Fri, Jan 24, 2014 - Page 9 News List

Nordic welfare state scaling down old model

The Nordic public sector is being cut back due to economic pressure, political shifts and an emergence of free-market models

By Soeren Billing  /  AFP, COPENHAGEN

It has left her deeply unpopular in some quarters. At last year’s May Day speeches she was met by jeers as audience members sprayed her with a water pistol, threw tomatoes at her, and even flashed their buttocks.

For some of Thorning-Schmidt’s allies — notably the leftist Red Green Alliance — the reforms have been too much to stomach, and in November last year, her minority government had to seek support from the main opposition parties to pass this year’s budget.

Denmark has been spurred into action by a persistently sluggish economy since a housing bubble. However, among Danes there is also a sense that the welfare state was ballooning out of control.

In 2011, a TV report aiming to show what life was like for the poor in Denmark visited the home of a single mother on benefits, whose disposable income turned out to be 15,728 kroner (US$2,860) per month.

“Poor Carina,” as she was later nicknamed, sparked a national debate on the level of unemployment benefits, with one pollster crediting her with fueling a rise in the number of people who felt benefits were too high.

The next Nordic country to reform its welfare state is likely to be Finland, battered by a downturn in the two pillars of its economy: the forest industry and information technology.

Helsinki responded to the crisis by announcing in August a slew of measures to put more Finns to work.

Under the controversial plan, the retirement age is to go up, time spent at university will go down and incentives to enter the job market will be boosted for the unemployed and young mothers.

Only Norway looks unlikely to reform entitlements anytime soon, bolstered by its oil wealth.

The country is home to the world’s largest sovereign wealth fund.

Worth some 5,116 billion kroner, each of the country’s 5,096,000 inhabitants is — at least on paper — a millionaire. New center-right Norwegian Prime Minister Erna Solberg has pledged to preserve the welfare state.

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