Labour costs

The labour costs in Denmark are in line with those of other countries in northern Europe

As illustrated in Figure 6, direct wages (pays) are among the highest in Europe but benefit payments and employers’ contribution to social security are so low in Denmark that the total costs for employers are lower than in countries such as Sweden, Germany and UK.

Figure: Comparison of labour costs (EUR)

Source: Mercer Human Resource Consulting 2005

* Pay: National average earnings for a full-time employed including pays for vacation and public holidays

** Social Security: Including all standard employers’ costs for benefit programs.

*** Benefits: Include all contributions that employers must pay through own or industry-wide mechanisms and benefit plans that employers typically provide

The Danish social security system is financed through taxes. Consequently the general pay is higher in Denmark because of the higher tax rate. Conversely the Danish employer’s social security contribution is only a symbolic 1.4 per cent of the income and is thus considerably lower than in other European countries, seefigure below. However, since 1994 employees contribute to the social security system with eight per cent of earned income. This contribution finances unemployment benefits etc. See separate fact sheet, Taxation.

Figure: Employer social security contribution in per cent of income* (2004)

Source: IMD World Competitiveness Yearbook 2005

* Equal to GDP per capita

For more information, download the factsheet "Labour Market

Last updated on: 08-06-2006	<< Back   Top