Russia’s invasion of Ukraine has rapidly become a new and destabilising factor in the Danish economy, as in other European countries. The National Bank of Denmark assesses that the war will reduce GDP growth by approximately 1% and increase inflation by about 2% in 2022. Most noticeable are the shortages in the oil and gas supply that will increase costs for businesses, and Danish exports will be affected, owing to lower growth in the export market. However, the National Bank has noted that the Danish economy is generally robust and should be able to handle the new challenges, but there is a risk of a reduction in activities.

Despite this risk, the Danish employment rate remains high. Recent surveys from the Danish Agency for Labour Market and Recruitment show that businesses are experiencing severe recruitment difficulties. Therefore, the Danish Government, the social partners and Local Government Denmark (KL), which is the association and interest organisation of Danish municipalities, have entered into a tripartite agreement regarding the current shortage of labour.

As to the unions, the situation is currently relatively normal and we do not see an increase in activities or reactions from their side.

As a consequence of the war in Ukraine, a special act was adopted by the Danish Parliament on 16 March 2022, entering into force on 17 March 2022. Under this Special Act, displaced Ukrainian citizens and persons recognized as refugees in Ukraine may obtain a temporary two-year residence permit in Denmark with the option of a one-year extension. The Act will allow such residence permits to be granted without the need to apply for a residence permit pursuant to the Aliens Act, and Ukrainians who are granted a residence permit under the Special Act are exempt from the work permit requirement. A large number of Danish businesses are interested in hiring Ukrainian refugees.