Denmark’s New Government – Initiatives on Business and the Labor Market

After 70 days of negotiations, four parties presented the agenda for Denmark’s new government on June 2, 2026. The four parties are the Social Democrats, the Socialist People’s Party, the Social Liberal Party, and the Moderates. The government is anchored in the center‑left.

The government has presented an extensive set of proposals. The financing of several initiatives has not yet been clarified, which makes the initiatives more uncertain. Below is an overview of the initiatives that would affect private-sector employees as well as the general conditions for businesses to operate in Denmark.

Fewer Burdens

The government has set a goal of reducing the regulatory burdens on Danish businesses by 25% by 2035. The government’s goal is not yet concrete. The initiative will be anchored in an expert group that will replace the current EU and Regulation Forum. Over the years, the EU and Regulation Forum, an advisory body, has not been able to significantly reduce the burdens faced by businesses.

The government will also explore the possibilities of using AI in companies’ reporting to public authorities, thereby reducing administrative burdens for businesses.

More Entrepreneurs

The government will introduce an entrepreneurship package that, among other things, will aim to improve access to capital, enhance the use of employee shares, and reduce tax-related barriers.

Productivity and Competitiveness Commission

The government will establish a commission tasked with providing recommendations on how Denmark can increase prosperity through improvements in productivity and competitiveness. The commission will, among other things, draw inspiration from the Draghi report. The government has no concrete considerations at this stage.

Nordic Growth Alliance

The government will work to establish a Nordic Growth Alliance that leverages the shared economic strengths of the Nordic region. As part of this effort, an industrial task force will be set up involving relevant ministries, industries, and research institutions. The task force will, among other things, provide recommendations on how Denmark can best achieve strategic autonomy with a focus on AI and the defense‑industrial strategy.

A Well‑Organized Labor Market

The government aims to strengthen the framework conditions for a well‑organized labor market. An expert group will be established to map the socio‑economic value of the Danish model, flexicurity, and the contributions of the collective‑bargaining parties to employment, skills development, conflict resolution, and the sustainability of the welfare state.

The group will also examine possibilities for relieving the collective‑bargaining parties of some of the costs they incur on behalf of the entire labor market, and for adjusting the tax deduction for union membership fees so that it specifically targets membership fees in unions that are party to collective agreements.

More International Employees and ID Cards

A requirement for ID cards will be introduced on major construction sites, and the already agreed collective‑bargaining‑based certification scheme for international employees will be implemented — see our earlier article on this scheme: Nye regler om ID-kort og arbejdsklausuler i byggebranchen.

Pensions and Working Life

The government wishes to establish a tripartite agreement with the social partners on a more flexible working and family life, including conditions for pensions and retirement. The following topics are to be discussed as part of this work: 

• Strengthening opportunities to work less during some periods of life and more in others
• Creating greater security and clarity regarding the rules for retirement
• Investing in education, upskilling, reskilling, and career shifts
• Reducing stress and sickness absence and improving the working environment
• Strengthening a more inclusive labor market, including for seniors

The government specifically intends to establish a career‑shift fund to support opportunities for reskilling and career changes, including for those parts of the workforce for whom artificial intelligence is expected to change the competency requirements, as well as for skilled and unskilled workers with long working lives behind them.

In addition, the government wants employees with young children to have the option of part‑time work with wage compensation. It will be a requirement that the employee works full‑time both before and after the part‑time period.

The tripartite agreement must also identify measures that can increase structural employment by 5,000 full‑time workers.

The government will improve the conditions for early retirement by, among other things, not raising the age threshold for early retirement and increasing the benefit by DKK 3,000 per month.

Reintroducing Great Prayer Day

It is the government’s goal to reintroduce “Store Bededag” (Great Prayer Day) as a public holiday from 2030. The prerequisite is that the government can present proposals that compensate for the loss of employment that follows from introducing an additional public holiday.

Taxation

The government intends to abolish the “top‑top tax,” which is a 5% tax on income above DKK 2.6 million. The abolition will be financed by changes to the taxation of principal shareholders.

The government also plans to abolish the middle tax bracket, which has so far been a 7.5% tax on income from DKK 641,000 to DKK 778,000. Going forward, there will only be a top tax of 15% on all income above DKK 778,000 – or $120.000.

The tax on share income will be slightly reduced, so that capital gains on shares up to DKK 110,000 will be taxed at 27%. Until now, the threshold has been DKK 90,000. Share income above the threshold will continue to be taxed at 42%.

The lower personal income taxes will be financed through new and increased taxes or reduced deductions on inheritance, interest expenses, research and development, business subsidies, and the personal tax allowance.

The government also wants to reform capital taxation to free up more capital for businesses. The reform has not yet been specified. A commission will be tasked with proposing the reform.

Corporate tax will be reduced over three years from the current 22% to 19%. Provided that other countries do not also reduce their corporate tax rates, Denmark will have one of the lowest corporate tax rates among Western countries.

Bottom Line

Several of the initiatives — particularly in the area of taxation — will improve the conditions for doing business in Denmark, while other initiatives might worsen the conditions for companies. In particular, improved conditions for part‑time work, retirement, reskilling, and the reintroduction of a public holiday will likely reduce the supply of labor.

A key uncertainty for businesses is the unclear and insufficient financing of the many proposals. The financing measures are an unknown factor that may increase the cost of running a business.

*Erik Simonsen is a Senior Labor Market Advisor with Littler Denmark