– Welfare is made available to all citizens when they meet certain conditions to receive it. – Most welfare benefits are financed by the whole population jointly through taxes, etc. There is therefore no direct connection between what you pay and what services you receive or use. – There has been a lot of emphasis on service tasks. Particular emphasis is placed on kindergarten and kindergartens, school-based arrangements, and elderly care (home help, nursing homes, etc.) than in most other countries.
The way in which the welfare society is organized enables both men and women to actively participate in the labor market, even if they have children. In Danish children’s families, both the father and the mother typically work full or almost full time, while the Danes have more children than in most other countries in Europe. But it is also necessary because otherwise it would not be enough to pay the costs of childcare, schools, hospitals, elderly care, unemployment benefits, cash benefits, social pensions, etc.
THE DANISH WELFARE MODEL DEVELOPMENT
In all societies it is the working adults who take care of the elderly, of the children and of those who for one reason or another can not cope with themselves. Historically, this has often been organized within the individual family or in local communities. In the Danish welfare society an increasing proportion of these tasks have gradually been taken over by the state. This has happened through the creation of a system in which all citizens of society have the right to receive economical and practical assistance based on uniform criteria. Talking about welfare in the broadest sense, the first crucial reform is the introduction of 7 years of schooling in 1814 – with free tuition for all.
Otherwise, the first steps towards the welfare society you know today were taken in the 1890s. It happened at a time when there were many changes in Danish society, economically, politically and socially. Agriculture was changed. Industry grew up. Democracy began to take shape. All this changed in a relatively few years, the Danish society markedly, including social conditions. With the changes of the old agricultural and craft community, a number of private social systems disappeared. Instead, the state began to take care of the citizens who needed help. There were more and more settled rules for who could be awarded social benefits for sickness, accident, unemployment and old age. There were also more and more who were granted access to the services. The welfare society was so small on the way.
In the early 1930s, a major social reform was implemented. With the reform, 55 social policy laws were gathered in four public insurance laws, and more clear rules were laid down for when the individual citizen could get help.
The main traces of the present welfare society were laid in the 1950s and 1960s. Here, several of the basic principles of welfare society were established. It was also during this period that welfare services expanded significantly and the social security network was expanded, inter alia, with the National Pensions Act in 1956 and 1964. In the past, the state had especially helped individual citizens affected by unemployment, sickness and accident , and at old age. However, during this period, the welfare society also included a number of services in particular in the social and health sector. This was especially true of childcare and home help for the elderly. The help of the distressed citizen was gradually supplemented with services that the whole population could benefit from, rich as well as poor.
However, from the mid-1960s to the late 1970s, the major expansion of services took place. It happened at the same time that almost all married women came to work and the home-made housewife almost disappeared. From the 1980s to the 2000s, this development continues to mean that the majority of women have gone from part-time to full-time or almost full-time. In particular, the public has taken over childcare and elderly care, etc., which has made this possible. Gradually, almost all children between the ages of 1 and 6 get childcare while most 7 to 10 year olds are taken care of after school. At the same time, maternity / paternity leave was prolonged for several weeks from a few weeks in the 1970s to the 50 weeks of full unemployment benefits currently applicable to persons in full-time work. In addition, the father can have two weeks and 32 of the 50 weeks can be freely distributed between the father and the mother. The conventions often supplement so there is full pay for part or all of the maternity leave.
The extension of care for children and the elderly and of maternity leave and parental leave is probably the most important feature of the Nordic welfare model. It is also accompanied by growth in women’s education level, which has not only acquired but also overtaken the men’s. The development of the socioeconomic economy greatly means the benefits the state can offer to individual citizens. In the 1960s and early 1970s there was strong economic growth. Public sector growth continued at high pace in the 1970s, despite the crisis. But in the late 1970s, economic growth in society could not follow. Therefore, it was necessary to slow down in the 1980s. This also applies, for example, to childcare, although the need was high. It was not until the 1990s and 00s that the expansion was completed.
The population’s composition also means a lot for the welfare society’s income and expenses. It is especially the part of the population who works, which finances the costs of children, the elderly and others who need help. With many children and the elderly, the number of welfare benefits recipients is high. This also means that the costs are high. If there are many people in working age, more people have a job. This also increases tax payments, which is the public sector’s most important source of income. In the period from the 1960s to the year 2000, there were steadily more in working age. This is because few children were born in the 1920s and 1930s, but many children after the Second World War. The women have also come to the labor market, almost to the same extent as men. On the other hand, fewer children were born. More in working age, more women in the labor market and fewer children. This combination made it easier for many decades to fund the development of the welfare community because it meant more revenue and less expenses. However, several of these favorable conditions are changing.
First, life expectancy increases. Since 1995, the residual life of the 60-year-old has risen since after many years has remained almost silent. From 1991-95 a 60-year-old man had an average of 17.45 years to live in. In 2010-14 it had risen to 21.18 years. For 60-year-old women, the survival time has increased from 21.50 years to 24.21 years. This is probably due to both healthier working conditions and lifestyles, and that treatment in health care has improved.
Second, it is no longer the small years from the 1920s and 1930s, retiring, but great years from 1945 onward. They are larger than the years that enter the labor market. This means that the population of working age is getting smaller, while increasing the number of older people. One solution may be to extend the working age. Therefore, a large majority in the Folketing in 2006 decided that retirement age should follow the average residual life of 60-year-olds.
Another means is to increase the participation rate for those groups who have had difficulty finding work. For example, many Danes with immigrant backgrounds have succeeded, where employment increased sharply in the period 1996-2007. During the crisis, employment has fallen both for people with Danish background and for immigrant backgrounds.
Getting more into the labor market is not enough to ensure that Denmark can remain one of the richest countries in the world and thus afford to maintain and develop welfare. Among other things, it is also necessary to ensure that the Danish workforce is among the best educated in the world and that Denmark is able to attract highly skilled labor from abroad. This will strengthen Danish business opportunities to cope with the increasingly tougher competition in the global market. In addition, both the technological development and the relocation of jobs mean that the number of unskilled jobs is falling. Therefore, it is vital for the future of the welfare society to get more education than today.
The Danish welfare society is characterized by a significant economic reallocation. Compared to other countries, Danish society has a high level of economic equality. This redistribution takes place both through the tax system and the welfare state’s benefits. Income tax is based on the principle that the widest shoulders should bear the heaviest burdens.
This means that the percent to be paid in tax increases for high incomes (progressive taxation). The cash benefits also redistribute. They are given especially to those who can not work (retirees, early retirees, students, unemployed, sick people, maternity leave, etc.). However, children’s families also receive cash benefits, which is justified by the fact that they have more expenses. Finally, there are cash benefits for a number of weak groups with small incomes, including housing subsidies. The services cater to all citizens with needs and help ensure that everyone has the opportunity to work and participate in community life. However, many services target groups that typically have small incomes, such as elder care. Together, taxes and public services contribute very much to reducing the differences in living standards between citizens.
The Danish welfare society is based on a principle that the individual citizen has both rights and duties. Citizens who fulfill certain conditions are entitled to welfare benefits. But the individual citizen is also obliged to contribute to the community. First, by paying taxes, partly by working, if you can. If you leave the labor market and receive help, you are also obliged to make an active effort to return to the labor market. This applies to both men and women. The Danish model for welfare society has many features in common with the other Nordic countries. Often, one talks about the Nordic model. The welfare society changes and renews all the time. Among other things, public welfare benefits are supplemented by agreements between social partners and, to a lesser extent, purely private schemes. The social partners play a major role in the field of pensions. Here there is also a large private market, where the individual can save up to his pension.
In most other areas, the public pays for the schemes, although sometimes it is private companies that provide services. In some areas, users have free choice between public and private suppliers. This applies, for example, to home help. In the health sector, private hospitals and clinics have been established. They work to a certain extent as an alternative or supplement to the public offerings.
The Danish welfare society is funded primarily through taxes on income and through taxes, etc. It is the state and municipalities that have the right to print taxes. Income tax was introduced in 1903, though with a significantly lower tax rate than today. Income tax means that almost all income is taxable wherever they come from. The Danish income tax is based on the principle of progressive taxation. This means that a high income person pays a larger proportion of his income to the tax service than one who does not have such a high income. Since 2009, however, in addition to the labor market contribution, there are only two rates for ordinary income, so there is an additional tax (top tax) of 15 per cent. for income over a certain size. It also means paying more in tax on the last-served crown than the first when you earn over a certain amount. In addition to income taxes, the state and municipalities also receive income from VAT and taxes, property taxes, corporation taxes and taxation of pension savings (so-called PAL tax).
THE WORK AREA’S TASKS AND ACTORS
The welfare society provides a wide range of services to the public. It is common to talk about the public sector performing two different kinds of welfare tasks. Firstly, the public sector helps the citizens who are struggling to cope with themselves. The public sector must ensure a social security network for those who need financial assistance. Approximately one third of total public spending goes to income transfers. These include, among other things, old-age pension, early retirement pension, state education support (SU), maternity allowance, childcare / youth benefit, housing support, unemployment benefits and sickness benefits, cash benefits and integration benefits. Secondly, the public sector supplies a number of public services, especially in the fields of social, health and education. These include, for example, crèches and kindergartens, hospitals, elderly care and many types of education.
The parliament and government determine through the legislation the framework for the Danish welfare society. But it is largely the municipalities and regions that fill out the legal framework. It is the one who in practice delivers most welfare benefits to the citizens. Until the structural reform came into force on 1 January 2007, the country was divided into 270 municipalities and 14 counties. In the structural reform, the counties were closed down and replaced by five regions. Municipalities’ numbers were reduced to 98, as many small municipalities were joined together. At the same time, the regions’ tasks were less than the counties, as the regions are primarily responsible for operating hospitals. The municipalities’ tasks became more. They took over some tasks from the former counties, while at the same time the government employment agency was combined with the municipal efforts for other types of unemployed to today’s job centers.
The municipalities solve many different welfare tasks. The municipalities should, as far as possible, act as citizens’ main entrance to the public sector. The municipalities therefore also have a large number of tasks that are closest to the individual citizen. This includes: – childcare in, among others, crèches and kindergartens – primary and lower secondary schools – elderly care – libraries and other cultural tasks – integration of refugees and immigrants – award of a wide range of social services – most tasks relating to the environment. When it comes to the efforts to help unemployed back in employment, it takes place in local job centers located in the municipalities. Finally, the municipalities in the field of health are responsible for care and rehabilitation after hospitalization, home care, alcohol treatment and substance abuse, municipal dental care, social psychiatry and prevention, etc. including support for smoking cessation. The most extensive task of the regions is to operate the majority of healthcare services. This applies to hospitals and public health insurance, which gives all citizens living in the country the right to medical care, etc. The regions also have tasks relating to regional development and the operation of certain specialized social institutions. The regions, together with the municipalities, also run the public transport companies. The state addresses a number of overarching tasks such as police, judiciary and defense as well as tasks such as youth education (colleges, etc.), higher education and research. The state also manages tax collection.
In Denmark, the welfare society is, as a rule, a public task. But over the last few decades, it has become more common to let private companies perform some welfare tasks, although it is still the public that pays. The assignments are thus outsourced to private companies paid by the public to carry out the task. There is also a tradition of involving voluntary organizations in solving the joint tasks. Thus, in Denmark there are several hundred voluntary organizations. They operate, among other things, shelters, visits, contacts and places of residence, etc. The tasks solved by volunteers are thus typically a number of additional tasks. In Denmark it is rare for voluntary organizations to provide basic services.
In 2014, a small group of citizens in Vendsyssel (vendelboere) formed the association “Venligboerne”, which would help newly arrived refugees with a rapid integration. It quickly inspired many others so that in the course of 2015 groups were formed across the country.
THE DANISH ECONOMY
The Danish society has changed the production type twice in recent centuries. The first time was in the 1960s, where Denmark went from being an agricultural country to developing into an industrial community. Second time, when the industrial community gradually developed into a knowledge and services community.
Agriculture has traditionally been the most important profession in Denmark. By the late 1800s, most of the population worked in the agricultural sector. During the same period, the first major industrial companies were founded in Denmark. Industry grew rapidly, and around 1960 it had a greater economic impact on the Danish economy than agriculture. From the beginning of the 1970s, the proportion of employed in industry fell and the services sector grew. Today, approximately three out of four employees are employed in private or public services. About a third of all employed work today in the public sector. However, production of agricultural and industrial products has risen, although the number of employees has fallen. This is mainly due to the mechanization of production and the rapid technological development in these sectors.
Most private companies in Denmark are small or medium-sized. There are only a few large companies, but they still play an important role for the Danish economy. Since agriculture has been a central business for centuries, part of the industry is still attached to and processing raw materials from agriculture. But Danish companies have also succeeded in finding areas or niches where they have special competencies and strength to compete in the world market. This applies, for example, to shipping companies, pharmaceutical industry and food industry, as well as products like wind turbines and hearing aids.
Denmark has an open economy where foreign trade has always played an important role. In part, Denmark is well located between the Baltic Sea and the world’s oceans and borders many countries. Partly, Denmark lacks many raw materials, so it has been necessary to trade with the outside world. Today, it is especially the other EU countries, Norway and the United States with which Denmark deals. Denmark would also like to trade with other countries. Among other things, Denmark is today a member of a number of international organizations who, like the EU, are also working for more free trade. This applies, for example, to the OECD (Organization for Economic Cooperation and Development) and to the WTO (World Trade Organization).
THE LABOR MARKET
Most of the working age participate in the Danish labor market, and this applies not only to men. Women’s entry into the labor market is one of the most significant features of developments in the Danish labor market over the past 50 years. The number of women in the labor market has doubled since 1960. At the beginning it was very common for women to work part-time, that is, fewer hours a week. But since 1980, more and more women are working full time. Today, approximately 75 percent of women in working age are associated with the workforce.
In addition, the Danish labor market is characterized by the fact that labor is generally well-trained. This is due, among other things, to the fact that in Denmark there are long and strong traditions for education, continuing education and further education.
THE DANISH WORKMARKET MODEL
There is often talk of a special Danish labor market model. It consists of social partners, ie unions and employers’ associations, who themselves agree on wages and working conditions in the labor market. The state does not interfere as long as the parties themselves are able to conclude agreements in these areas.
The Danish employment model model is based on three key elements. Firstly, the majority of the workforce is organized in trade unions. Second, a large part of the labor market is covered by collective agreements. And thirdly, the labor market is characterized by tripartite cooperation between employees, employers and the state.
The tradition is more than 100 years old. During the early industrialization of the late 1800s, there was gradually a larger working class in the cities. The workers found together in the National Organization in Denmark, the current LO, which aims to fight for better working conditions, etc. In response, employers also joined the Danish Employers’ Association, currently called DA. The relationship between the two parties was initially characterized by conflicts and work struggles. After a long conflict in 1899, the parties entered into a settlement known as the September Settlement.
The September Settlement is often called for the labor constitution. The Settlement means that LO and DA acknowledge each other as eligible to negotiate on behalf of their members. They can thus conclude agreements covering more groups of workers and employers. Such an agreement is called an agreement, and typically determines wage and working conditions. The September Settlement also states that it is the employer who leads and distributes the work and who can hire and dismiss employees. Finally, the settlement involves a so-called peace obligation. This means that strike and lockout is not allowed when an agreement has been reached.
These basic principles are at present the basis of the agreements entered into in the Danish labor market. It is also the social partners who themselves seek to resolve the conflicts that may arise. The state mixes as little as possible. The basic idea is that the social partners can adapt the agreements to the individual industry or individual company more quickly and better. And when the parties themselves have agreed to enter into an agreement, they also accept its terms. This also means that you do not have legislation on minimum wages in Denmark. The minimum wages have been agreed by the parties in their agreement or an individual agreement.
The social partners are usually also involved in designing the part of labor market policy that is laid down by legislation. This applies, for example, to rules on the working environment, employment services, labor market education and unemployment insurance.
Collaboration between employees, employers and the state ensures a labor market that is both flexible for employers and safe for employees. Flexibility is that employers can easily dismiss people when the economy is bad and easy to hire people when it’s going well. Confidence is that employees have financial security if they lose their jobs. They are also assured of help trying to get back to the labor market, for example through job referral. The Danish labor market model is often referred to as the flexicurity model.
HIGH ORGANIZATION GROWTH AND COMPETITION
In the Danish labor market, the vast majority of employees are professionally organized. About 70 percent of Danish workers are members of a trade union. The union works to ensure the best possible terms for the members in the workplace. There are unions for both private and public employees.
Both unions and employers’ organizations are gathered in nationwide federations and main organizations. The two largest organizations in the labor market are LO and DA. LO represents the wage earners. LO is an umbrella organization for a total of 18 professional federations and organizes approximately 1 million. members. DA is the employer’s organization and organizes approximately 24,000 companies in industries, commerce, transport, service and construction.
Nearly 80 percent of the Danish labor market is covered by collective agreements. A collective agreement is an agreement between a trade union and an employer or employers’ organization on pay and working conditions in a particular area that the parties themselves delineate in the agreement. An employer who has entered into an agreement is obliged to give all employees the terms and conditions of employment provided for in the agreement. This applies, for example, to agreements on wages, pensions, working hours, holidays and termination.
There is freedom of association in Denmark. This means, among other things, that the individual employee must decide whether he or she wishes to be a member of a trade union and, if so, which one. It also means that an employer is forbidden to dismiss an employee because he is not a member of a trade union. Neither in connection with recruitment, an employer must demand that an employee be a member of a particular trade union.