61 Rethinking local government: Essays on municipal reform - VATT

Local Government in Denmark and the 2007municipal reformtreated at the regional hospitals. The overall idea was to provide themunicipalities with an incentive to solve their health tasks efficiently.If they are efficient, hospital treatments may be avoided, and becauseof the new co-financing arrangement, this again means that theysave money. However, this idea rests upon quite heroic assumptions(Pedersen, 2005). First, the municipalities do not refer patients to thehospitals, which means that there is no automatic connection betweenthe municipalities’ and the hospitals’ activities. Second, the municipalshare of hospital costs is only about 30 per cent. This means that themunicipalities only save money if their alternative solution costs lessthan one third of a hospital treatment. To support relations betweenmunicipalities and regions in the new system, the central <strong>government</strong>introduced a formal requirement that they conclude cooperationagreements with each other that specify practical arrangements.From the perspective of the regions, the functional part of the2007 reform was a set-back. First, the municipalities were givenresponsibilities within their traditional main function, health care.Second, almost all their other traditional functions were taken away.Specialized social services were transferred to the municipalities, andall their institutions within secondary education were transferred tothe central <strong>government</strong>.In sum, the functional part of the 2007 reform entailed a considerablestrengthening of the functional base of both the central <strong>government</strong>and the new municipalities, while the new regions were createdas reduced versions of the old counties. A considerable numberof employees in the municipalities and counties got a new publicemployer and some had to accept a longer commute to work becausetheir work place was relocated as part of the reform. However, noonelost their job because of the reform since employment rights werelegally protected. 33 According to the Danish law on employees’ rights in case of transfer ofundertakings (lov om virksomhedsoverdragelse) employees cannot be laid off becausetheir job is transferred to another employer (but it does not protect against dismissal forother reasons). This law implements EU rules on safeguarding of employees’ rights.58