August 26, 2015 | by CRAIG WILLY
An open, liberal economy combined with redistribution and social welfare: The Danish model has largely weathered the storm of the financial and euro crises. Yet, when looking at education and integration, not all is rosy in the Kingdom of Denmark.
Denmark has long been a byword for good government, liberal democracy, and social equity of the highest levels in the world. The little Nordic country’s success has been such that the American political scientist Francis Fukuyama – of “end of history” fame – has said that the goal of politics is “getting to Denmark.” In this, the Denmark report of the recently published Bertelsmann Stifung’s Sustainable Governance Indicators (SGI) notes that: “Trust between different actors and societal groups, often referred to as ‘social capital,’ has also been an important factor.” Indeed, the country is famously free of corruption, Transparency International rating Denmark the least corrupt country in the world together with New Zealand.
Many countries have faced difficulties maintaining existing social models and levels of well-being in the face of the challenges of economic globalization and demographic change. Denmark is no exception, but as the 2015 SGI report shows, the country has largely maintained its success, despite some emerging problems. The country rates highly in most policy and governance areas, whether on the environment, economics, or democracy.
The most immediate challenge to Denmark has been on the economic front. The Danish model combining an open, liberal economy with significant redistribution and social welfare has largely weathered the storm of the financial and euro crises. This is no minor achievement given Denmark’s standards, as the SGI report notes: “The hallmark of Danish society – and other Nordic countries – has been to balance low inequality and an extensive public sector with a well-functioning economy and high income level.”
Unemployment, while not yet having returned to the amazing pre-crisis level of 3.4%, has fallen to 6.6%, one of the lowest rates in the European Union. In 2014, public debt amounted to 45.2% of GDP and growth reached 1.1%. The country then has some admirably positive economic metrics in a global context where many developed countries are struggling to return to lasting growth and fiscal sustainability. The Danish model of “flexicurity” appears to be reliably adaptive.
The long-term financial prospects of Denmark are also fairly positive thanks to better-than-average demographic trends. The fertility rate rose to almost 1.7 last year, distinctly above average for a developed country. This appears to have been achieved thanks to significant government support, including social benefits for children and families amounting to 4.2% of GDP – the highest in the European Union – and sometimes highly-unorthodox public awareness campaigns (one of the most recent of which was the “Do It for Denmark” advertising campaign, which advised Danish couples to take a holiday to increase lovemaking, complete with free baby goodies to be handed out if conception were to occur).
Denmark’s dark spots: education and integration
A rare dark spot has been Denmark’s mediocre educational performance. While the country is a top education spender, performance as measured by PISA is very average. Indeed, the SGI gives Denmark an education policy score of just 6, one of its weakest areas. Despite this, Denmark remains strong on research and innovation, 3.1% of GDP to R&D, one third of which provided by government spending, and having among the most researchers and patent applications in the world.
Another weak point is the integration of migrants and their descendants, a major threat insofar as failure would lead to inequality and social fragmentation. As the SGI report notes: “Danish society is trending toward more disparity and inequality. This applies to immigrants as well as groups who are marginalized in the labor market, often due to insufficient job qualifications.” There is also some evidence that Harvard sociologist Robert Putnam’s observation of ethnic diversity reducing social trust is also occurring in famously-trusting Denmark.
Indeed, Denmark, like many other developed countries, has had significant difficulties in integrating some migrant groups and their descendants. The SGI report notes: “a number of immigrants in Denmark, especially from non-Western countries, have problems integrating.” In 2014, some 626,000 immigrants and their descendants lived in Denmark, about 11.1% of the population.
Integration problems are evident in numerous policy areas. On Denmark’s otherwise highly-successful labor policies, the SGI report notes: “The main challenge Denmark faces is getting more immigrants, and to some extent older people, into the job market.” The unemployment rate for migrants is twice as high for native-born. The gap has however generally been shrinking.
On education, the report notes: “[Im]migrant students score markedly lower than Danish students, a problem particularly pronounced among boys.” There has been improvement however:
Concerning educational achievements, immigrants and their descendants – especially girls – are making progress. In 2013, for the age group 30 to 39 about 47% of men and 64% of women had completed a labor market qualifying education. The corresponding numbers for ethnic Danes are 72% and 80%. For those 22 years old 49% of male and 61% of female non-western descendants are in education, which is only two and three percentage points below the corresponding rates for ethnic Danes.
Some intergenerational progress is then evident for migrants, although the extent to which governments will further succeed in closing gaps is an open question.
Denmark is a relatively closed country to immigration, family reunification having been curtailed in 2004. The June 2015 elections saw the populist and anti-immigration Danish People’s Party (DF) emerge as the single-biggest vote winner, but paradoxically they gave their support for a moderate, center-right government under Venstre (the liberals). Integration measures taken by the previous center-left government are likely to be curtailed and anti-immigration policies can be expected for the government to appease the populists.
All is then not rosy in the Kingdom of Denmark. But on the whole, the Danes remain one of the most prosperous, egalitarian, free, ecological, and well-governed nations in the world, despite the numerous challenges of globalization. “Getting to Denmark,” remains a valid objective for most countries in the world, although few have achieved it!
Craig Willy is an EU affairs writer. His blog is available here.