How to make switching jobs not terrifying

0:01NPR.

0:11This is The Indicator from Planet Money. I'm Stephen Massaha. And I'm Darren Woods. So, Stephen, there are reports showing that people are pretty worried about their jobs right now. Yeah, it's this sort of labor market freeze that we're in. Like, very few companies are hiring right now. Workers, they're clinging to their existing jobs. I believe job hugging is the word I've heard. Okay. Yeah, even if they don't like the job, they're holding on tight. Yeah, the quits rate is really low, and that is not a great sign usually. Now, there are a lot of reasons behind this freeze. You've got interest rates starting to bite, uncertainty about government policy, probably even artificial intelligence automating junior tasks.

0:53But whatever the cause, there is a set of policies that we in the U.S. could learn from, policies that could unfreeze the labor market. It's called flexicurity. Flexicurity, exactly. When the Economics Nobel was announced this year, this term kept coming up as a way to manage a fast-changing economy. The Danes, I think, have been very smart. They invented the flex-security model. This is economist Philippe Aguillon, one of those Nobel laureates. And he explains that flex-security means there's flexibility in the labor market. You can hire and fire easily. But there's also security, generous unemployment benefits, training, and help finding a new job.

1:34And with all the talk about socialism following Zeran Mamdani's mayoral win in New York, it's worth pointing out this type of policy is a key part of democratic socialism. So today on the show, Flex Security. We'll meet a woman who left her job in Denmark and how this completely changed her life. And we'll ask whether the Danish model could work in the U.S. This message comes from LinkedIn ads. One of the hardest parts about B2B marketing is reaching the right audience. That's why you need LinkedIn ads. You can target your buyers by job title, company, role, seniority, and skills. All the professionals you need to reach in one place.

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2:54growing up on the Faroe Islands off mainland Denmark, Rakul Skarana loved hanging out with her school friends. School work, less so. By age 15, she was ready to leave. I just wanted to go out and have fun with friends and drink some beers and, you know, like living the good life as a teenager. So Rakul got a job on a fishing boat. After several years, she moved to the Denmark mainland and got a job in childcare, which worked for a while until she had her own daughter. Then I was like, I came home to take care of a child, go to work and take care of another child who also needs my help and care.

3:35So I thought that it became too much for me. So she quit, which sounds like a big decision, because the family would basically survive on government support. How worried about receiving health care were you? No, I don't think that because here in Denmark, we are paying that much in tax how much you earn. And then we are paying that way. So you paid so much tax that you thought the government will pay for this? I think so. Of course, health care is publicly funded in Denmark. And she got money, too. Between all her various allowances from the government, she says she got the equivalent of about$1 ,500 a month.

4:17Ruckl did have obligations, though. She had to show that she was applying to jobs and regularly meet with a jobs counsellor. And this was administered through her old union tied to her childcare job. At least two out of every three workers are part of a trade union in Denmark. They were like telling me that I had that an opportunity to get in school. I was like, me to school? Oh my God, no, I don't want to do that. And they were like, but listen to me, you are this person, you are full of energy, you have so much positive vibes in your body that we mean that you will be great to this job. And I was like, okay, what is this job?

4:55Union suggested she train to become a nursing assistant. And I was thinking like for like 15 seconds and look up into the ceiling and I was like, hmm, okay. But what about money? I'm a single mom. I cannot afford to pay school. And he was like, but now, yeah, but you are getting, how do you call it, payments, yeah, during this school. The Danish government would pay 110 % of the unemployment benefit to people studying in industries where there was a shortage of labor. Rakul could get this higher payment from the government by studying social work and health care. So I was like, wow, I want to try to do that.

5:35Rukul enrolled and studied for the next five and a half years. And she didn't need to take on an extra part-time job. You're living a normal life. And you can give your children food in their mouth without thinking about, oh, we need to save 10 Crohn's for this and 15 for that. We did not live like that. When Rukul graduated this summer, she landed that job as a nursing assistant, helping patients. Strokes, cancer, depression, everything. So we are like helping them up on their foot. So from Ruckel's perspective, this whole unemployment situation was pretty good. She had the opportunity to leave a job she didn't feel was suitable and retrain for another while getting a decent allowance each month from the government.

6:22This is flexicurity in action. But for a less motivated person, we wanted to know if there was a risk the safety net might become a hammock. So you want to know about the flexicurity? Yes, so we'll talk about that. Morden Grasing is a deputy director general at the Danish Agency for Labour Market and Recruitment. If the government pays unemployed people fairly well, doesn't that create the incentive for people to quit their jobs and just stay unemployed? Exactly. But that's one of the main arguments of having an extensive active labour market system, is to create motivation. Active labour market system.

7:01As in, the government helps with retraining and connecting unemployed people with jobs. It might even mean the government tops up people's wages at first as they start working again. But there's expectations on the unemployed person. Basically, there's an unwritten contract that, okay, you receive these social benefits. They're quite generous. But then you have to participate in activities and be active in seeking jobs and document that you are active pursuing to get a job. Unemployment benefits are sanctioned if the person doesn't meet these responsibilities. So yeah, this incentive is there and that is why we have a quite intensive and some would say aggressive active labor market system because we are pursuing that each individual are getting back into jobs very, very quickly.

7:53Morten says this muscular approach balancing rights and responsibilities has worked. It seems like it's performing quite well. We have in many years we've had a high employment and also our unemployment is very low actually. So, well, basically the results are quite good. It's true that raising unemployment benefits alone will likely raise joblessness. But the economic literature shows that adding training and job counseling to the mix often helps get people into jobs. Results vary on specific programs. As for whether a country like the U.S. could copy and paste Denmark's approach to unemployment, well, we already have the flexible part.

8:37Workers in the U.S. have among the lowest protections from getting fired among rich countries. As for the security part, Morten was actually pretty tempered. Yeah, it's hard to make a short-term advice because this model, this institutional build-up takes many years of building up trust and the build-up of institutions. A critical part of the flex-security puzzle is unions. Like the union Rakul was part of that worked collaboratively with the government and employers to help their unemployed members. If those relationships are acrimonious, then the machine doesn't work as well. If you look at the performance of the Danish labour market and the Danish economy, one would say that this might be the bumblebee that, in theory, couldn't fly, basically.

9:31And that buzzing economy is working for Rakul. Her new job is a far better match for her. I love my job. Seriously, really much. So I put 150 % in my job. You're a people person, so this is a great job for you. Seriously, really. You know, this all feels really relevant right now as we talk about how AI is coming for everyone's job, even like white collar jobs now. Yeah, flex security may help ease the pain to transition to a new job. I could use a flex security blanket right now. And the label, made in Denmark. This episode was produced by Cooper Casper Kim and Sierra Juarez with engineering by Robert Rodriguez.

10:12It was fact-checked by Tyler Jones. Cake and Canon edits the show and The Indicator is a production of NPR.

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