Thu, Apr 25, 2013 - Page 9 News List

Denmark rethinks its
out-of-kilter welfare state

Danes pay the highest income tax in the world in exchange for extravagant benefits that lead to some people getting more money on welfare than when working. Many say this situation has become untenable

By Suzanne Daley  /  NY Times News Service, COPENHAGEN

“Now people do not have that mentality. They think of these benefits as their rights. The rights have just expanded and expanded, and it has brought us a good quality of life, but now we need to go back to the rights and the duties. We all have to contribute,” Haekkerup said.

Last year, a little more than 2.6 million people between the ages of 15 and 64 were working in Denmark — 47 percent of the total population and 73 percent of 15 to 64-year-olds.

While only about 65 percent of working-age adults are employed in the US, comparisons are misleading, since many Danes work short hours, and all enjoy perks like long vacations and lengthy paid maternity leave, not to speak of a de facto minimum wage approaching US$20 an hour. Danes would rank much lower in terms of hours worked per year.

In addition, the workforce has far more older people to support. About 18 percent of Denmark’s population is more than 65, compared with 13 percent in the US.

One study, by the municipal policy research group Kora, recently found that only three of Denmark’s 98 municipalities would this year have a majority of residents working. This is a significant reduction from 2009, when 59 municipalities could boast that a majority of residents had jobs. (Everyone, including children, was counted in the comparison.)

Joachim Olsen, the skeptical politician from the Liberal Alliance party who visited Carina 16 months ago in her pleasant Copenhagen apartment, is particularly alarmed. He says Sweden, which is already considered generous, has far fewer citizens living on government benefits. If Denmark followed Sweden’s example, it would have about 250,000 fewer people living on benefits of various sorts.

“The welfare state here has spiraled out of control,” Olsen said. “It has done a lot of good, but we have been unwilling to talk about the negative side. For a very long time it has been taboo to talk about the Carinas.”

Already the government has reduced various early-retirement plans. The unemployed used to be able to collect benefits for up to four years. Now it is two.

Students are next up for cutbacks, most of which are intended to get them into the workforce more quickly. Currently, students are entitled to six years of stipends, about US$990 a month, to complete a five-year degree which, of course, is free. Many of them take even longer to finish, taking breaks to travel, and for internships before and during their studies.

In trying to reduce the welfare rolls, the government is concentrating on making sure that people like Carina do not exist in the future. It is proposing cuts to welfare grants for those under 30 and stricter reviews to make sure that such recipients are steered into jobs or educational programs before they get comfortable on government benefits.

Officials have also begun to question the large number of people who are receiving lifetime disability checks. About 240,000 people — roughly 9 percent of the potential workforce — have lifetime disability status; about 33,500 of them are under 40. The government has proposed ending that status for those under 40, unless they have a mental or physical condition that is so severe that it keeps them from working.

Instead of offering disability, the government intends to assign people to “rehabilitation teams” to come up with one to five-year plans that could include counseling, social-skills training and education, as well as a state-subsidized job, at least in the beginning. The idea is to have them working at least part-time or studying.

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