The purpose of the unemployment insurance funds in Denmark is to ensure economic support for the unemployed citizen. They also work closely with the municipalities.
Unemployment insurance is a voluntary scheme administered by Denmark's unemployment insurance funds and not by the state. The Danish unemployment benefit system is based on the Ghent system and has its roots in the early 1900s. In its present form, it dates to the late 1960s.
Denmark's unemployment insurance funds are private associations of employees or self-employed persons organised for the sole purpose of ensuring economic support in the event of unemployment.
Unemployment benefits are, however, largely financed by the State. There are all in all 25 unemployment insurance funds in Denmark.
The Act on Unemployment Insurance is administered by the Danish Agency for Labour Market and Recruitment.
Under current rules, an unemployed person can receive unemployment benefits if he or she has been a member of an unemployment insurance fund for at least 1 year and has reported at least DKK 223.428 (EUR 30,033) as a fulltime insured member or DKK 148.956 (EUR 20,022) as a part-time insured member as income (2017) to the income registry in the last 3 years. Benefits can be received for a maximum of 2 years within a period of 3 years.
As a rule, the rate of unemployment benefit paid out is calculated on the basis of the 12 months with the highest income in the past 24 months. It is possible to receive up to 90 per cent of the average salary income. However, it is not possible to receive more than the highest unemployment benefit rate, which in 2017 was DKK 18.403 (EUR 2,473) a month as a fulltime insured member and 12.269 (EUR 1,649) a month as a part time insured member.
Graduates can become members of an unemployment insurance fund even if they do not have an employment record, on the condition that they join the fund immediately after graduation. Unemployed graduates receive a reduced unemployment benefit at a rate of 71.5 per cent of the normal level.