By Erik Matzen and Teis Jensen

By Erik Matzen and Teis Jensen

COPENHAGEN (Reuters) - Denmark must adopt reforms to expand the workforce this year or a shortage of workers in some areas will dampen economic growth in the future, Economy Minister Simon Emil Ammitzboll told Reuters in an interview.

After some years of mediocre growth, Denmark's liberal minority government now expects the economy to pick up this year and next by 1.5 percent and 1.7 percent, respectively.

But there is a danger of work bottle-necks.


"We have to do some things both short-term and long-term to expand the workforce," Ammitzboll said

He said the government would seek to raise the retirement age, increase the employment rate for foreigners, reform a lucrative grant system for students, and lower taxes to encourage the unemployed to find a job.

"We have to make these decisions fairly quickly," Ammitzboll said, adding that cutting welfare benefits or increasing the number of foreign workers also could come into play.

His party, The Liberal Alliance, joined Prime Minister Lars Lokke Rasmussen's government in November alongside the conservative party.

However, despite the expansion the government still only holds 53 of 179 seats in parliament and depends on support from the right-wing Danish People's Party or the center-left Social Democrats to push through reforms.

Danish People's Party, an ally of the government, would like to negotiate the government's proposals, which will be presented later this year, but is a against tax cuts for the wealthiest, a spokesman for the party said.

The Social Democrats will also join the negotiations about tax and job reforms but is against increasing the retirement age and giving tax cuts to the wealthiest.

(Editing by Jeremy Gaunt)