Novo Nordisk Layoffs Add Fuel to Denmark’s Economic Anxieties

The career services hotlines are busier than usual at HK, one of Denmark’s largest unions. On the phones are office workers, computer scientists and laboratory technicians anxious about their professional futures. Just a year ago, Danes were enjoying the spoils of a national hiring spree. Now, career transitions and reskilling are top of mind. A recent HK survey found that more than half of the organization’s members fear losing their jobs.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The career services hotlines are busier than usual at HK, one of Denmark’s largest unions. On the phones are office workers, computer scientists and laboratory technicians anxious about their professional futures. Just a year ago, Danes were enjoying the spoils of a national hiring spree. Now, career transitions and reskilling are top of mind. A recent HK survey found that more than half of the organization’s members fear losing their jobs. Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.“Layoffs are becoming normalized,” said Ida Ullitz, career adviser at HK, noting that they’ve seen cuts across industries and sectors, as well as public and private organizations. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.On paper, Denmark’s economy looks enviably robust. Employment is at a record high, growth is solid and public finances are strong. By most conventional yardsticks, the country is booming.Yet those numbers don’t reflect the sense of dread that’s taken hold since many of the country’s flagship companies began slashing their workforces last year. In September, pharmaceutical giant Novo Nordisk eliminated about 5,000 jobs in Denmark — one of the largest-ever reductions in the country’s history. Lundbeck, Nykredit, Tryg, Nordea Bank and other major employers followed with cuts of their own. And an end isn’t in sight. Energy company Orsted has warned of hundreds of layoffs amid pressure on offshore wind, and Maersk said this month it would eliminate 1,000 positions, including in Denmark, to brace for weaker revenue.“We’re seeing a wave of layoffs, and we expect more to come,” said Kia P. Dollerschell, head of the legal department at Djof, a union that represents white-collar professionals. Last year, Denmark recorded its highest level of layoffs since the Covid-19 pandemic, and in December, joblessness rose to a four-year high of 3.0%. (Because of notice periods, this figure likely does not capture the Novo downsizing.) That’s sent a chill through the labor market. People “read about layoffs at large, well-established companies and think: if it can happen there, it can happen to me too,” said Kasper Hojvang Kyed, managing director of unemployment insurer A&Til. Denmark’s “flexicurity” labor model allows employers to easily hire and fire, while giving Danes access to state-funded unemployment benefits. Many people buy salary protection insurance for extra security in the event of losing their job; since the Novo cuts, sales of such policies at Kyed’s firm have increased by 24% — a trend also playing out across other providers.In a country of just six million people, many Danes have a friend, neighbor or family member who has been directly affected by layoffs. And when households grow anxious, said Ida Marie Moesby, a consumer economist at Nordea, they postpone major purchases and skip holidays to save money. “It drives more pessimism,” she noted. Soren Kristensen, chief economist at Sydbank, emphasized that although “the economy is doing very well” by almost all metrics, “that’s just not the perception consumers have.” This disconnect is posing the question of whether the layoffs will be a blip on the economic radar or if they could set off a chain reaction, with corporate cutbacks rippling through the broader labor market and, in a worst-case scenario, leading to rising unemployment and a possible downturn. Denmark’s labor market is capable of absorbing the corporate job cuts, Kristensen said. Yet he warned that if geopolitical tensions escalate with the US or demand weakens from Germany, one of Denmark’s most important markets, it could further create the conditions for an economic spiral. Moreover, with the prime minister obliged to call an election before the end of October, there is a risk that souring public sentiment could become a political challenge as well as an economic one.The situation is also calling attention to the outsized role that Denmark’s flagship companies play in the country’s economy. When they do well, their success can raise all ships — and sometimes obscure problems lurking beneath the surface. When they struggle, the effects can spread throughout the wider economy. In a report from January, the OECD warned that the Danish economy has become increasingly reliant on a small number of multinationals for jobs, investment and tax revenues, leaving the country more exposed when one of them stumbles. Few companies embody this dynamic more clearly than Novo Nordisk, whose rapid expansion has driven Denmark’s growth and hiring boom in recent years. Because of its dominance, Novo’s standing doesn’t only impact the Danish economy, but the public mood. The country’s consumer confidence indicator plummeted to a two-year low last year when the drugmaker announced layoffs as its shares were taking a beating. With the weight-loss drug market becoming increasingly competitive, Kristensen pointed to Novo’s ongoing troubles as a key factor in Denmark’s current economic unease. Up until a year ago, Novo Nordisk was hoovering up talent as part of a hiring rush that left other Danish companies scrambling for workers.“Novo essentially kept the whole market afloat,” said Rasmus Meyhoff, a managing partner and pharmaceutical specialist at recruitment firm Compass HRG. Official data underscores this point. Since mid-2022, the company has accounted for roughly 16% of all private sector employment growth, according to the Economic Councils’ October report — an outsized impact for a firm that represented less than 2% of all private sector jobs. This helped prop up headline employment figures, and may have masked tectonic shifts that were quietly taking place across the Danish economy.While unemployment remains low, demand for labor has weakened in recent years. In 2022, 46% of companies in the manufacturing sector reported that their production was constrained by a lack of workers. In January, just 7% of companies said that, with half instead citing lackluster customer demand as their main problem. Similarly, the number of available positions posted on Jobnet, measured by daily average, has been trending down since its peak in March 2022, dropping 35% by early 2026.Then, last year, Novo stumbled. Bruising competition from copycat obesity drugmakers and the relentless rise of US rival Eli Lilly & Co. began to eat into its margins. The company cut its full-year earnings guidance four times, and ushered in a new CEO. With that leadership change came a swift and startling internal reset: First, a hiring freeze. Then, new recruits were abruptly told not to show up for their first day. Soon after, longtime employees were handed redundancy notices, while others were given revised contracts with downgraded roles or less favorable terms.As this was happening, Denmark’s broader corporate landscape was changing. Companies across industries were trimming operations in response to escalating global uncertainty, leaving the labor market less able to quickly absorb displaced workers. Henrik Brabrand, CEO of Albright Partners, which specializes in executive-level recruitment for pharmaceutical makers, said he expects most laid-off Novo workers to find new roles over time, given Denmark’s strong life-science ecosystem and years of investment in startups. But he cautioned that the recovery will be slow, and it will likely take two to four years before most secure new positions.In the meantime, he said of layoffs, “the trend we’re seeing now won’t stop.”With economic nerves already frayed, that puts heightened focus on Novo’s next moves. The biggest concern is that a further slowdown at Novo — which has warned of negative growth this year — might not be confined to the company itself. Years of expansion have turned the pharmaceutical company into an economic engine in the regions where it operates, meaning that even a modest pullback risks setting off a chain reaction.“If activity at Novo declines, it will inevitably spread,” said Helge Pedersen, chief economist at Nordea. “If less production is needed, it affects subcontractors. If there is less investment, it hits contractors. And if activity in a local area decreases, it impacts retail, and so on.”Some of those knock-on effects are already becoming visible. Meyhoff said he’s worked with several Novo suppliers and subcontractors that once hired aggressively to keep up with demand but are now being forced to cut jobs as the drugmaker scales back. “They are really under pressure,” he said.During a presentation on earnings and year-ahead outlook, Chief Financial Officer Karsten Munk Knudsen said that most departments within Novo have seen their budgets cut for the year. “Our suppliers should expect that we’re going to spend less,” he added. “We are in a different situation now. With the top line declining, there’s only one way to go.”The Danish Society of Engineers, IDA, a union that represents engineers and IT and natural science professionals, said that membership inquiries have risen since Novo announced the layoffs, and not only from its employees.“We are seeing more large rounds of layoffs than usual at the moment,” said Malene Matthison-Hansen, who chairs IDA’s employees’ council. “Since Novo is cutting back, some of the companies that supply Novo Nordisk also need to cut back, so there are definitely some ripple effects at the moment.”Some experts point out that there could be a silver lining in the Novo downsizing. Companies that struggled to find workers in the wake of the drugmaker’s aggressive hiring might now have an easier time, said Christin Tuxen, Nordic head of banking for SME business customers at Danske Bank, Denmark’s largest lender.Tuxen described how recent layoff rounds across the Nordics have strengthened innovation by putting highly skilled engineers back into the labor market. She also pointed to Finland’s experience after Nokia downsized thousands of workers. That freed up a pool of talent that went on to found new firms and create a broader technology ecosystem in the country.In fact, Novo has received “big thank-you’s from many of the other companies” because it had “finally released some workforce back into the market,” Mike Doustdar, the drugmaker’s CEO, said in an interview.The Danish government is watching these developments closely. While it has played down the immediate impact of the Novo cuts, arguing that the country’s labor market remains strong, it concedes that they will drag on employment growth. The redundancies are expected to show up in unemployment figures in the first half of 2026, according to the economy ministry, after notice periods expire.That timing is politically sensitive, as Denmark must hold a general election before Oct. 31. To keep voters on their side, the grand coalition government is moving aggressively to limit the economic fallout. In early February, Denmark’s employment ministry announced that it would allocate extra resources to municipalities supporting workers laid off by Novo. The government is also trying to energize consumer spending by abolishing an electricity tax, promising grocery checks to millions of households and proposing measures such as cheaper childcare.For people like Romel Amineh, however, this won’t make the search for work any easier. Amineh is the founder of Club5000, a LinkedIn group for laid-off Novo employees that has grown to thousands of members. Months after the cuts, it remains highly active as a clearing house for job leads, professional advice and social support, with participants invited to join running clubs and attend networking dinners. This has given Amineh an up-close view of the anxiety that many of his former colleagues are dealing with as they struggle to find their footing in the wake of the layoffs.“There are a lot of people out of work now,” he said. “It’s a real problem, and it was already a big enough problem to begin with. It takes longer to find a job. It affects people.”When Amineh was let go from his job leading a digital product development team at Novo, it was the second time in less than two years that mass layoffs had upended his life. He had found the position only months earlier, after his previous employer initiated a major restructuring. Amineh is now doing freelance consultancy work, and is wary of whether any future employer will be able to offer long-term stability. “Which workplace will be the next one to carry out mass layoffs?” he asked. “It’s not a particularly reassuring environment right now.” —With assistance from Naomi Kresge and Christian Wienberg.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.