As wages responded with a lag to higher productivity growth, unit labor costs fell, profits rose, and then competitive pressures passed along the lower costs to lower prices. In effect, the short-run non-accelerating-inflation rate of unemployment (NAIRU) declined, allowing above-trend growth to lower the unemployment rate without putting upward pressure on inflation. But both the demand and disinflationary effects are temporary.
We expect zero growth and rising unemployment next year, but nevertheless, it is important to remember that Denmark goes into recession from a situation with low unemployment, extensive labour shortages and relatively high wage increases. Many comparable countries are in a very different situation.