The coincidence of the 2024 general election and the Euro 2024 football tournament is a great lesson in the myopia of Westminster and its creatures.
Somewhere, deep in our hearts, we do know that the vast majority of people in Britain (OK, England and Scotland) are far more interested in the football than in the ups and downs of the campaign. But does that stop us fixating on the minutiae of that campaign? Not at all: for political nerds, this is our championship, after all, one of those (quite) rare moments when all the stars, all the heroes and villains, are on the pitch together, generally kicking lumps out of each other. So of course we’d rather watch paint-drying political debates than half-a-billion quid of sporting talent burning up the German turf.
Whoever wins the football, expect Britain to be taking Danish lessons soon
Maybe, just maybe though, there are ways to unite these disparate tribes, to find political interest in footie fixtures. Take England vs Denmark, for instance. I have pretty much no idea who will win that game, or why. But I do know that people interested in British public policy should be paying attention to Denmark. More specifically, to its welfare policy. Because I have a hunch that the Danish approach to unemployment could just have a role to play in Labour’s plans to deliver a bigger workforce.
The shortage of available workers is one of the big economic challenges Labour will inherit. Unlike other countries, our inactivity rates have not returned to ‘normal’ since the pandemic, so several hundred thousand people of working age are currently absent from the labour market.
This is a big problem, because a shortage of labour bids up the price of labour, driving inflation and keeping interest rates higher than they could be. That, in turn, curbs the economic growth that Labour has promised.
So a more dynamic labour market is really quite important to Labour. That means welfare policy is going to be a big deal in the new Parliament, even though it’s not getting much airtime in the campaign.
When that happens, I have an idea that Labour will start talking about ‘flexicurity,’ the Danish model of welfare and employment support. In short, flexicurity means that employers have a very high degree of flexibility on hiring and firing (‘flexi..’) while the state offers those who lose their jobs generous support while they find a new job (‘..curity’).
The Danish model has been popular with Labour-leaning wonks for years. The Social Market Foundation, the think-tank I used to run, was publishing on this almost two decades ago. Much more recently, and importantly, the Resolution Foundation – whose former boss Torsten Bell will become a Labour MP at the election – wrote about it last year, albeit with a bit of scepticism for how the model is coping with ‘gig’ work and other innovations.
Those quibbles notwithstanding, I’d bet on Labour in government taking a good hard look at the Flexicurity model.
Arguably, Labour has already promised to put in place two of three elements of flexicurity: fairly liberal employment laws, and an active support service via JobCentres. All that remains is to make unemployment benefits more generous: the UK system replaces barely 16 per cent of the typical workers’ wages when they’re out of work. In Denmark, the replacement rate is around 57 per cent.
Here, sharp-eyed readers will have spotted that I’m predicting a big increase in the generosity of unemployment benefits under Labour. That would be a big deal, both fiscally and politically, of course. But I still wonder if it might still be attractive to a Starmer administration, even one short of public money to spend.
Offering more generous support to the unemployed, Labour advisors may conclude, could be less expensive than it looks, because it would help to pay for itself. Lots of evidence suggests that when workers are confident that they will be looked after if they lose their job, they are more likely to switch jobs, get training, start businesses – all things that drive up productivity and thus growth and tax revenues.
This sort of thing is, in fact, a central argument of Rachel Reeves’ ‘securonomics’. Studying that agenda and talking to people involved in it, it’s easy to imagine how if the party wins a big majority, some party advisors will argue for a major project of building what amounts to a European-style social insurance regime that offers much greater to support for workers.
Enhanced unemployment benefit would be part of that. Also on the agenda could be statutory care pay allowing people to take time out from work to look after sick and elderly relatives, another feature of the Danish labour market. Danish employees have the right to time off to care for a close relative who is dying, seriously ill or disabled. The government is responsible for carer’s pay while they’re on leave.
There’s a lot we still don’t know about how Labour would govern, but there are clues out there as to how the party would approach big questions like employment. Whoever wins the football, expect Britain to be taking Danish lessons soon.
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