An election coloured by crisis

The economy and jobs are the most important questions for Danish voters when they go to the polls on 15 September in this year’s parliamentary elections. Four in five voters say the economy is the most important theme and crucial for how they will vote. 

The crisis is biting in Denmark. Unemployment is lower than in many other countries, but one in four working age people is on some kind of state benefit, and social inequalities and the fear of poverty are both growing factors among Danes. 

Four in ten Danes say the economic crisis is challenging their household budget, and one in four fear loosing his or her job. The figures come from a recent poll by Analyse Danmark commissioned by the weekly newsletter A4 during the global stock market unrest in August.

Unemployment among 25 to 29 year olds is now just under nine percent, much lower than in countries like Spain and Portugal. Yet nearly half of the young people in the A4 survey said they feared unemployment. 

Among those already unemployed two in three fear the economic crisis means they’ll remain unemployed, and both trade unions and organisations representing people suffering social hardships share that fear. They predict even more Danes will end up socially and economically marginalised because tighter rules now mean people can only receive unemployment benefits for two rather than four years. After two years you now loose your cash assistance, and there are also new restrictions on how cash assistance is meted out – which means many people relying on this live on very limited means. 

Growing inequalities

The social gap has grown more in Denmark than in any other European country over the past few years. The gap between the richest and poorest in society has grown by nearly 25 percent in just a few years, according to a new Eurostat survey. This is mainly blamed on stricter rules regulating unemployment benefits as well as the government’s tax reforms, which give considerable tax breaks to people on higher incomes. The gap has also grown because people with jobs have enjoyed comfortable salary increases before the crisis, while transfer payments have not risen accordingly.

In the run-up to this election the right-of-centre coalition government has made a big point of the fact that unemployment is lower today than it ever was during the latest Social Democrat government. But the government has not managed to reduce the number of people on passive benefits, even though it has been pushing for an active employment policy aimed at job creation. When the centre-right coalition came to power in 2001 one in four Danes received passive benefits. That number has not changed. 

A new survey from the Organisation for Economic Co-operation and Development, OECD, shows how the Danish state spent 27 billion Danish Kroner (€3.6bn) in 2009 on administration, flexjob solutions, revalidation and wage subsidies alone. On top of that came the much larger expense of transfer payments for the unemployed - cash assistance, sick pay and early retirement payments. 

Wage subsidies 

One year ago the government launched a so-called activation check which would root out pointless job activation schemes and turn focus on using wage subsidies to get more unemployed people into jobs. As a result the number of people in wage subsidised jobs has trebled in four years, and two new surveys conclude that business-targeted activation does work and that wage subsidies for jobs in private companies can help unemployed people into the labour market faster - especially non-western immigrants.

Getting even more unemployed into wage subsidised jobs is therefore a central element in the government’s growth plan “Sustainable Growth” which was recently presented by Prime Minister Lars Løkke Rasmussen. Yet that plan has had a mixed reception. Most unemployed are offered wage subsidised jobs in the public sector while both international and Danish studies and job centres conclude only wage subsidised jobs in private businesses will improve the chances for finding a permanent job later on. 

Wage subsidies can also upset competition. In May this year some 117,000 Danes received state benefits in order to stay in a job. Trade unions warn this means businesses with people on wage subsidies in reality receive a massive company subsidy. They have presented examples of businesses which have been tempted to offer jobs to unemployed people on wage subsidy schemes instead of hiring permanent staff on ordinary salaries with no subsidy.

Longer working week or later retirement

The government and opposition have presented their different plans to solve Denmark’s economic problems. All agree the level of debt and an ageing population spells a need to save billions in public expenditure. The political parties also agree that the Danish must work more. But they differ on how this will be achieved. The government’s 2020-plan sees the abolition of an early retirement scheme (‘efterløn’) which means Danes will retire later, while the Social Democrats and the Socialist People’s Party (SF) want everybody to work 12 minutes longer days. The 12 minutes will be found and agreed upon by the social partners, so exactly how this would work is yet not known. As a result, the government has been keen to describe the opposition’s plan as ‘diffuse‘. 

As the election was called the government and their supporters in parliament, the Danish People’s Party (‘the blue block’), were trailing in polls behind ‘the red block‘ - the Social Democrats and parties on the left. But a full 44 percent of voters said Prime Minister Lars Løkke Rasmussen (V) was the man best suited to handle the economic crisis. 31 percent felt the Social Democrat prime ministerial candidate Helle Thorning-Schmidt was the best person to steer the country out of the crisis.