Denmark made firing easy and paid the fired to keep working

Most European labor markets in the early 1990s faced the same tension from opposite directions: countries with strong job-protection laws made it costly and legally risky for firms to lay off workers, which in turn made firms reluctant to hire in the first place, since taking someone on felt like an irreversible commitment. Countries that instead offered generous unemployment benefits without much pressure to actually seek work risked the opposite failure — benefits became a comfortable parking spot rather than a bridge back to employment, and unemployment could persist even as the labor marke

Facing an unemployment crisis in the early 1990s, Danish policymakers pursued neither path in isolation. The 1994 labor market reform, later reinforced in 1996, deliberately combined elements economists usually treat as opposing choices — flexibility for employers and security for workers — into what became known as the "golden triangle."