Danish foundation supporting more research on welfare states

How can the Nordic countries deliver growth and high quality service to citizens without anyone falling through the net? Research will be needed to solve this tricky question in the coming years, believes Elin Schmidt, President of the Danish Rockwool Foundation. 

“The Nordic welfare state is under a lot of pressure, especially from globalisation and ageing populations. Research that highlights how we can handle this pressure will be important to all the Nordic countries in the coming years. One of the things we will need to look at is what the welfare state should provide for citizens whose own pensions are insufficient and who will be expecting a certain level of support,” she says.

The Rockwool foundation already delivers a lot of research of this kind. 2020 it spent 125 million Danish kroner. The amount is growing every year. Its aim is to strengthen the welfare state’s social and economic sustainability by creating solid knowledge about the challenges of ensuring cohesion and the financing of the future welfare state, and knowledge about possible solutions to these challenges.

So the foundation’s activities are research and practical interventions in for instance the labour market in order to help vulnerable groups of young people and refugees find jobs.

Among the foundation’s most recent publications is a survey which shows that refugees stop taking Danish language lessons as soon as they get a job. Another new study from the foundation shows that young people with little or no labour market connections also often face challenges related to health or crime, and that this is closely linked to their lack of “perseverance”.  

Inequality like in the USA

The Rockwool foundation is also behind two sensational studies into social inequality that show how, despite a well-developed welfare state, social mobility in Denmark is in many areas similar to social mobility in the USA. In both countries, your social background has an impact from birth and lasts a lifetime. It manifests itself in for instance children’s skills in kindergarten and through school, in youth crime, completed education levels, income and labour market access.

The foundation has its own research unit with 40 researchers, Ph.Ds and research assistants who often cooperate closely with other research institutions. The studies on social mobility are therefore carried out by Nobel laureate and professor at the University of Chicago, James Heckman, together with research professor at the Rockwool foundation’s research unit, Rasmus Landersø. 

Nordic similarities and differences

The Rockwool foundation also regularly produces comparative surveys of the welfare state and the Nordic countries’ labour markets. In recent years, the foundation has been particularly focused  on comparing the Scandinavian countries and has produced several major publications including the 2020 book “Welfare states and populations in Scandinavia”.

In it, the Rockwool foundation compares the socio-economic development in Denmark, Norway and Sweden since the birth of the welfare state, based on data from the countries’ statistics agencies, Eurostat, the OECD and the Nordic Council of Ministers, as well as the Rockwool foundation’s own research. 

The comparison shows that the Scandinavian welfare states are generally very similar, but that they have taken different directions when it comes to immigration and integration. Sweden has also experienced rising crime rates while this has fallen in Denmark and Norway.

The foundation concludes that since the 1980s, all three countries have seen a slight increase in social inequality. For the past few decades, they have also experienced the financial challenge of an ageing population leading to the need for major reforms to the welfare state. 

Independent research

The Rockwool foundation is happy to work with others but never accepts money for research from external sources other than public research institutions. This is a firm principle that secures the foundation’s total independence, explains Elin Schmidt.

“We always finance our research by using our own economic means, and we have no ideological or political links, not even to industry. This independence gives us a unique and really good basis from which to offer completely impartial knowledge about the welfare state.” 

The impartiality is crucial in order to be listened to by the foundation’s primary target group – political decision-makers.

“The new knowledge that we create is given to stakeholders in society so that they can have a meaningful democratic conversation about the welfare state, and to the political decision-makers so that they can prioritise in a rational manner and adapt the welfare state’s institutions. That is why our credibility must be sky high – and it is," says Schmidt. 

Political credibility

The foundation’s credibility is regularly assessed by the political parties in the Danish parliament, and the politicians’ view is clear. 

“We enjoy the same credibility on the left and on the right, and this is extremely important to us as we want to avoid any kind of blindspot in our research and measures. The foundation itself never proposes concrete political solutions,” says Elin Schmidt. 

New research from the foundation is published in reputable scientific publications and is also presented to decision-makers at press conferences or in briefings where ministers and opposition leaders discuss relevant political consequences of any new knowledge that the foundation has created about the welfare state.  

The foundation’s latest study about social inheritance in Denmark and the USA was debated by two former prime ministers from opposite sites of the political spectrum – Lars Løkke Rasmussen from Left, Denmark's Liberal Party, and Poul Nyrup Rasmussen from the Social Democrats – in a briefing organised by the foundation.

A big money bin

The Rockwool Foundation has plenty of its own money to use for independent research. It owns shares worth billions of Danish kroner in the Rockwool International group. The group produces energy solutions, and was founded and is still partly owned by a large Danish industrial family, Kähler.  

40 years ago, six of the family members decided to establish a foundation and contribute a large part of their already considerable wealth to it. 

The Rockwool foundation was given the equivalent of 25% of Rockwool International’s shares and a mandate to produce independent, trustworthy research that would benefit society. The foundation’s board operates independently from Rockwool International when choosing focus areas and which projects to fund.  

It gets dividends from Rockwell International, and these make up the financing of the foundation’s activities. The foundation can not get involved with projects or activities that might directly or indirectly influence Rockwool International’s commercial development, explains Elin Schmidt.

“Our most noble task is to provide facts to the welfare society debate. In order to do that, nobody must think we are looking after anybody’s special interests. That is why we cannot carry out research on issues that could influence the commercial development of Rockwool International.

“For instance, we cannot look at any aspects of the green shift that involves energy renovation. Several descendants of the foundation’s founders sit on the board that decides which projects to support based on recommendations from a committee of leading professors from Scandinavian universities.

“The research is carried out and communicated totally independently from the board and often in close cooperation with external researchers from the best universities and research institutions in Europe and the USA."

Jobs for 5,000 young people

Since 2015, the foundation has also run a so-called intervention unit that focuses on the welfare society’s systemic challenges and helps find solutions to some of the seemingly deadlocked welfare challenges that the foundation’s research has identified. 

For instance, every year 5,000 young Danes are not in work or training, which equals some seven percent of all youths of a certain year group. This has been the case for nearly two decades, with no sign of progress.  

This costs the welfare state 15 billion Danish kroner (€2bn) a year, according to the Rockwool foundation’s research unit. It also estimates there are similar deadlocked and extremely expensive challenges when it comes to integration. That is why 20 employees at the Rockwool foundation’s intervention unit are working with what the foundation calls practical “system innovation” – new ways of getting for instance young, vulnerable people into work or education.

“We support experiments that try to find new solutions to systemic faults in the welfare state, for instance the fact that we for the past 20 years have failed to get more vulnerable youths into jobs or education. And we only provide support through projects that are evaluated according to extremely high standards, so we produce evidence for what actually works,” says Elin Schmidt. 

The Rockwool Foundation has developed the NExTWORK employment initiative, which goes beyond the traditional role played by job centres and uses a direct network linking young people and businesses that can offer vulnerable youths internships and help them get work experience.

“There are many signs that this project has hit on something that really works,” says Elin Schmidt. 

She also uses her spare time to work for social mobility and to give vulnerable children and young people the same opportunities as everyone else to get an education, a job and a good life. For 17 years she has been chair for the humanitarian organisation Mødrehjælpen (Mothers’ help).

“I am not political or ideological, but my personal belief is that social mobility is important and that in a welfare society everyone should have the opportunity to contribute to society and create a good life for themselves. That is why I would like to help give the next generation of children good opportunities.”