Foreign workers increasingly fill knowledge-intensive jobs
Foreign labor plays an increasingly important role in the Danish economy, with around one in seven employed persons of foreign origin in 2024. These workers are increasingly employed in highly-paid, knowledge-intensive positions.
A growing share in high-skill roles
The share of employees of foreign origin in Denmark has risen significantly, from 3 percent in the early 1990s to 14 percent in 2024.
Historically, foreign workers were primarily employed in low-paid service industries requiring manual labor.
However, a notable shift has occurred, with foreign workers increasingly securing highly-paid positions in knowledge-intensive occupations.
This trend is more pronounced in Denmark than in the EU overall, reflecting a broader shift in the Danish economy towards more knowledge-intensive industries.
Approximately half of these foreign workers have resided in Denmark for less than 10 years, indicating a dynamic and relatively mobile segment of the labor force.
The analysis highlights that this group's employment patterns are increasingly aligned with the demands of a modern, high-skill economy.
Younger, more educated, and cyclically sensitive
Denmark's foreign labor force differs in composition from the EU average, characterized by younger, more highly educated individuals who are more frequently employed in knowledge-intensive occupations and welfare sectors.
Furthermore, Denmark has a higher proportion of workers from other EU countries compared to third countries.
An econometric model reveals that foreign labor exhibits sensitivity to cyclical developments in Denmark.
The number of foreign nationals tends to increase when real wages rise and unemployment falls relative to the EU.
This cyclical responsiveness of foreign labor can help to cushion fluctuations in wage and price pressures, potentially reducing the risk of economic volatility amplified by wage inflation.
Structural shift with cyclical benefits
This analysis underscores a fundamental transformation in Denmark's labor market, where foreign workers are now crucial for knowledge-intensive sectors.
While the study highlights positive cyclical stabilization effects, it implicitly raises questions about long-term integration strategies and potential societal impacts.
Policymakers must now consider how to sustain this influx while ensuring equitable outcomes for all workers.