The Labour Market in Storstrøm County
Structure and Challenges

by Svend Lundtorp, Jie Zhang, Bjarne Madsen and AF-Storstrøm (Danish Employment Service), May 2005

Report available in Danish

Summary

Why conduct a labour market study?

Without studies of the labour market in Storstrøm County, the regional labour market council would have to play it by ear. In order to be proactive, the labour market council must have knowledge of current and coming structural problems. This especially applies to areas where unemployment is an issue or a threat and to areas where it can be difficult to find the necessary labour.

or many years, parts of Storstrøm County have suffered from high unemployment. In the light of this labour market analysis is a follow-up of the analysis that AF-Storstrøm (Danish Employment Service) conducted in 1999 as a base year. This report examines developments from 1996 to 2002 and provides a projection until the year 2011.

A positive trend

For many years, parts of Storstrøm County have suffered from high unemployment. In the light of this, the trend from 1996 to 2002 has been exceedingly positive. During that period, unemployment dropped by 41 per cent and is now on level with the rest of Denmark. This positive trend has continued after 2002 – and projections suggest that in future there will be a shortage of (qualified) workers.

Table 1 [here]

This trend is not only seen in the County as a whole, unemployment is down dramatically in all regions in Storstrøm County.

With regard to other key figures for the trend, a picture develops of a society in stagnation. The population has grown very little, as has employment. The labour force has shrunk slightly and there were fewer jobs in 2002 than in 1996. These symptoms of unchanged status, however, cover significant variations when examined in detail.

Structure

The study focuses primarily on elucidating structural differences. First, this means areas where Storstrøm County differs notably from the rest of Denmark. Second, there are some differences between regions within the County. Six regional labour catchment areas have been defined – three south of and three north of the Storstrøm Bridge.

A characteristic feature is that Storstrøm County is increasingly becoming part of the Copenhagen Metropolitan Area labour market. This is especially true in the region of the County north of the Storstrøm Bridge.

Business and Industry

As in the rest of Denmark, Storstrøm County has experienced a drop in the number of jobs within agriculture and manufacturing. On the other hand, the County has experienced rapid growth in the building and civil engineering sector.

But whereas trade and service cover the sectors with the greatest growth at national level, it appears that Storstrøm County has not benefited from this growth. Specifically, this applies to the sectors that employ many people with a higher education. Storstrøm County has not benefited from the rapid growth in these knowledge-based enterprises.

The growth in the public sector has not been as great as in the rest of Denmark, either. In fact, the number of public-sector jobs has remained constant in Storstrøm County, while nationally there has been a 4 per cent growth.

Within the County, there is a varied business and industry structure, which for the individual labour catchment areas is characterised by single businesses. However, it is important to note that the largest sector is the public sector, which in Storstrøm County accounts for 40 per cent of the jobs. Since most public-sector employees provide services to the local communities, the jobs are distributed across the County roughly pro­portion­al to the population figures.

With regard to sectors, the iron and steel sector is very significant in West-Lolland and Mid-Lolland, while the building and civil engineering sector becomes more significant the closer you get to the Copenhagen Metropolitan Area.

The food processing, beverages and tobacco industry is a significant sector in Storstrøm County. But whereas the sector elsewhere in Denmark is characterised by large-scale exports abroad, in Storstrøm County it is a home-market sector. The manufacture of sugar and beer is primarily for the Danish market. From a local point-of-view, however, the sector is an export sector because the majority of the production is sold in regions outside Storstrøm County.

Education

In just six year, the composition of the labour force in Storstrøm County has changed significantly. It is especially noteworthy that the number of employed with a higher education has increased by 21 per cent (Table 2). In this case, it appears that the number of employed with a medium-range higher education, in particular, has grown.

Trend in educational level in Storstrøm County 1996-2002

Table 2 [here]

However, there has also been significant growth in the number of employed with a long-range education. But it should be noted that the majority of these people live in the County, but work in the Copenhagen Metropolitan Area. What is perhaps more significant is that the pro­por­tion of employed with a long-range higher education is only 3 per cent in Storstrøm County, while it is 7 per cent in the country is a whole. 

The proportion of unskilled workers has dropped by 6 per cent, thus making this group smaller than the group of skilled workers, which has increased by 4 per cent.

Occupational rate

The occupational rate indicates the labour force as a percentage of the population. This rate is lower in Storstrøm County than in the rest of Denmark. For 16-66-year-olds, the occupational rate is 73 in Storstrøm County and 77 in Denmark as a whole. However, in Storstrøm County, this figure covers significant variations. For instance, the occupational rate in Rødby is approximately 60, while in Rønnede it is 80.

Since a shortage of labour is expected in the future, an increase in the occupational rate would be one way to bring more people into the labour market. So the study explored the possible reasons for the lower occupational rate in the County. The conclusion is that the difference is caused by a large proportion of unskilled workers (who have a low occupational rate), fewer young people with jobs while obtaining an education, greater tendency towards early retirement and very likely also significant social problems in certain parts of the County.

Challenges in coming years

In order to get an idea of what challenges the near future might bring to the region and to the regional labour market council, the report makes some observations based on the trends from 1996 to 2002 and provides a projection to the year 2011.

From this background, short-term and medium-term challenges can be established, with medium-term being just 6 years. It should be noted that the study only deals with problems; it does not provide solutions.

Current challenges

One immediate problem is the high unemployment rate of the 55-59-year-olds. In the course of a few years, many workers in this group will take early retirement and, consequently, no longer be counted as unemployed. However, this »laissez-faire solution« does not change the fact that there is a group of older workers who want to work and that society is losing their working capacity.

Quite an opposite problem is that apparently there will be a shortage of certain labour groups with a medium-range higher education. More spe­cific­ally, there is reason to expect a shortage of schoolteachers in coming years. At the same time, there is a risk that there will be too many nursery teachers, kindergarten teachers and leisure-time teachers.

In general, the projections suggest an increasing imbalance in the County’s labour market in terms of a shortage of qualified workers.

Long-term challenges

In this context, long-term refers to up to the year 2011.

For the County as a whole, the projections provide a very positive picture of the future with more people in employment, more jobs and almost no unemployment. However, the projection used is based on a number of prerequisites that apply to the country as a whole, among them that unemployment will fall by approximately 60,000 from 2005 to 2011 and that during this time approximately 80,000 new jobs will be created. In the model, these figures are broken down into specific areas, including the labour catchment areas in Storstrøm County.

The apparent balance in the future labour market camouflages the fact that in 2011 there will be some unemployment among unskilled workers, and at the same time a shortage of educated workers, especially those with a higher education. The figure for unemployed unskilled workers is modified by the fact that unemployment is especially prevalent among 15 to 29-year-olds, and in this group, many will still be in the process of obtaining an education.  The overall picture – with the prerequisites laid down for the projection – is that there will be a shortage of educated workers.

One dominant problem underlies these forecasts, namely that there will be more older people and fewer younger people. This applies to the entire country and within Storstrøm County. The large generations from the 1940s will take early or normal retirement in coming years, which means that a large group will leave the labour market without a corre­spond­ing number of young people entering the labour market. Dealing with this problem is presumably the greatest task on the agenda of the Danish Government’s Welfare Commission. 

Globalisation and technological progress

There are no signs that globalisation and technological progress will have an impact on Storstrøm County that is greater than other parts of Denmark.

Globalisation is very visible when factories close down to move production abroad. But in terms of jobs, the impact is not very significant compared to the 260,000 jobs that are shed every year in Denmark.

Job shed as a result of technological progress is less visible, but much greater in scope. In general, however, it appears that they are replaced by other jobs, typically held by people with a higher education. For instance, this is the case in the financial sector, where the number of employees has dropped significantly in recent years, and where the newly employed are much more likely than previously to hold an academic degree.

For Storstrøm County, the greatest challenge from the outside appears to be the coming liberalisation of the EU sugar policy. This will not only affect the 1,500 jobs in the sugar industry, but also the large share of the agricultural sector that grows sugar beets.

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