may lie in returning to their country of origin, and it therefore provides financial assistance for voluntary resettlement. (40)

Family reunification

Family reunification has been a somewhat contentious aspect of Danish immigration amid concerns that some ethnic were disproportionately using these rules to expand overall immigration from their countries. It may slow the integration process of the sponsor, most particularly for young people who bring in a spouse. Another concern has been whether these rules may have facilitated forced marriages in some cases, although it is difficult to assess how significant this problem is, as arranged marriages are a relatively common feature in some ethnic groups in any case.

Virtually all countries operate family reunification policies, and the strictness of Denmark's rules appears to fall within the range of policies that are applied elsewhere (OECD, 200 lb). (42) The requirements for sponsorship that apply in different countries show many common elements, reflecting that they address similar concerns. Sponsorship is generally required to ensure that those coming into the country do not become reliant on state income support. Adequate housing must also be provided. For Denmark, the sponsor must -- unless exceptional reasons make it inappropriate -- take financial responsibility for the family member until he or she obtains permanent residence -- otherwise the residence permit may be revoked. The main difference in the latest changes, brought into force in mid-2002, is that the same rules now apply to Danish citizens who seek to sponsor a foreign citizen under family reunification provisions, as well as immigrants. Previously Danish citizens were exempt, leading to claims of dis criminatory treatment against immigrants. Other changes such as tightening the "ties to Denmark" provision, further limiting unification by marriage for those under the age of 24 years, and increasing the self-support requirements primarily serve to reinforce the policy changes made in May 2000. In any case, the total number of permits granted for reunification for spouses and partners has remained relatively stable in recent years, while the number of applications from residing immigrants, apart from refugees, has actually fallen since the peak in the mid-1990s (Table 17). In any case, only one-quarter of reunification permits granted for spouses in 2001 involved a partner less than 24 years old and it is unclear to what extent the tightening of these provisions will lead to postponements of such marriages or to a higher tendency to marry Danish residents instead. However, new data show that applications for family reunification have fallen since the latest changes brought into place in mid-2002.

Highly skilled immigrants

Recent policy changes have made it somewhat easier for highly skilled immigrants to come and work in Denmark. European Union and Nordic citizens are entitled to move to Denmark anyway, and the latest modifications to the rules are intended to grant easier access to those of other nationalities with needed skills. The job-card scheme means that foreigners from other countries who have a concrete job offer within one of the sought-after occupational categories will be able to get work and residence permits within 30 days, as long as the salary and terms of employment conform to standard Danish employment conditions.

Even with these changes, Denmark's approach is still quite a long way from the approach taken by countries such as Australia, Canada and New Zealand, all of which operate a "points" system. Under this approach, these countries encourage anyone who wants to immigrate to apply and then select the "best" according to an evolving set of criteria. The emphasis is on selecting those most likely to be able to establish themselves economically, rather than trying only to match particular skills or requiring concrete job offers. Indeed, evidence from Canada indicates that job offers are an unreliable indicator of integration potential, and, thus, this factor is no longer given any weight in selection.

In competing to attract highly qualified migrants, Denmark faces two disadvantages: language and relatively low after-tax incomes. Almost all highly skilled migrants already have some English language skills, giving English-speaking countries a significant advantage as hosts that Denmark can do relatively little about. Furthermore, despite easing entry requirements, it may remain a less attractive destination than those countries where wages reflect more closely the international value of such human capital and taxes are less onerous (Figure 23). The special tax relief scheme for foreign researchers and key employees recruited abroad (43) has the effect of raising their after-tax incomes.

Another possible consequence of relatively low after-tax incomes compared with other countries is that this might encourage well-qualified Danes to move abroad. This would be facilitated by the scope for free movement of labour within the European Economic Area, while most well qualified Danes also have strong English language skills. Although there are a significant number of Danes living abroad, and some commentators have pointed to a risk of a "brain drain", it is rather difficult to conclude that a significant problem currently exists. Thus far, it would appear that the majority of exits are temporary: after six years, three-quarters of expatriate Danes have returned home (S.B. Nielsen et al., 2002). It could be argued that such international experience is a plus for Denmark. Nevertheless, some concerns about the risk of a future train drain" persist.

The broader issue is the extent to which the population move either temporarily or permanently in order to minimise their lifetime tax payments while maximising their lifetime access to, or use of, the generous public services and income support offered in Denmark (i.e. "social shopping"). This is an inevitable risk in a system where graduates have received extensive public funding to acquire their education and where access to many parts of the social welfare system is largely disconnected from contributions" (see Chapter II).

Improving the integration of immigrants from less-developed countries

Improving the economic integration of immigrants from LDCs is a challenging task and has become a priority for the Danish government. The Danish Think Tank on Integration was set up in November 2000 by the then Minister of the Interior to clarify the integration of foreigners in Danish society, analyse future trends in the number of foreigners and address the social consequences. It established seven criteria for successful integration (Think Tank on Integration in Denmark, 2001): Danish skills and education; employment; economic independence; lack of discrimination; contact between foreigners and Danes; participation in political life; and fundamental values and norms. The Think Tank considered that education, employment and economic independence are crucial, and participation in the labour market is the most important precondition to success. These seven criteria were accepted by the government as appropriate benchmarks. The government's current strategy is particularly focused on the economic integration o f foreigners, and this chapter also addresses this aspect of integration. (45)

The importance of a lob

Even in the best of circumstances, full economic integration cannot be achieved overnight and may take even longer than a generation, but the objective for policy is to speed up the process as much as possible; indisputably, the critical step along the path is getting a job. (46) Immigrants' participation in the labour force is significantly lower than for native Danes, and unemployment amongst foreigners is also considerably higher (Figure 24). Getting migrants into work depends on both the availability of jobs that correspond to their skills, and the willingness of migrants to seek work. At the most basic level, the former requires either providing more low-skilled jobs, or raising the skills of immigrants to the point where they can all compete with native Danes for the jobs that are typically available.

In some countries, low-skilled work is relatively abundant, albeit at very low wages, and immigrant workers tend to be concentrated in certain sectors that employ a relatively large share of unskilled workers, most often agriculture and services such as hotels and restaurants. (47) In Denmark, these low-skilled jobs are comparatively scarce (Figure 25). The economic structure has evolved into one where wages at the bottom end of the wage scale are relatively close to the average; the lower quartile is paid up to 83 per cent of the median hourly wage, while the ratio of the bottom decile to the median wage is one of the highest in the European Union. (48) This wage compression at the low end would be a problem for low-skilled Danes as well, but with extensive public funding for higher education and skills acquisition, their wages and skills are better matched, resulting in high employment. But low-skilled migrants have a tougher time in this environment to find jobs that they are capable of doing, since genero us income transfers and high effective minimum wages in collective agreements keep wages from falling to levels where they could price themselves into employment.

Furthermore, with a relatively high tax wedge on labour income, households have an economic incentive to reduce their working hours and carry out more domestic chores and home maintenance themselves, even if their comparative advantage and personal preferences might lead them to hire someone else if the tax wedge were smaller. Once more, this trade-off seems to be relatively well accepted by native Danes, who undertake a significant proportion of major house repairs themselves (Brodersen, 1998). But it reduces the opportunities for low-skilled immigrants to find suitable work providing household services, such as cleaning and gardening, where immigrants are typically over-represented in most countries. Alternatively they may be undertaking work in the black economy, but there is little precise knowledge about the extent of this. (49)

Wage subsidies -- bridging the gap between wages and productivity

One policy response to the gap between wages and immigrant productivity would be to develop wage subsidies of some sort, targeted on not yet skilled migrants to enable them to gain employment in the ordinary labour market. A new scheme has been announced that provides gradually diminishing wage subsidies for newly-hired immigrants, while providing in-the-workplace language training as well as job-specific skills (see Box 3). In principle, this approach has a great deal to recommend it, especially as it integrates training in the workplace and is designed to take immigrants to the point where they can continue working, without requiring ongoing subsidies. Since getting the job may be the most difficult step of all, this could be all the help those immigrants need to achieve economic independence. It is too early to judge the likely success of this strategy, which may depend on careful selection of those immigrants best equipped to make good use of the experience. It could also prove costly unless a clear and r apid phase-out path for each participant is adhered to. However, the immigrants with the weakest skills to start with may not even be capable of entering such a programme. They will still be able to take courses in Danish and build up their skills to the point where it is possible to introduce them to a workplace.


One way of bringing hourly wages for immigrants down to levels that make employment viable is self-employment, where effective minimum wages no longer act as a constraint. Self-employment is much higher among immigrant groups, although earnings are much lower than for those same immigrant groups in dependent employment (Table 18). In contrast, Danish entrepreneurs on average earn almost one-quarter more than Danish wage-earners, but they tend to be better educated and are much less likely to be concentrated in low value-added business sectors (Bager and Rezaei, 2001). (50) Self-employed immigrants work very long hours, with only around 10 per cent working 39 hours or less per week, while the majority work 70 hours or more. Low returns to business ownership would seem to imply that those who could get a job working for someone else would prefer to do so. This suggests a very low hourly productivity and implicit hourly wage. Thus, low-skilled immigrants tend to opt for self-employment for lack of alternatives ( Clark and Drinkwater, 1999). (51) This is in quite sharp contrast to the experience of immigrant entrepreneurs in the United States: there, the self-employment rate for immigrants was around 12 per cent in 1990, only slightly more than that of natives, and their earnings were sharply higher than those for immigrants in dependent employment and tended over time to converge with, and then surpass, the earnings of both dependent and self-employed natives (Lofstrom, 1999). Thus, self-employment has played a quite different role in the integration of immigrants in the United States than in Denmark.

Indeed, it is hard for most immigrants in Denmark to use entrepreneurial activities to break out of traditional sectors, and it rarely happens. This may be in large part because, despite long hours and hard work, the experience does little to broaden their skills or offset their lack of qualifications. The skills gap with Danish entrepreneurs is huge -- two-thirds of all native entrepreneurs have technical or advanced education, while less than one-third of Iranian entrepreneurs, the most qualified immigrant group, have equivalent qualifications. A lack of language skills is also seen as a handicap by many ethnic entrepreneurs, although they often rated even lower their skills on such basic business tasks as marketing and advertising, negotiating with authorities and staff administration (Bager and Rezaei, 2001). But a growing number of family businesses are now being handed on to better-educated descendants: already in 1996 around one in five Turkish-owned and Pakistani-owned businesses were owned by those a ged between 18 and 25 years old. These younger owners might, with access to financial resources from their parents, and/or better skills at tapping external sources of finance, find it easier to either raise productivity and earnings or use their business as a springboard to a wider range of opportunities.

The Government has announced three initiatives concerning immigrants in its recent general plan to improve entrepreneurial activities:

-- Developing local networks for ethnic entrepreneurs and strengthening guidance services for them.

-- Making entrepreneurial activities a theme in the courses for asylum seekers and the introduction programmes for aliens.

-- Conducting a survey concerning the barriers faced by ethnic entrepreneurs in obtaining financial support.

The aim is to improve and broaden entrepreneurial activities among immigrants.

Addressing the skills gap

Another approach to addressing the skills gap for immigrants from LDCs is to invest in upgrading their skills, although careful attention needs to be paid to the cost-efficiency of such efforts. The distribution of education among immigrants from LDCs is quite noticeably different from that of native Danes (Figure 26), with large variations among different ethnic groups. Overall, half of these immigrants had no more than basic education compared with a third of native Danes, while significantly fewer had vocational education. For men, tertiary education rates were around the same as for Danes, although rates for women were significantly lower. Iranian and Polish immigrants are strikingly better educated on average. However, only around half of those with higher education when they arrived actually have jobs. This may be due to language difficulties, but also partly be due to lower, or even impossible to assess, quality of some foreign higher education, notably when obtained in some LDCs, and employers may fi nd it difficult to evaluate these foreign qualifications. To assist them and to make it easier for skilled immigrants to make proper use of their qualifications in the Danish job market, the government has allowed the Danish Centre for Assessment of Foreign Qualifications to make binding assessment of foreign qualifications, permitting entry to regulated professions. The government also wants to make it easier for immigrants to have their actual level of skills verified, either through business colleges or on-the-job testing, as is already done by a group of companies located in Funen who issue their immigrant workers with written certificates of their demonstrated skills.

Having some Danish education is associated with higher labour market participation rates at all levels of educational achievement (Table 19). Few immigrants from LDCs have Danish post-compulsory education, and even after 15 years of residence in Denmark, around two-thirds still do not have any Danish education. Younger immigrants and descendants are more likely to participate in post-compulsory education than their parents, but it is still a lower proportion than for young native Danes (Table 20). Both men and women aged between 18 and 35 are significantly less likely to have completed a qualifying education, with predictable consequences: a longer wait for their first job, shorter tenure in their first job and lower wages (H.S. Nielsen et al., 2002). (52) These results are not unique to Denmark, and similar outcomes can be observed for descendants from less-developed regions in all destination countries, including the United States. (53) Nevertheless, there is actually greater improvement in educational att ainment among the children of immigrants compared with their parents than can be seen for native Danes, with second-generation immigrants finding it easier, on average, to overcome the disadvantages of low income and parental education.

Several key factors have been identified as making a difference to education attainment for immigrants and descendants from LDCs:

-- Level of parental education and positive attitudes. Many immigrants who arrived relatively young and went through the Danish education system had mothers with very low levels of education (Jakobsen and Smith, 2002). This particularly affects Turkish-born offspring: on average Turkish mothers who arrived during the "guest worker" period had only 1.4 years of formal education. This probably made it difficult for those parents to help their children with their education, especially in a school setting they were unfamiliar with. For descendants, the education level of their parents was not a factor affecting educational attainment, but still made a difference to their success on the labour market (H.S. Nielsen et al., 2002). A positive parental attitude towards their children's education also makes a significant difference, especially for girls. (54)

-- Marrying young. Danes marry for the first time on average at the age of 31 years, Turkish immigrants at around 19 years, and Pakistanis and ex-Yugoslavians typically at around 22 years. Women tend to marry younger than men for all three minority groups and are less likely to complete their education as a result. (55) Early marriage is a particular handicap, given that in Denmark formal education is generally completed at a later age than in many other countries (see Chapter II). For second-generation immigrants, marriage to an ethnic Dane was associated with an increased likelihood that a female descendant will complete a qualifying education. But very few young women from LDCs actually marry outside their ethnic group (Pedersen, 2000). (56)

-- Danish language proficiency. This is obviously critical to obtaining a higher level of education and plays the most significant role in determining the individual dropout risk. This factor is clearly linked to both age at arrival and may also be affected by bilingual education practices and ethnic concentration (see below).

A key feature of the Danish education system is the extensive opportunities for adult education. This provides a second chance for Danes and foreigners to obtain basic and advanced skills, and attendance is free in most cases. Indeed, Danes show high rates of participation in adult education. In principle, this existing structure should make it not only possible but relatively easy for motivated immigrants to boost their qualifications and thereby improve their prospects. It is unclear why so few immigrants appear to be using this channel and might be worth examining more closely. In any case, the recent strengthening of the framework of activation plans could help to raise awareness among immigrants of the value of undertaking additional education (see Chapter II).

Language skills

Language skills are clearly important to labour market success in Denmark, as in many countries. (57) Lack of Danish language proficiency remains a major handicap for many immigrants (Table 21). (58) Even among descendants, some 12 per cent are not fluent. Around DKK 1 billion of public funds per year are spent on providing free Danish language courses for adults, but the quality of some of these programmes may be variable, and absenteeism is around 25 per cent. It is not possible to identify to what extent these two factors have contributed to the weak language performance of immigrants. Nor is it clear what strategies might incite long established immigrants to make more effort to become fluent in Danish, if they have managed to get by in daily life without it thus far.

A greater awareness of the importance of language skills for successful labour market integration led the authorities to emphasise Danish language as part of the new Integration Act in 1999. This Act applies to all immigrants arriving from outside the European Union or Nordic countries, whether as refugees or under family reunification schemes. Under this legislation, responsibility for integration was handed to the municipalities, on the grounds that they would be better placed to implement comprehensive and co-ordinated measures to facilitate integration. They are obliged to offer all arrivals (except from Nordic or EU countries) a three-year introduction programme. This should be designed as an individual contract for each immigrant, after assessing his or her individual abilities and background, and be aimed towards eventual participation in the labour market or further relevant education. The programme involves Danish language lessons and classes in understanding Danish society and also involves activati on for those eligible for the introductory benefit. For such immigrants, the introduction programme must be at least 30 hours per week.

The first introduction courses have only recently been completed, and it is perhaps too early to judge their success. However, despite the general good sense of this strategy, two aspects need to be carefully monitored. The first risk is that the length and intensity of the course (and associated income support) might actually keep some immigrants out of the job market longer than they would otherwise be, or discourage them from looking for work and achieving self-reliance. The present government has stressed that it does not believe that foreigners have to learn Danish before getting a job, and it is looking to find ways to organise language training so that it fits better the needs of individuals and companies. The new wage-subsidy scheme for immigrants, which incorporates workplace language courses, is one approach along these lines. The second potential shortcoming is that local case officers may be reluctant to exercise the sanction on non-attendance provided, namely reducing the introduction benefit, or such penalties might prove ineffective in changing behaviour.

Bilingual education and performance

Language acquisition is also critical for the successful integration of immigrant children. But those children currently within the school system are clearly performing less well than Danes, and the gap for reading literacy among 15 year-olds is more marked in Denmark than in many other OECD countries. It is more surprising to find that the gaps on reading are worse for descendants than for immigrant 15 year-olds tested at the same time (Figure 27). Overall, this suggests that the education system is unsuccessful in overcoming the disadvantages ethnic minorities face in acquiring basic education and skills. Identifying the educational shortcomings and addressing them is beyond the scope of this Survey, but one factor which has been called into question is bilingual education. (59) Until 2002, municipal authorities were obliged to provide bilingual instruction to all bilingual children, including descendants, and the majority of ethnic-minority pupils were enrolled in such education programmes. This requiremen t has now been abolished, but a number of municipalities continue to offer instruction in both languages spoken by those children.

Whether bilingual education per se helps or hinders educational attainment and integration more generally is a contentious issue in a number of countries (see, for example, Duignan, 1998). (60) In one study of 12 OECD countries, most had established the goal of having immigrant children mainstreamed into regular classes within three months to three years (Glenn and de Jong, 1996). But although the countries followed quite a range of different strategies, and sometimes changed tack, none had achieved clear success in overcoming the weaker overall scholastic performance of immigrants relative to natives. The same study also pointed out that policies adopted were generally not grounded on research and evidence of a link to educational attainment. (61) Given the lack of solid evidence demonstrating a strong role for mother-tongue education in improving educational attainment or assisting economic integration, and the weak Danish skills of immigrants, it seems reasonable to ask whether bilingual education might be retarding the integration process.

In this context, the government's recent decision to extend the opportunities for immigrant children to receive special Danish language exposure and stimulus programmes to 3 year-olds as well as 4 and 5 year-olds should help to get those children off to a better start in Danish, as well as redress the slightly lower participation of young immigrant children in childcare activities. Evidence from the US Head Start pre-school programme, designed to boost school readiness among disadvantaged children, suggests this would be a useful strategy (Currie and Thomas, 1999).


Ethnic concentration plays a complex role in integration. In principle, network effects may make it easier for new arrivals to become more quickly established in housing, as well as find jobs, through the established contacts of other immigrants. However, international evidence indicates that immigrants living in an enclave have weaker host-language proficiency, with both less incentive and fewer opportunities to improve language skills (Chiswick and Miller, 2002; Bauer et al., 2002). They are also less likely to get involved in mainstream daily life and activities. In Denmark some 8 per cent of immigrants and descendants surveyed indicated they had no contacts at all with Danes, while another 19 per cent were on no more than nodding terms with any Dane (Schultz-Nielsen, 2001). The lack of contact with Danes among the unemployed, course participants and others outside employment is significantly higher. All else equal, including language proficiency, associating with native Danes and reading Danish newspapers regularly appears to boost male immigrants' chances of finding employment. Contact with Danes was also important for women's employment prospects. This raises questions about the extent to which ethnic enclaves may be hindering the integration process for adults and also providing a less favourable language environment for children, especially for those in bilingual schools.

Most immigrants from LDCs are concentrated in a few municipalities, primarily around Copenhagen, Arhus, Odense and Aalborg (Table 22). Although Copenhagen has the greatest number, four smaller authorities in the greater Copenhagen area actually have higher concentrations. The probability of finding work appears to be lower for immigrants who live in these enclaves (Ministry of Refugee, Immigration and Integration Affairs, 2002), which is consistent with the above findings on the importance of contact with Danes. There has also been a clear trend towards segregation within all the larger towns and cities in Denmark: this problem has been exacerbated by the way in which municipalities have primarily allocated refugees to non-profit (social) housing estates and to dwelling blocks where there is already a larger-than-average proportion of Danes with social problems.

The government became concerned about the concentration of immigrants around the beginning of the 1990s and established a committee on Metropolitan Affairs in 1993 to find ways to discourage ethnic enclaves. This group proposed a number of measures to combat social problems in "distressed" urban areas. In 1996, the committee changed tack and focused on a new strategy, through an urban regeneration programme (Kvarterloft), aimed at making such areas more attractive without trying to directly influence the social composition of tenants. This approach has been extended further with the present government's programme of "inclusive cities".

The concentration of immigrants in social housing is probably made worse by the rigidities of the Danish housing market (OECD, 1999). The majority of Danes own their own home, with only 15 per cent residing in social housing, while the proportions are almost exactly reversed for immigrants and descendants from LDCs. Rent controls for private rented dwellings and co-operatives keep the rents under market value but produce long waiting lists and low turnover, which again makes access more difficult for immigrants. Turnover is highest in the least attractive social housing, and municipalities have a right to allocate a part of this housing stock, (62) which tends to reinforce the concentration of immigrants in specific areas. The present government's announced reform to make it possible for social housing tenants to purchase their homes has been criticised for making it less likely that a more diversified mix of occupants would result over time (Groes, 2003). Policy changes to improve the way the housing markets function overall (as recommended in previous Surveys) would help to ease access for immigrants, (63) even though such measures must be implemented carefully and would not produce instant results.

Newly-arrived refugees are dispersed across the country, in accordance with the Integration Act, in order to distribute the responsibility among the municipalities and also to promote contact with native Danes. However, there is a tendency in Denmark, as in most countries, for migrants themselves to gravitate towards others of their ethnic group, even though it does not seem to be in their economic interests. This is an area where further research is needed, especially as international experience indicates that it is difficult to identify policies that can successfully and durably disperse immigrants more widely (Ministry of Refugee, Immigration and Integration Affairs, 2002). This suggests that, for the meantime, a more relevant target for policy might be to ensure that other measures minimise the present negative outcomes associated with enclaves: for example, through greater efforts to boost Danish language exposure.

The benefit trap

One factor that discourages immigrants from working is the low economic return, compared with living on public income support. The Danish welfare system is generous: so-called "short-term" benefits such as unemployment insurance and social assistance are intended to provide people with a bridge back to supporting themselves (see Chapter II). For native Danes, the system appears to fulfil this role, in sharp contrast to the situation of migrants from LDCs (Table 23). Migrants from non-western countries are particularly vulnerable to finding themselves in a welfare trap because their average earnings prospects are so much lower than for native Danes. (64) Seen in that light, it is remarkable that around one in five immigrants and descendants in work would be financially better off drawing unemployment insurance, while another third gain less than DKK 500 per month by working (Table 24). The situation for these low paid workers does not show any improvement until they have been working around five years. Indeed, it has been estimated that while Danish men benefit from a significant positive boost to earnings for five years work experience, all else equal, the gains to experience are marginal for immigrants (Husted et al., 2001 ). (65)

For those immigrants and descendants who are not members of an unemployment insurance fund, and thus qualify for social assistance instead, the incentive problems are even worse, because if one spouse gets a job, the social assistance to the partner is withdrawn. This means that if only one spouse enters the workforce, the household would experience a net loss unless he or she could earn more than DKK 28 000 per month, which is well above the median wage. This creates a benefit trap for any family in the same situation, but it affects immigrants disproportionately for three reasons: they are more likely to be married with dependant children than Danish recipients; they are more likely to find themselves in a situation where neither partner has a job; and their earnings potential is likely to be lower than that of native Danes.

To address these incentive problems, the government's "More People in Work" strategy includes a number of measures to make work relatively more attractive (see Chapter II). In addition, for new arrivals, it has introduced a residence requirement of seven out of the past eight years to qualify for full access to social welfare benefits. During those first seven years, those in need of social assistance will receive less generous introduction benefits, albeit within the range of net replacement rates that apply in other OECD countries (Figure 28). In every case, as a minimum, those receiving these benefits will receive at least as much as the benefits paid to students in Denmark. It is too early to assess the extent to which these adjustments to incentives will boost employment among new arrivals, but as already noted, it has probably reduced the risk of Denmark being considered a "soft touch" by some low-skilled asylum seekers.


Denmark has made considerable progress in putting in place a more coherent strategy for addressing the economic aspects of immigration. However, it still has to address the situation of those foreigners who arrived under earlier entry policies and who have not achieved economic integration. The economic consequences of those earlier policies are significant, given the gap between the economic prospects of immigrants from LDCs and the nature of the Danish economy. Low employment rates and high reliance on public income support among some immigrant groups has meant that, overall, immigration has not significantly boosted the country's economic output (see Chapter I). It has at the same time added to the effective dependency ratio and entailed redistribution of resources from working Danes to non-working Immigrants. Furthermore, some immigrants from LDCs have had visible difficulties in integrating into Danish society, which has created some social tensions.

The logical first steps in addressing the integration difficulties facing immigrants from LDCs are to avoid adding unduly to the problem and to do more to ensure that those who arrive in future can more quickly become self-supporting. Denmark has gradually tightened restrictions on entry over the past several years. It has also endeavoured to distinguish more clearly between providing safety and freedom from persecution for genuine refugees and restricting entry for those migrating for economic reasons but with poor prospects of achieving success in Denmark. The government has also delivered the clear message that anyone coming to Denmark will be expected to work and to make every effort to integrate. This message of self-reliance has also been delivered to Danes, along with measures to boost employment (see Chapter II).

The current challenge is to improve the integration of immigrants, especially those from LDCs with very low skills, some of whom arrived many years ago. With few low-skilled jobs in Denmark, high effective minimum wages and high net replacement rates on public benefits, these migrants face several obstacles to obtaining a job. These difficulties could be reduced by scaling back welfare benefits and allowing lower wages to be paid for low-skilled work. The social partners have announced that they will consider the possibility of making agreements that allow lower wages for persons not yet completely skilled for the job. Such agreements have already been made in parts of the industrial and financial sector. Furthermore, the unions and employers have collaborated on a scheme to place migrants in the workplace, with temporary wage subsidies linked to on-site training and work experience. This could be a promising approach as long as a rapid subsidy phase-out is enforced, although it may not reach enough migrants to make a major difference. Another helpful element would be to reduce the tax wedge on labour incomes (see Chapter IV), making it cheaper for households to employ low-skilled workers to provide household services, as they do in a number of other countries.

Raising the skills of immigrants is another way of achieving better labour market integration. Speeding up progress for young immigrants and descendants may be difficult, since the government may be able to exercise only limited influence over some of the factors that make a difference to educational performance, such as mothers' education. However putting more stress on the importance of education for economic integration may help to strengthen aspirations and counter negative parental attitudes; greater wage premia for educational qualifications would also make education more rewarding (see Chapter II). Persuading young immigrants to concentrate on completing their education and gaining a foothold in the labour market before marriage may also yield considerable dividends although it is difficult to see how exactly this could be done. In addition, special efforts to reduce the gap in reading performance shown for immigrants and descendants still at school would seem to be a prerequisite to improve educationa l attainment for immigrants in general. Furthermore, the role of bilingual education in explaining this poor performance needs to be clarified. In any case, efforts to reinforce Danish language skills at all levels of the school system would help to reduce the current performance gap.

Evidence on the importance of host-country language skills for successful economic integration is overwhelming, not just in Denmark, but in other OECD countries as well. As a result, most countries have tightened their expectations that immigrants should make an effort to quickly acquire these skills, while facilitating, or requiring, attendance in language courses. Denmark instituted a three-year introduction programme for immigrants assigned to local authorities in 1999. Careful evaluation of these courses would help to signpost where improvements can be made and how the link to job readiness can be strengthened, especially for women. Attendance requirements need to be more effectively enforced, which to some extent depends on effective and consistent case management at the local level. Sharing of best practices for achieving results across municipalities might provide useful insights into how attendance can be boosted. Another approach would be to apply stronger economic sanctions on those who fail to mak e reasonable efforts to progress.

The benefit trap in which immigrants from LDCs too often find themselves is an additional obstacle to labour force participation. The government has already instituted a number of measures to limit the disincentives to work arising from relatively generous welfare payments. The most notable change is the lower introduction benefit for new arrivals, which should significantly increase their incentives to obtain employment. But for immigrants already in Denmark and drawing social assistance benefits, the government has limited room to manoeuvre. Tighter work requirements and effective activation measures that quickly lead participants to real jobs may thus be the primary way in which this unemployment trap can be overcome. But if this approach cannot be made to work, then the government will either have to consider more radical changes to the incentive structure faced by immigrants or accept paying social benefits to a high proportion of immigrants indefinitely. Specific policy recommendations arising from thi s chapter are presented in Box 4.











Table 14

Activity rates in selected OECD countries

Percent, 1999-2000 average


                             Nationals  Foreigners  Difference

Australia (August 2000) (1)    75.3        67.3        -8.0
Austria                        80.5        86.1         5.6
Belgium                        74.1        73.0        -1.1
Canada (1996) (1)              73.8        68.4        -5.4
Czech Republic                 80.4        88.6         8.2
Denmark (2)                    79.2        63.0       -16.2
Finland                        79.8        81.1         1.3
France                         75.6        76.4         0.8
Germany                        80.1        77.9        -2.2
Greece                         78.9        89.3        10.4
Hungary (1)                    67.9        73.0         5.1
Ireland                        81.1        76.1        -5.0
Italy                          74.8        89.0        14.2
Luxembourg                     75.5        77.9         2.4
Netherlands                    84.8        67.2       -17.6
Norway                         86.0        84.5        -1.5
Portugal                       83.7        81.3        -2.4
Slovak Republic                76.6        79.5         2.9
Spain                          77.2        83.8         6.6
Sweden                         80.5        65.1       -15.4
Switzerland                    93.0        89.6        -3.4
United Kingdom                 84.9        76.2        -8.7
United States (1)              73.4        79.6         6.2


                             Nationals  Foreigners  Difference

Australia (August 2000) (1)    58.9        49.1        -9.8
Austria                        63.1        63.4         0.3
Belgium                        58.2        40.7       -17.5
Canada (1996) (1)              60.2        52.9        -7.3
Czech Republic                 64.4        61.6        -2.8
Denmark (2)                    75.5        48.3       -27.2
Finland                        74.4        58.0       -16.4
France                         63.5        48.5       -15.0
Germany                        64.8        49.9       -14.9
Greece                         50.3        57.9         7.6
Hungary (1)                    52.5        53.2         0.7
Ireland                        55.7        54.4        -1.3
Italy                          46.3        52.1         5.8
Luxembourg                     47.3        56.7         9.4
Netherlands                    66.4        44.6       -21.8
Norway                         77.7        70.7        -7.0
Portugal                       66.7        68.5         1.8
Slovak Republic                62.6        63.9         1.3
Spain                          49.8        57.3         7.5
Sweden                         75.3        59.4       -15.9
Switzerland                    74.8        68.4        -6.4
United Kingdom                 69.2        56.0       -13.2
United States (1)              61.6        53.7        -7.9

(1.)Data refer to persons born abroad or in the host country

(2.)As at 1 January 2000

Source: Statistics Denmark, Labour Force Surveys, data provided by
Eurostat and by the Australian Bureau of Statistics, 1996 census,
Statistics Canada, Current Population Survey, US Bureau of the Census

Table 15

Participation rates among different immigrant groups

Per cent, as at 1 January 2000

Country of origin      Male  Female  Total

All countries           63     48     56

United Kingdom          79     64     73
Sweden                  74     70     72
Germany                 72     56     64
Vietnam                 71     53     62
Turkey                  71     46     59
Oceania                 69     49     61
Poland                  68     62     64
Pakistan                68     34     53
Chile                   67     56     62
Norway                  66     62     64
Iran                    62     41     54
North America           60     52     56
Ex-Yugoslavia           58     42     51
Unknown and stateless   46     27     39
Lebanon                 46     17     33
Iraq                    33     15     26
Somalia                 25     10     18

Source: Ministry of the Interior and Health.

Table 16

Working-age population outside the labour force

                                   Less developed countries

                                   Men             Women

Participation in the workforce    59.0              43.0
Students in further education      4.5               5.1
Temporarily outside the labour
 force (activation, cash
 benefits, maternity, etc.)       18.0              26.8
Early retirement schemes
  (including disability)           7.8               5.7
Others, not in labour force       10.7              18.8
Total outside workforce           41.0              57.0

Total number of persons         37 200            50 900
 outside labour forces

                                 EU, Nordic countries
                                   and North America

                                   Men         Women

Participation in the workforce    71.0          62.0
Students in further education      2.9           3.8
Temporarily outside the labour
 force (activation, cash
 benefits, maternity, etc.)        3.2           3.8
Early retirement schemes
  (including disability)           6.7          12.1
Others, not in labour force       16.0          17.9
Total outside workforce           29.0          38.0

Total number of persons         11 900        15 000
 outside labour forces

                                    Native Danes

                                    Men     Women

Participation in the workforce     83.0      75.0
Students in further education       2.9       3.5
Temporarily outside the labour
 force (activation, cash
 benefits, maternity, etc.)         2.2       4.0
Early retirement schemes
  (including disability)            9.7      13.8
Others, not in labour force         2.2       3.8
Total outside workforce            17.0      25.0

Total number of persons         289 800   403 600
 outside labour forces

Source: SOPEMI report for Denmark,2001.

Table 17

Family reunification permits granted and denied


                                           Granted   Denied    Per cent

Spouses and partners                        6 122      895       87.2
of which:
  To residing refugees                      1 338      193       87.4
  To residing immigrants                    1 325      344       79.4
  To residing Danish or Nordic citizens     3 449      358       90.6

Under age children                          2 429      431       84.9
of which:
  To residing refugees                      1 309      172       88.4
  To others residing in the country         1 120      259       81.2

Parents over the age of 60                    186      565       24.8
of which:
  To residing refugees                         71      379       15.8
  To residing immigrants                       38      137       21.7
  To residing Danish or Nordic citizens        77       49       61.1

Total                                       8 727    1 891       82.2
of which: To residing refugees (per cent)      31        -          -


                                           Granted   Denied    Per cent

Spouses and partners                        6 499    2 043       76.1
of which:
  To residing refugees                      1 694      297       85.1
  To residing immigrants                      443      807       35.4
  To residing Danish or Nordic citizens     4 362      939       82.3

Under age children                          6 422      684       90.4
of which:
  To residing refugees                      3 777      314       92.3
  To others residing in the country         2 645      370       87.7

Parents over the age of 60                    266      559       32.2
of which:
  To residing refugees                         71      370       16.1
  To residing immigrants                        0        9        0.0
  To residing Danish or Nordic citizens       195      180       52.0

Total                                      13 187    3 286       80.1
of which: To residing refugees (per cent)      42        -          -

Source: Ministry of Refugee, Immigration and Integration Affairs.

Table 18

Gross income for self-employed and wage-earners

18-59 year olds, 1996

Country of origin  Self-employed  Wage earners'  Gap DKK  as per cent of
                        DKK            DKK                active labour

Denmark               285 200        233 200      52 000        8.7
Iran                  104 600        183 400     -78 800       29.3
Pakistan              136 600        167 900     -31 300       30.7
Ex-Yugoslavia         176 500        190 800     -14 300        7.0
Turkey                114 300        166 300     -52 000       18.7
China                 126 500        181 000     -54 500       21.7
Other countries       189 300        222 600     -33 300       13.2

Total                 277 300        232 300      45 000

(1.)Inclues unemployed.

Source: Statistics Denmark

Bager and Rezaei (2001).

Table 19

Education and labour market participation

Level of education attained as at 1 January 2001, 16-66 year olds

                            Elementary  Secondary  education/
                              school     school    apprenticeships

                                            Per cent

Immigrants from third
  countries - education
  only acquired in the
  country of origin
  In work                       41          42         51
  Unemployed                    10           9          8
  Not in the labour force       50          49         41
  Total                        100         100        100

Immigrants and descendants
  from third countries -
  at least some Danish
  In work                       51          66         76
  Unemployed                     5           3          8
  Not in the labour force       44          31         15
  Total                        100         100        100

The remaining part of
  the population
  In work                       63          82         84
  Unemployed                     5           3          3
  Not in the labour force       32          14         13
  Total                        100         100        100

                            Shorter-term   long-term
                              advanced    university   Not stated/
                              studies       studies    no education
                            (< 4 years)   (> 4 years)

                                            Per cent

Immigrants from third
  countries - education
  only acquired in the
  country of origin
  In work                        49           50            28
  Unemployed                      8            7             4
  Not in the labour force        43           43            67
  Total                         100          100           100

Immigrants and descendants
  from third countries -
  at least some Danish
  In work                        75           80            40
  Unemployed                      9            6             7
  Not in the labour force        16           14            52
  Total                         100          100           100

The remaining part of
  the population
  In work                        87           92            52
  Unemployed                      3            2             4
  Not in the labour force         9            6            44
  Total                         100          100           100

Source: The Ministry of Refugee, Immigration and Integration Affairs;
Statistics Denmark.

Table 20

School-to-work transition

18-35 year olds, 1997

                               Ethinic Danes    Descendants

                                 Men  Women      Men  Women

Agerage age                     26.8  26.8      20.7  20.7
Education, years                11.8  12.1      10.7  11.1
Employed, per cent              69.0  56.0      46.0  28.0
Unemployment, rate               6.8  10.8      15.3  16.2
Completed a qualifying
 education, per cent            64.7  61.7      17.7  22.6
Duration of waiting time         2.7   3.9       3.6  51.
 spell before first job,
Duration of first               19.9  19.2      12.8  11.7
 employment spell, months

Source: H.S. Nielsen et al. (2002).

Table 21

Danish language skills (1)

Per cent

                                Fluent  Good  Average  Poor  Total


All immigrants and descendants    28     29     26      16    100
Immigrants, aged 13 or more on    15     31     33      21    100
Immigrants, aged 12 or lesson     62     29      7       2    100
Descendants                       88     10      2       0    100


All immigrants and descendants    28     21     25      25    100
Immigrants, aged 13 ormore on     13     23     31      32    100
Immigrants, aged 12 or less on    69     22      8       2    100
Descendants                       88      9      2       1    100

(1.)Interviewers' assessments of respondents' level of knowledge of
Danish in 2001.

Source: Larsen (2002).

Table 22

Concentration of immigrants by municipalities

As at 1 January 2002

                                            Immigrants and descendants

                                   Total        From less developed
Municipality                    population           countries

                                                             Per cent

Copenhagen                         500531          69110       13.8
Arhus                              288837          25451        8.8
Odense                             183628          15738        8.6
Aalborg                            162264           7990        4.9
Frederiksberg (1)                   91322           7455        8.2
Brondby (1)                         34542           6870       19.9
Hoje Taastrup (1)                   45947           6227       13.6
Albertslund (1)                     29130           5396       18.5
Ishoj (1)                           20987           4974       23.7
Hvidovre (1)                        49674           4877        9.8
Total of above municipalities     1406862         154088       11.0
Rest of Denmark                   3961492         157281        4.0

Total                             5368354         311369        5.8

                                    Immigrants and

                                    From EU, Nordic
Municipality                      and North American

                                              Per cent

Copenhagen                           20663       4.1
Arhus                                 6076       2.1
Odense                                3066       1.7
Aalborg                               2558       1.6
Frederiksberg (1)                     3881       4.2
Brondby (1)                            609       1.8
Hoje Taastrup (1)                      709       1.5
Albertslund (1)                        566       1.9
Ishoj (1)                              323       1.5
Hvidovre (1)                          1012       2.0
Total of above municipalities        39463       2.8
Rest of Denmark                      64499       1.6

Total                               103962       1.9

(1.)Municipalities within the Greater Copenhagen area.

Source: Statistics Denmark.

Table 23.

Years on social assistance, municipal activation or retraining

Period 1996-2000

                               Native Danes

                              Men       Women

Not involved                  89.2      87.5
Up to 1 year                   6.2       7.0
1-2 years                      1.6       1.8
2-3 years                      1.0       1.2
3-4 years                      0.8       0.8
More than 4 years              1.1       1.7

Proportion of each immigrant
 group who received support
 for more than 4 years

Ex-Yugoslavia                    -         -
Iran                             -         -
Lebanon                          -         -
Pakistan                         -         -
Poland                           -         -
Somalia                          -         -
Turkey                           -         -
Vietnam                          -         -
Other non-western countries      -         -
Western countries                -         -

                              Non-western immigrants
                                 and descendants

                              Men            Women

Not involved                  47.7           48.5
Up to 1 year                  20.1           15.6
1-2 years                      8.7            6.7
2-3 years                      7.6            7.1
3-4 years                      6.2            6.8
More than 4 years              9.8           15.4

Proportion of each immigrant
 group who received support
 for more than 4 years

Ex-Yugoslavia                  9.4           14.6
Iran                          13.5           23.3
Lebanon                       30.5           56.2
Pakistan                       2.8            9.6
Poland                         3.9            8.4
Somalia                       29.4           36.6
Turkey                         2.9            9.4
Vietnam                        8.3           19.8
Other non-western countries    8.9           11.9
Western countries              1.4            1.7

Source: N. Nielsen (2002).

Table 24

Disposable income gaps between work and unemployment (1)

18-59 year olds, per cent

                             Wholepopulation, 1996

                            Men      Women     Total

Childcare costs
   Negative "gap"            6         16       10
   "Gap" under DKK 500      12         28       20
   Negative "gap"            5         7         6
   "Gap" under DKK 500      11         22       16

                            Immigrants and descendants, 1998/99

                              Men            Women       Total

Childcare costs
   Negative "gap"              18              26         21
   "Gap" under DKK 500         34              41         36
   Negative "gap"              14              21         17
   "Gap" under DKK 500         26              35         30

(1.)Proportion of employed members of an unemployment insurance fund
who have a smaller disposable income from full-time employment than from
full-time unemployment.

Source: Schultz-Nielsen (2001).

(36.) The measured improvement over time may also be biased upwards by those migrants from earlier cohorts who have left the country again (Edin et al., 2000). More than 17 000 foreign nationals emigrated from Denmark in 2001: some 5 per cent of the stock of foreigners. Almost two-thirds were of working age, and although there were actually more foreigners from MDCs than from LDCs, those who left had a slightly lower employment rate than those who chose to stay. However, there is little further concrete information about the characteristics of those who departed or their reasons for doing so.

(37.) For example, the Integration Act 1999 imposed a requirement to attend a three-year introduction course (including a significant language component) on all immigrants, not just refugees, and an amendment to the Aliens Act in May 2000 tightened the rules on family reunification.

(38.) For example, Australia, Canada, New Zealand and the United States all operate quotas for total immigrant flows or for certain categories. In France and Japan, some immigrants are granted residence permits but are not permitted to work or face restrictions on the work they may do.

(39.) This assessment was in part based on a reappraisal of the extent to which the mere act of seeking asylum in another country put them in danger in Iraq, and of the consequences of refusing military service.

(40.) The United Kingdom has also operated a programme of voluntary assisted returns since early 1999. Most of those who have availed themselves of this facility were still working their way through the asylum process at the time. An evaluation by Deloitte and Touche found that this approach provided clear financial and human benefits, especially for those who would have been refused leave to stay at the end of the asylum process (see United Kingdom Home Office,

(41.) Two ethnic groups stand out for such family reunification: Turks and Pakistanis, where some 80 to 90 per cent of young people marry someone from outside the country and seek to bring them to Denmark.

(42.) For example, the United States operates a significantly more generous policy towards family reunification, while Austria operates a quota for family reunification for those who arrived since the beginning of 1998 that is limited to the spouse and unmarried minors. Those who settled in Austria before 1998 may only bring in their spouse and children under the age of 14 years. The family member is not allowed access to the labour market until after four years residence, and even then, it is not automatically granted. In Canada, the family class includes grandparents as well as dependent children, but it does not include fiances, who have recently been moved to the humanitarian and compassionate category to allow for more detailed scrutiny and avoid abuse of this provision.

(43.) This scheme provides for foreign, highly paid employees to pay 25 per cent gross income tax instead of normal (higher) rates of taxation on earned income, for a maximum of three years. The expert may choose to remain in the country for up to four more years, under normal tax rules.

(44.) Contributions are required for unemployment insurance, although workers overseas can still be members of an unemployment fund. Access to cash benefits is now restricted to those who have been in the country for seven out of the previous eight years.

(45.) However, it should be noted that the government has also been working actively on addressing the elimination of all forms of discrimination on grounds of racial or ethnic origin. The government is working towards introducing legislation to implement the EU directive on equal treatment irrespective of race or ethnic origin, based on recommendations prepared by a committee set up in May 2001 by the then Minister of the Interior. In May 2002 the Danish Parliament adopted the Act that established the Danish Centre for International Studies and Human Rights, whose tasks include the promotion of equal treatment and which can publish independent reports. Awareness campaigns were also conducted within the context of the UN Year against Racism in 2001.

(46.) It not only provides financial independence, but also can provide valuable work skills and experience together with greater opportunities to mix with Danes and acquire language and customs (Hustead et al., 2001).

(47.) Although these workers are relatively poorly paid by host-country standards, for migrants the alternative is returning home to even less attractive economic prospects. A separate issue is the extent to which these immigrants have driven down wages for low-skilled native workers, although the evidence suggests this impact is over-stated. For example, Friedberg and Hunt (1995) find that a 10 per cent increase in the fraction of immigrants in the population reduces native wages by at most 1 per cent.

(48.) In the United States some 20 per cent of jobs pay less than two-thirds of the median hourly wage and 30 per cent pay less than three-quarters of the median wage (Economic Policy Institute website).

(49.) One study of black market activity in Denmark found that it was primarily being undertaken by young, skilled males, including students and involved on average less than 3 hours per week for each person engaged in such activity (Pedersen, 1998).

(50.) For example, 25 per cent of Pakistani and 8 per cent of Iranian and Turkish family-owned businesses are small-scale supermarkets, kiosks, etc, compared with less than 0.5 percent for Danes (Bager and Rezaei, 2001).

(51.) This phenomenon can also be seen for Pakistani migrants to the United Kingdom (Clark and Drinkwater, 1999), where the self-employment rate is almost 30 per cent for those over 35 years old and almost 40 per cent for those aged 16 to 24 years.

(52.) Part of the difference can be explained by the average age difference, since amongst descendants there is a bulge at the younger end of the age group.

(53.) See, for example, a number of studies cited in H.S. Nielsen et al. (2002).

(54.) Jakobsen and Smith (2002) found that an additional five years of education for mothers (the equivalent of raising Turkish mothers' levels to those of ex-Yugoslavian mothers) would increase the probability of formal education by 10 percentage points for young women and 5 percentage points for young men. A very positive attitude to education among parents increases the probability by 18 percentage points for men and 31 percentage points for women.

(55.) For each year that marriage is postponed in the sample that Jakobsen and Smith (2002) examined, the probability of completing education rose by around 2 percentage points for men and 3 percentage points for women.

(56.) In contrast, already in the early 1980s, some 25 per cent of Mexican American marriages in California were mixed, and this rate had risen to 50 per cent by 1997 (Duignan, 1998).

(57.) For example, English proficiency has been shown to have a significant impact on both employment probability and earnings in both the United Kingdom and the United States (Dustmann and Fabbri, 2000), while speaking Swedish well has been shown to increase chances of getting a job in Sweden (National Board of Health and Welfare, 1999). It is worth noting that for the United Kingdom it was found that verbal skills boosted employment prospects only slightly, while writing abilities make about three times as much difference. Language proficiency makes a difference to earnings as well, although the effect seems to be stronger in the United Kingdom than in the United States, Canada or Australia, while in Germany the difference is slight.

(58.) In contrast, a study for the United Kingdom, where language skills were also assessed by the interviewer, 78 per cent of immigrants arriving before the age of 10 years old, and 24 per cent of those arriving after the age of 24, were fluent. Among different minority groups, Pakistanis had the weakest language performance (Shields and Wheatley Price, 1999).

(59.) Bilingual education involves providing some proportion of the instruction in subjects other than Danish language in the student's home language.

(60.) In the United States, the question has become highly politicised and closely intertwined with the objective of preserving ethnic cultures as well as an issue for educational attainment (Duignan, 1998).

(61.) The rationale for home-language teaching has also varied between countries and over time, including: facilitating the return home of guest workers' children; recognition of separate cultural identity; building minority children's self-esteem and sense of security; and cognitive benefits of bilingualism.

(62.) The rest of this housing is allocated by the housing association itself.

(63.) This would be the result if a shift to market-based rents removed the incentive for people to hang on to good quality, larger flats, on which they pay cheap rents. This would boost turnover, and a greater supply of available accommodation would reduce market prices.

(64.) Average hourly wages for refugees in 1995 were 18 per cent lower than for Danes and for immigrants from Africa, Pakistan and Turkey, earnings were still 14 to 15 per cent lower than for Danes (Husted et al., 2001).

(65.) For refugees, early and firm attachment to the labour market is a critical determinant of future wages; although their wage levels are much lower at the outset, they climb more steeply than Danish wages if firm attachment is obtained within 10 years of arrival. But because such attachment is difficult for refugees, average wages remain low. Indeed, the probability of a male refugee finding employment starts to fall after 10 years in Denmark and more sharply so after 20 years, although this may also be an age effect.


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RELATED ARTICLE: Box 2. Welfare assistance for asylum seekers

Denmark has traditionally provided generous welfare assistance to all residents, including new arrivals. Asylum seekers are lodged in special reception centres -- most of them run by the Red Cross, under contract -- while their applications are considered. They are provided with not only food, lodging and health care, but also with pocket money amounting to around 30 euros per week, significantly more than received by their counterparts in Austria, Belgium, the United Kingdom, Germany or Sweden, although slightly less than is paid in Norway (Ministry of Foreign Affairs, 2002). However, in January 2003 the government put forward a bill that lowers the welfare assistance to asylum seekers significantly. It was adopted by the Parliament in April 2003 and enters into force on 1 July 2003.

Furthermore, until the changes in mid-2002 (which imposed the residency requirement of seven out of the previous eight years for full access to social welfare benefits), asylum seekers recognised as refugees were entitled to receive full cash benefits immediately. Full welfare benefits are generous, both by international standards and especially relative to the income from work those unskilled immigrants could hope to obtain (see below). It is hard to know to what extent this generosity acted as a magnet to asylum seekers, although a number of countries operate some sort of waiting period before granting immigrants full access to the social welfare system. However, the Aliens Act of 2002 entitles the Danish Immigration Service to deny asylum seekers cash benefits if they fail to meet certain requirements.

Box 3. Integration through the workplace

In May 2002, the social partners, municipalities and the government signed a new agreement, "The Integration Package for Immigrants". This focuses on rapid introduction to working life and acquisition of Danish language skills through the workplace itself. It is motivated by the belief that the workplace is the best environment for immigrants to learn the skills they need, including Danish language, for successful labour market participation. It also reflects a realisation that the workplace provides excellent opportunities for closer contact between immigrants and Danes. The necessary legislation was introduced to Parliament in March 2003.

This agreement, inter alia, proposes a new model for workplace integration, involving three stages after an introduction to Danish language and the labour market:

Stage 1. Workplace introduction phase

-- Immigrants undergoing workplace introduction will not be covered by an employment contract, and the enterprise will not pay them any wages. However, they will receive public income support (social assistance or introduction benefit).

-- Danish language teaching will be the primary focus and will take place on site. It will be paid for by the municipalities, who will also cover the cost of other skills training.

-- The workplace introduction phase will last up to 13 or up to 26 weeks if special needs apply, depending on the specifics of the programme. People with very special difficulties might even participate for a longer period if this is assessed to be relevant.

Stage 2. Workplace training phase

-- Immigrants are recruited by the enterprise, and are paid according to collective agreements.

-- The immigrant's time will be split between working and training, and employers will pay only for the periods when the employee is actually working. Specific job-training might also be used as an instrument, during this stage.

-- The public authorities will pay the costs of continuing Danish language and other skills training and to some extent subsidise wages.

Stage 3. Ordinary employment

-- The immigrant will be in ordinary employment and receiving hourly wages from the company employing him or her, like any other employee. There is a scope to reach agreement to pay lower wages to persons not yet completely skilled for the lob. However, such employment may be part time, and combined with Danish courses or skills training, paid for by the public authorities.

Box 4. Recommendations on policies for immigrants


Policies concerning entry to Denmark need to take into account a range of non-economic factors, but the government should in any case consider the following:

-- Monitor the entry rules to ensure that Denmark receives in-flows of migrants that correspond to its objectives.

-- Reassess the role that compressed wages and high taxes play in making it harder to attract more highly-skilled immigrants and also expose Denmark to the risk of a "brain drain". Shifting more of the cost of higher education onto the individual, beneficial in any case, would reduce the economic cost of such emigration.


Policies concerning integration overlap to some extent with the policy recommendations from Chapter II to boost employment, since the primary focus is on raising immigrants' participation rates.

-- Ensure that policies to overcame the skills gap and the benefit trap, such as wage subsidies and stricter activation policies are clearly time-limited and deliver results. If these do not generate significant improvements in integration, consider the scope for scaling back welfare benefits and reducing effective minimum wages to facilitate the emergence of more low-skilled lobs, which low-skilled immigrants could use as an entry point into the labour market.

-- Facilitate the emergence of greater wage premia for education and skills to send clearer signals about the value of obtaining additional human capital, which would be beneficial in any case.

-- Pinpoint and address the weaknesses in the school system that result in relatively poor results for immigrants and descendants. Put more emphasis on Danish language skills, and monitor programmes to identify and extend best practices.

-- Monitor closely the results obtained from the introduction programme, and stand ready to modify it to make it more effective. Ensure that sanctions for non-attendance are applied effectively at the local level.
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Publication:OECD Economic Surveys - Denmark
Geographic Code:4EUDE
Date:Jul 1, 2003
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