Labor Shortage May Stunt Danish Growth for Years, Premier Warns

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Denmark faces a shortage of labor that could hamper economic growth for years to come unless fixes are made to its jobs market and education system, Prime Minister Mette Frederiksen said.

In a speech in parliament on Wednesday, Frederiksen said a lack of qualified labor could also hurt efforts to achieve Denmark’s ambitious plans to reduce carbon emissions. Denmark needs to make it more attractive for its youth to seek vocational education, she added.

Frederiksen’s warning comes as the Nordic countries are emerging from the pandemic stronger than most of other advanced economies, benefiting from generous welfare systems and widespread digitalization that made working from home easier. Some analysts have highlighted potential bottlenecks due to growing labor shortages.

“We risk that we cannot reap the benefits of Denmark’s green leading position if we lack skilled workers,” Frederiksen said. “This is a problem for all of us. It could halt growth and progress.”

Lack of skilled labor is resurfacing as a growth bottleneck across the Nordic region, Swedbank’s economist Marlene Skjellet Granerud said in a report this week, pointing at “particularly high” new vacancies in Denmark and Norway.

“Although labor figures are gradually improving along with the easing of infection control measures, unemployment rates remain higher than normal, while at the same time companies in certain sectors are struggling to find workers,” she said.

This also reflects worries in other advanced economies, such as neighboring Germany. A shortage of skilled workers will become “a serious obstacle to growth over the next few years without further countermeasures,” KfW, Germany’s state development bank, said in a research report on Tuesday.

In its most recent forecast, Denmark’s Finance Ministry sees economic growth of 2.4% this year, the biggest jump in 15 years.

Danish Finance Ministry Raises 2021 Economic Growth Forecast

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