Denmark's Flexjob System: A Record-Size Disability Employment Scheme — and Its Limits
A System Built on Inclusion
Denmark built its disability employment architecture on a foundational commitment: that people with reduced work capacity who want to work should be able to do so, with public subsidy bridging the gap between what they can deliver and a wage.
The flagship expression of this commitment is the flexjob — a position in which the employer pays only for the work actually performed, while the municipality pays a wage supplement on top. According to the Ministry of Employment, the flexjob scheme — including people approved for a flexjob who are still waiting for one — covered just under 110,000 full-time persons in 2023, a record, based on Jobindsats.dk data.
How Flexjobs Work
A flexjob is granted by the municipality to people whose work capacity is permanently and substantially reduced. Key features:
- Five years at a time: A flexjob is granted for five years at a time. People over 40 who still meet the conditions after their first five-year grant receive a permanent flexjob; for those under 40, the municipality reassesses eligibility before each period ends
- Wage split: The employer pays wages for the work actually performed; the municipality pays a flexjob wage subsidy (fleksløntilskud) directly to the worker, which is reduced as earnings rise. Wage and subsidy together cannot exceed the full-time wage for the position
- Ordinary conditions: Pay and terms follow the relevant collective agreement where one applies
The reform of disability pension and flexjobs — agreed by a broad parliamentary majority in 2012 and in force from 1 January 2013 — made two significant changes to the scheme:
1. No minimum hours — there is no longer a lower limit on how many hours a person must be able to work in a flexjob, so people with very little work capacity can hold a flexjob of only a few hours a week (provided they can develop their capacity within a reasonable period)
2. Subsidy to the worker, not the employer — the old system of refunds to employers was replaced by a subsidy paid by the municipality directly to the worker and adjusted to their actual wages
Retention flexjobs (fastholdelsesfleksjob) — flexjobs at a person's existing workplace — as a main rule require at least 12 months' prior employment there under the so-called social chapters of collective agreements or on special terms.
The caseload has grown markedly since the reform: the number of full-time persons in the flexjob scheme rose by 40,000 between 2013 and 2023. The Ministry of Employment links this growth to the reform, which made few-hour flexjobs possible and at the same time restricted access to disability pension (see below).
Employment Outcomes: The Uncomfortable Evidence
The central question is whether flexjobs produce employment that would not otherwise exist — i.e., whether the scheme creates net labour market inclusion or primarily subsidises employment that would have occurred anyway (deadweight), or displaces unsubsidised workers (substitution).
One of the more rigorous evaluations — Datta Gupta, Larsen & Thomsen, "Do wage subsidies for disabled workers result in deadweight loss? – evidence from the Danish Flexjob scheme" (Aarhus University, Department of Economics and Business Economics, Working Paper 2013-24) — examined the scheme as it worked before the 2013 reform, when employers received the reimbursement. It used a 2002 cut to the reimbursement paid to government (state) employers, while municipal and regional employers kept the same rate. After the cut, government employers created fewer flexjobs, and the share of new flexjobs going to workers retained from an ordinary job at the same employer, rather than to new hires, was twice as large as it would have been without the reform. The authors describe this as substantial substitution between "insiders" and "outsiders" — though the paper does not put a single economy-wide deadweight figure on the programme as a whole.
The Disability Pension Shadow
Flexjobs exist alongside — and interact with — the disability pension (førtidspension). In December 2024, 245,000 people living in Denmark received førtidspension, up from 239,000 in January 2024 (Statistics Denmark) — with especially fast growth among recipients under 40 in recent years.
The 2013 reform restricted access to førtidspension and eased access to flexjobs, with the stated intention that as few people as possible should end up on disability pension. According to the Ministry of Employment, this has meant more people in flexjobs.
What the Evidence Supports
Notwithstanding the limitations of flexjobs, Danish disability employment policy has some genuinely evidence-based strengths:
IPS in Denmark: Individual Placement and Support was tested in a randomised trial from 2012 to 2018 among 720 people with severe mental illness in Copenhagen/Frederiksberg, Odense and Silkeborg. The trial compared standard IPS, IPS enhanced with cognitive remediation and work-related social skills training (IPSE), and standard Danish vocational rehabilitation. Over a 30-month follow-up, 65% of the IPS group and 65.1% of the IPSE group had been in competitive employment or education at some point, compared with 52.7% in the standard-services group. Counting competitive employment alone, the figures were 46.5% for IPS against 35.1% for standard services — a clear advantage for IPS, though a more modest one than headline comparisons sometimes suggest, and the enhanced variant added nothing beyond standard IPS.
Early intervention: Under Denmark's sygedagpenge (sickness benefit) system, the jobcentre contacts people on sick leave before the end of the 8th week of their sickness period, with ongoing follow-up conversations for those on long-term sick leave.
The Fiscal Picture
InkludX's own estimate, based on Statistics Denmark's ESSPROS data, puts Denmark's spending on disability and sickness benefits at €13.6bn (DKK 101.8bn) in 2024, or 3.4% of GDP — of which disability pension (førtidspension) accounts for €7.3bn and sickness benefit (sygedagpenge) for €2.0bn. This excludes lost tax revenue, healthcare, social care and employment-programme costs, so it does not capture the full public cost of the flexjob scheme.
The Danish example is simultaneously a model of ambition — a society that has decided to maintain workers with reduced capacity rather than allow them to fall into poverty — and a cautionary tale about the limits of wage subsidies as a primary inclusion tool.
The Path Forward
Denmark's April 2025 agreement on reforming employment policy (Aftale om reform af beskæftigelsesindsatsen) sets aside an additional DKK 100 million a year in 2026–2035, and DKK 150 million a year from 2036, to expand IPS and a related youth initiative. It also ends the offsetting of the flexjob wage subsidy against a spouse's state, senior or disability pension, and removes the requirement for municipalities to set up rehabilitation teams for flexjob and disability pension cases.
On the evidence above, there is a strong case for shifting the emphasis from wage subsidies alone towards supported placement with job coaching such as IPS — while maintaining flexjobs as a safety net for those with severe work capacity limitations.
Sources: Ministry of Employment, Status på arbejdsmarkedet, October 2024 (based on Jobindsats.dk); sundhed.dk, Lægehåndbogen: Fleksjob, 2024; STAR, Fleksløntilskud, 2026; Datta Gupta, Larsen & Thomsen, "Do wage subsidies for disabled workers result in deadweight loss? – evidence from the Danish Flexjob scheme," Aarhus University Working Paper 2013-24; Statistics Denmark, Folke- og førtidspension 2024 (April 2025); Christensen et al., "30-Month Follow-Up of Individual Placement and Support (IPS) and Cognitive Remediation for People with Severe Mental Illness," Psychiatry Journal, 2023; Djøf, Hvis du bliver syg; Aftale om reform af beskæftigelsesindsatsen, April 2025; InkludX, Fiscal cost of labour exclusion: Denmark.