What you need to know for the test
- The Danish model means that the social partners – trade unions and employers' organisations – themselves agree pay and working conditions through collective agreements.
- Denmark has no statutory minimum wage – pay is agreed in the collective agreements, which in practice have the same effect.
- The September Agreement of 1899 (Septemberforliget) is also called "the Constitution of the Labour Market".
- About 65 per cent of employees were members of a trade union in 2023, and more than 80 per cent of the labour market is covered by collective agreements.
- Flexicurity combines flexibility (easy to hire and fire) with security (benefits and help back into work).
- Unemployment benefits normally require membership of an a-kasse (unemployment insurance fund), and the benefit period has been two years since 2010.
- The law on equal pay for the same work was passed in 1976.
- In 2025, 77.6 per cent of 16-64-year-olds were in employment – both men and women take part in the labour market.
The Danish model and the September Agreement
During industrialisation at the end of the 1800s, workers organised themselves in trade unions, which fought for better pay and working conditions. In response, the employers came together in the Danish Employers' Confederation (Dansk Arbejdsgiverforening, today DA). In 1899 the two sides concluded the September Agreement (Septemberforliget), which is also called "the Constitution of the Labour Market". With the agreement, trade unions and employers' organisations recognised each other as entitled to negotiate on behalf of their members. The agreement also established that it is the employer who directs and allocates the work, and it introduced a peace obligation: strikes and lockouts are not permitted while a collective agreement is in force. You can read more about the period in Denmark's history 1849-1945.
The Danish labour-market model is built on five central elements: the majority of the workforce is organised in trade unions; the parties themselves agree pay and working conditions (self-regulation); a very large part of the labour market is covered by collective agreements; there is tripartite cooperation between the state, employers and employees; and there is flexicurity.
Collective agreements – no statutory minimum wage
A collective agreement (overenskomst) is a collective accord between a trade union and an employer or employers' organisation on pay and working conditions within a particular field. It can cover, for example, pay, pension, working hours, holiday and dismissal. As a rule, the state does not interfere in pay and working conditions. Matters that in most other countries are decided by law – such as working hours, overtime pay, notice periods and minimum wages – are in Denmark agreed between the parties. Denmark therefore has no statutory minimum wage. The parties have also agreed a labour-market pension, into which employees typically pay 12-17 per cent of their pay, on top of the state pension paid by the state.
Almost two out of three employees (65 per cent in 2023) are members of a trade union. The trade unions are gathered in confederations: the largest is Fagbevægelsens Hovedorganisation (FH), the Danish Trade Union Confederation, with about one million members, while DA is the employers' confederation. There is freedom of association in Denmark: you decide for yourself whether to be a member of a trade union, and an employer may not dismiss an employee either for being or for not being a member. Read more about the civil liberties under the constitution and rights.
Industrial disputes, strikes and the public conciliator
If the parties cannot agree on a new collective agreement, an industrial dispute can arise: employees can strike, and employers can respond with a lockout, in which staff are sent home without pay. To avert disputes, the state has since 1910 had a Conciliation Institution (Forligsinstitutionen) – often called "the conciliator" (forligsmanden) – which can summon the parties to negotiations, put forward a mediation proposal or postpone a looming dispute. Major conflicts are rare; the most recent on the private labour market was in 1998, when the Folketing (the Danish parliament) intervened with a law based on the conciliator's mediation proposal.
Flexicurity and tripartite cooperation
Flexicurity is a combination of flexibility and security. The flexibility consists in it being relatively easy for employers to hire and dismiss staff. The security consists in the unemployed receiving financial support and help to get back into work, for example through education, work placements or other activation measures.
The state also cooperates continuously with the social partners on the part of labour-market policy that is laid down by law – for example, rules on the working environment, job placement services, labour-market training programmes and unemployment insurance. This is called tripartite cooperation, because it consists of three parties: the state, the employers and the employees.
A-kasser, unemployment benefits and tax on work
If you become unemployed, you can receive unemployment benefits (dagpenge) if you are a member of an unemployment insurance fund (a-kasse). The benefit period has been shortened repeatedly to get more people into work: in 1993 the limit was set at seven years, and since 2010 the period has been two years. At the same time, greater demands are made today to take work other than what you are trained for. Unemployment benefits are part of the welfare society's services – read more under the welfare society.
Work is taxed with the progressive Danish income tax, where the tax rate rises for high incomes. To increase the reward for working, tax on earned income has been lowered, among other things with an employment allowance (beskæftigelsesfradrag) – an amount you do not pay tax on when you are in work.
Women in the labour market, equal pay and holiday
In the mid-1900s, most married women looked after the house and children. From the 1960s, women increasingly entered the labour market, and the stay-at-home housewife almost disappeared. This became possible above all because the public sector took over childcare and elderly care. Women, however, were often paid less than men for the same work, and in 1976 the Folketing – on the basis of an EC directive – passed a law on equal pay for the same work. In 2025, 75.8 per cent of women and 79.4 per cent of men (aged 16-64) were in employment. Since 2002, parents have also been entitled to a total of 52 weeks of maternity and parental leave with full benefits.
Working conditions have also improved over time: the working week became shorter (from 48 to 40 hours between 1958 and 1974), and holiday grew from two to four weeks between 1953 and 1972. Today, holiday is one of the matters typically regulated in the collective agreements. See also Denmark after 1945, the glossary of key terms and our guide to the indfødsretsprøven 2026.