Econ­omy, wel­fare take cen­ter stage in Dan­ish elec­tion


Den­mark’s econ­omy and cradleto-grave wel­fare sys­tem have taken cen­ter stage in the run up to Thurs­day’s elec­tion, with a loom­ing skills short­age fu­el­ing a de­bate on the scope of un­em­ploy­ment benefits.

With the race too close to call, Prime Min­is­ter Helle Thorn­ingSch­midt and op­po­si­tion leader Lars Lokke Ras­mussen, who gov­erned from 2009 to 2011, are both claim­ing credit for a resur­gent econ­omy in in­creas­ingly heated de­bates.

Af­ter a burst­ing of the real es­tate bub­ble in 2008, house prices fell by 20 per­cent and pri­vate con­sump­tion tum­bled, with Dan­ish house­holds left with the high­est debt bur­den in the world.

But in 2015 the gov­ern­ment raised the growth fore­cast to 1.7 per­cent, and be­lieves the econ­omy will grow by a whole 2 per­cent next year.

On May 27, the same week her gov­ern­ment de­clared an end to the eco­nomic cri­sis, Thorn­ing-Sch­midt called the elec­tion.

“My poli­cies have se­cured this (re­cov­ery). It an­noys me if you are go­ing to mess it up with your ex­per­i­ment,” the prime min­is­ter said last week, re­fer­ring to her ri­val’s pledge to freeze public spend­ing and cut so­cial benefits.

“I have to an­swer this rant ... It seems your mem­ory be­gins when you be­came prime min­is­ter,” re­torted Ras­mussen, leader of the right-of-cen­ter Ven­stre party.

When So­cial Demo­crat Thorn­ing-Sch­midt took of­fice, she dis­ap­pointed some of her vot­ers by cut­ting taxes and main­tain­ing some the un­pop­u­lar poli­cies of her rightwing pre­de­ces­sor, who had slashed the un­em­ploy­ment in­sur­ance pe­riod from four years to two.

The re­cent re­cov­ery helped Thorn­ing-Sch­midt bounce back in the opin­ion polls af­ter a mostly un­pop­u­lar ten­ure, just weeks be­fore the June 18 vote.

But ex­perts say growth has lit­tle to do with pol­icy and more to do with ris­ing de­mand in ex­port mar­kets.

The econ­omy is im­prov­ing “be­cause we’re be­gin­ning to feel the global up­swing. Den­mark is a rel­a­tively open coun­try and we live off ex­ports to a high de­gree,” said Frank Skov, chief an­a­lyst at the Ce­vea think tank.

Ex­ports ac­count for just over half of gross do­mes­tic prod­uct (GDP), with Ger­many, Swe­den and the UK among Den­mark’s big­gest mar­kets.

Den­mark posted its sev­enth straight quar­ter of growth in the first three months of the year, and un­em­ploy­ment stood at 4.8 per­cent in April, its low­est in nearly six years.

Skills Short­age

How­ever, even as com­pa­nies step up hir­ing, Dan­ish busi­nesses claim the coun­try can­not af­ford its costly un­em­ploy­ment benefits, which are gen­er­ous even by Scan­di­na­vian stan­dards.

Ras­mussen re­cently came un­der fire for claim­ing some Dan­ish work­ers on un­em­ploy­ment benefits would hardly gain any­thing from tak­ing a job, but on the right many peo­ple agreed with him.

“Some of those re­ceiv­ing so­cial benefits aren’t tak­ing the jobs avail­able be­cause the gain is too small,” said Mads Lundby Hansen, chief econ­o­mist at right-lean­ing think tank Ce­pos.

“You can see this from the great Dan­ish para­dox whereby we have tens of thou­sands of eastern Euro­peans on the Dan­ish la­bor mar­ket and at the same time over 100,000 un­em­ployed.”

Ac­cord­ing to Hansen, those re­ceiv­ing the high­est benefits have no in­cen­tive to take on jobs pay­ing 117 kro­ner (US$18) an hour, as they would lose 400 kro­ner a month.

Some firms were al­ready be­ing squeezed by the com­bi­na­tion of an age­ing pop­u­la­tion, low un­em­ploy­ment, and high benefits, he claimed.

“Com­pa­nies have be­gun say­ing that they lack la­bor and look­ing for­ward we can see that they will have to turn down or­ders be­cause they can’t fill va- can­cies,” he said.

Those views are echoed by the Con­fed­er­a­tion of Dan­ish In­dus­try (DI), which wants to see un­em­ploy­ment benefits capped.

Skov of the left­ist Ce­vea think tank said Ger­man data sug­gested that cut­ting wel­fare would only lead to em­ploy­ers slash­ing pay for the low­est earn­ers.

“Around 16,000 peo­ple work in Den­mark even though they would get more from be­ing on so­cial as­sis­tance. Work­ing means much more” than just get­ting paid, he said.

For­eign La­bor

A po­ten­tial la­bor short­age has also made DI the lead­ing pro­po­nent of eas­ing re­quire­ments for for­eign­ers to move to Den­mark for work.

“We would like to see bet­ter ac­cess to for­eign la­bor,” said DI’s chief econ­o­mist Klaus Ras­mussen, who is not re­lated to the prime min­is­ter’s elec­toral ri­val.

If Ven­stre’s leader Ras­mussen wins the elec­tion, he will have to gov­ern with the sup­port of the anti-im­mi­gra­tion Dan­ish Peo­ple’s party.

He has pro­posed low­er­ing the min­i­mum wage re­quired for a Dan­ish work per­mit, but only for cit­i­zens of coun­tries con­sid­ered eco­nom­i­cally and cul­tur­ally sim­i­lar to Den­mark, ruf­fling feath­ers on the left.

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