Jobreform I and Integration Allowance (2015)
The two main elements of Jobreform I are the ceiling of the total amount of social assistance and the requirement of 225 hours of work within a year. The introduction of the Integration Allowance for foreigners aims to ensure better integration and incentive to work.
On 18 November 2015, an agreement was reached concerning social assistance as part of the first phase of the Job-reform. The main purpose of the agreement is “making-work-pay” for recipients of social assistance, and to increase their availability on the labour market in order to achieve the goal of more recipients finding a job. Legislation enacting the agreement in law was adopted by the Danish Parliament on 17 March 2016. The legislation formally entered into force on 1 April 2016 and has had an effect on the amount of benefits being paid as from 1 October 2016.
There are two important elements in the agreement necessary in order for it to achieve its aims
A ceiling on social assistance
It is the view of the Danish Government that there must be a clear economic advantage from working - even in jobs in the lower end of the wage scale - compared to being a recipient of social assistance, when taking into consideration the total amount (after tax) received in the form of social assistance, housing-allowance, special allowance, subsidies of daycare institution fees, child and youth allowances and child benefits after tax. In the context of Jobreform I this is being achieved by establishing a cap ("the ceiling") on the total amount of social benefits (social assistance, special housing allowance and housing benefit) payable to a recipient of social assistance. However, the amount of social assistance per se, along with benefits directly related to children, are not being reduced. Thus, it is only housing allowance and the special allowance which may be reduced as a consequence of the ceiling.
Tighter availability rules: Work requirement to maintain full social assistance
The so-called 225-hour rule requires recipients of social assistance to continually prove availability for the labour market by having worked at least 225 hours within the past 12 months. This corresponds to approx. 6 weeks of full-time work and provides an incentive for recipients to maintain a connection to the labour market. Failure to comply with this requirement will result in a reduction of benefits until the recipient fulfils the requirement of 225 hours of work within a year. A person is exempted from the work requirement in periods where the person's ability to Work is reduced to such a degree that the person is unable to work in ordinary unsubsidised employment.
Integration allowance (2015)
As of 1 September 2015, the government introduced a new integration allowance for foreigners and Danes who have not resided in Denmark (or Greenland and the Faroe Islands) in seven of the past eight years. This allowance will replace educational or social assistance and should, among other things, ensure a larger incentive to work and to become integrated into Danish society. The allocation and assessment principles of this allowance will be similar to the principles that apply to educational and social assistance in general.
The integration allowance may be granted for up to seven years. The integration allowance is on par with educational assistance (which is based on the rates of the student grant system) and does not include the possibility of receiving the activity-based extra allowance. Persons covered by the integration allowance who show a willingness to become integrated into Danish society by learning Danish may by application obtain a supplement to the integration allowance. On 19 November 2015, it was agreed that the integration allowance will be extended to include all persons who have not resided in Denmark for at least seven out of the past eight years. This legislation was adopted by the Danish Parliament in March 2016 and came into force 1 July 2016.