The Danish Benefits System
Many people outside Denmark look upon the country as being the ideal place to live. The Danish view of democracy has produced a lot of benefits for the population; but there are drawbacks to it as well.
One of the effects was totally unexpected; a deterioration in the speech of the average person! Most of us spend our childhood surrounded by adults and we learn how to talk by listening to them and copying them. From a very young age most Danish children are taken into childcare; so they spend the day not with their mothers but with other children of a similar age. The result is that they pick up accents and verbal habits from their companions, rather than the more precise language of adults!
The state apparatus in Denmark provides massive benefits for the population but it costs a fortune to run and it employs almost 1 million people; and this is in a country with only a population of less than 6 million, and a total workforce of about 3 million. One third of the workers in Denmark are employed by the state. Although all these employees no doubt do a worthwhile job they are not involved in any form of manufacture or services which can earn the country money.
On the plus side, the minimum wage is the highest in the world which has resulted in a much smaller gap between rich and poor. A citizen can be looked after by the state from the cradle to the grave; healthcare, education and childcare are all free. over 65's get a state pension which is about double that available to pensioners in the UK.
All this has to be paid for somehow. Danes have to pay council, church (about 80% of Danes pay 1% of their income to the church), healthcare and income tax which can gobble up between 50 and 60% of their income, but that is only part of it. Try and buy a car in Denmark and you will pay 180% tax on it. VAT is levied at a rate of 25% but this is also levied on payments for food, which hits anyone dining out in a restaurant, and there is also a tax on foodstuffs which are deemed by the state to be unhealthy. However, the Danes generally seem fairly satisfied with this; the consensus of opinion is that it is only fair that those who benefit from a system should contribute towards it. Although political parties in Denmark can vary between extreme left and extreme right wing there is only one tiny party, the Liberal Alliance, that advocates a low tax economy, because they know full well that the population would never vote for it.
Indeed, back in 1992 when Denmark first voted on joing the Common Market (as it then was) the country voted against it, because of fears of the effects on the welfare system.
On the face of it, the welfare state looks safe; the prospect of Thatcherism in Denmark in the foreseeable future seems extremely remote. There are fears it cannot last however.
the population is getting older; possibly thanks to the welfare state! The problem with this is that there is a growing proportion of the population with chronic health issues. In the meanwhile the number of retired people is increasing all the time, and their pensions have to be paid from somewhere. More healthcare personnel are retiring than are entering the profession. The current trade deficit is around 3%, which is not large by most standards, but it is likely to get bigger and offsetting it with higher taxes, when the level is already extremely high, will be very difficult. Foreign businesses are being put off from investing in the country because of these high tax rates, and more and more high earners are emigrating, so reducing the tax revenue even further.
Immigration is a very sore point in the country; since the majority of people from the Indian subcontinent and the Arab world were never likely to be able to speak Danish when they arrived, the level of unemployment amongst them has been very high, resulting on many of them having to live on welfare benefits. Free Danish lessons are available - but only for those aged under 23.
A solution to this last problem may be in training these immigrants to work in the social sector, where there is a great demand for workers, so that they could become tax paying contributors to the pot. A counter argument however is that these people will themselves eventually retire and become eligible for the relatively high pensions that Danes are currently entitled to.
Despite the problems, though, the concensus of opinion amangst Danes is that their welfare system may have to change slightly, but it will survive. Time will tell.