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The Cash Benefit Reform (2013)

The reform has an emphasis on educating young people. It sets out to move people under the age of 30 from unemployment into education or employment through employment initiatives and individual assessments.

The objective of the cash benefit reform is that young persons under the age of 30 without an education who are in receipt of education benefit should begin and complete an ordinary education as quickly as possible. Moreover, youths with an education and adults (persons older over the age of 30) who receive cash benefits should obtain employment. As a result of the reform youths without an education will no longer receive cash benefits, but will instead receive benefits at a lower rate – education benefit – which corresponds to the level of financial assistance offered under the state education grant. This supports the overall objective of unemployed persons entering education.

Reform initiatives

As a result of the reform of the cash benefit system, employment initiatives will be implemented at an earlier stage and must be based on the challenges and resources of the individual. The employment initiatives offered to young persons must operate on a continuous basis. For the most resourceful recipients of education benefits or cash benefits, the so-called “usefulness initiative” has been introduced, according to which recipients undertake socially useful tasks for public employers. Youths who are ready to enter education can, for instance, be offered a pre-course at an educational institution (building bridge to education), courses to improve basic reading, writing and arithmetic skills, wage subsidies, or job training in private businesses. More vulnerable youths and adults (i.e. those who may not readily be able to start an education or a job because of, for example, health problems etc.) must be offered a holistic initiative, which could, for instance, include job training in private businesses and/or mentoring. Participants in this scheme will have the right to receive a supplement to their education benefit or cash benefit for the duration of their participation in an employment initiative. 

Parts of the cash benefit reform came into force on 1 January 2014. The municipalities are working in line with the goals of the reform, and are establishing programmes that support a targeted, early and continuous initiative for the individual. The Ministry of Employment has initiated a number of trials and projects that aim to support the implementation of the cash benefit reform in the municipalities. The municipalities have shown interest in applying for funds to participate in trials and projects that can develop the most effective offers for recipients of education aid or cash benefits.

Evaluation of the reform

An evaluation of the implementation of the reform was completed in 2015. The evaluation indicates that municipalities have prioritized implementation of the reform for young people below the age of 30 without education, where the reform has achieved the most significant results, e.g. a change in the benefit rate and a focus solely on education. The municipalities have succeeded in ensuring active measures have been taken and the implementation of new measures for recipients of education benefit. The evaluation also indicates that recipients of cash- and education benefits perceive a clear focus on either job or education in the dialogue they have with their caseworker. The evaluation furthermore indicates the potential for improvements which can be applied to future implementations of the reform by municipalities and the Danish Agency for Labour Market and Recruitment, e.g. a focus on ensuring that all cash- or education benefit recipients receive an active intervention measure, and that more people in the cash benefit system are offered opportunities by private employers (wage subsidies, or job training in private businesses). Intervention measures at companies generally have positive effects for people on the margins of the labour market.
The number of recipients of cash- or education benefits increased in the period following the implementation of the reform compared to the yearly average prior to the reform. The average in 2013 prior to the reform was approx. 147,200 people and had increased to 151,000 by December 2015, i.e. after the reform came into effect. The increase in the amount of people receiving cash- or education benefits is primarily due to an increase in the number of people over the age of 30 receiving cash-benefit. There has been a decrease in the number of people under 30 receiving cash- or education benefits.

In August 2014 the Ministry of Employment conducted a preliminary impact assessment of the youth initiatives in the cash benefit reform based on data from the phasing-in period (January 2014 to May 2014). The results indicate that the cash benefit reform has had a positive effect on the flow of unemployed people under the age of 30 into education and employment. The Ministry of Employment recently undertook a follow-up analysis of the cash benefit reform and furthermore estimated the hypothetical flow of this demographic into education and employment had the reform not taken place. The analysis indicates a positive effect on the flow into education and employment for 25-29 year-olds and estimates that the flow is 20 per cent higher than it would have been had the reform not taken place.

Last updated: 12-12-2018