Before going into the finer details of the recent reforms, it might be useful to step back for a panoramic view of the Danish social model, often referred to as the Nordic – or Scandinavian – social model of which it forms part. The model includes universal health care, education free of charge and a tight social security net.
“There are a number of constants to the Danish model and nobody wants to tinker with core elements. At the same time, the model has always been very dynamic”, says Jørgen Goul Andersen, professor of political science at Aalborg University in Denmark.

A case in point is the widely commended “flexicurity” approach in the Danish labour market. “Flexicurity” gives employers flexibility in hiring and firing while employees are provided with financial security and training to prepare for new jobs.
“By combining flexibility and social security, both companies and employees will be more willing to try something new, and that creates growth. Employees become more mobile on the labour market, and companies become more willing to employ groups like the young or those who are on the edge of the labour market,” says Nick Hækkerup, the Minister for Trade and European Affairs.

Another example of the Danish model is the old-age pension system consisting of the government old-age pension and the private labour market pension, based on a savings scheme. The official retirement age in Denmark is being gradually increased, an early retirement benefit is being phased out, and people stay longer in the labour market as a consequence. The system as a whole is financially sound.

According to Iain Begg of the London School of Economics, Denmark successfully brings together an open economy and public investment in human capital. “One of the features of the Danish social model that has made it extremely flexible and ready for change is that it is less protective than other models when it comes to jobs. Companies are able to adjust the size of their workforce quickly to fluctuations in the marketplace, resulting in a very dynamic labour market.
At the same time, Denmark was a pioneer country in shifting from social aid to social investment – that is viewing humans as something for society to invest in rather than an expense. Free education is a case in point. This is also favourable for companies.
Therefore, Denmark has managed to remain very competitive in spite of an extended social security net. This is a rather unique combination,” he says.

Source:
Focus Denmark
Photo: Niclas Jessen/ VisitDenmark.com