The Danish welfare experience of the 1990s contains interesting lessons about the relationship between changing labour markets, welfare policies and citizenship in a globalised economy:

• • The idea that European welfare states face a trade off between employment and equality is contradicted by the Danish ‘job miracle’ (from 1999), which brought unemployment down to one-half the European average, without sacrificing welfare or income equality. This is often attributed to the ‘third way’ policy of activation. However, ‘sound’ economic policy seems at least as important.

• • It was possible, even during the recession, to overcome severe economic problems of the welfare state without serious retrenchments, let alone systemic change (Andersen, 1997a).

• • Until the mid-1990s, Denmark pursued a remarkable policy – in retrospect dubbed ‘passive’ – that granted the unemployed access to full benefits for more than eight years. This policy even proved economically sustainable and may share responsibility for the quick reintegration of long-term unemployed on the labour market. At any rate, this policy embodied the ultimate ‘social rights’ conception of citizenship and was backed by the Social Democratic Party, which strongly resisted any change until it became the governing party from 1993.

• • The significant changes in Danish welfare policies for the unemployed speak against the idea of welfare states’ “resistance to change” (Pierson, 1998; van Kersbergen, 2000) but this is explainable in terms of the few ‘veto points’ in the Danish welfare system: only the last, and perhaps least significant, part of the reforms was made after consultations with the social partners. The Danish reforms also speak against the idea of changes being made in response to crisis: on the contrary, the economic upswing was a driving force behind the reforms.

This chapter provides an overview of (un)employment policies in Denmark during the 1980s and 1990s, mainly from a citizenship perspective but acknowledging the importance of economic sustainability. From a citizenship perspective, work is not equal to social integration. The core concern from a citizenship perspective is to avoid exclusion from full participation in social and political life (Andersen et al, 1998). Nevertheless, this concern traditionally meant emphasis on full employment. Only from the late 1970s, priority was given to protecting the social and economic rights of the unemployed. However, during the 1990s, Social Democratic governments came to underline the duty to work, since work is considered the only source of full and true citizenship.