Business interests lauding the welfare state?
September 7, 2011 — While liberal and conservative pundits alike in the United States have long been issuing fatalist warnings about the “unsustainability” of the European welfare state, business leaders and economists in Denmark — a country with one of the most generous welfare states in the world — insist that, in fact, it is the U.S. model that may prove to be a dead end.
WHY WE SENT ALBERTI TO COPENHAGEN
Remapping Debate was founded in order to try to help expand the extraordinarily narrow range of policy choices that are treated by most mainstream media sources as falling within the realm of the “practical” or “realistic.”
One manifestation of the problem is the assumption that neither central elements of the social safety net nor extensive governmental regulation is compatible with a modern economy seeking to operate within today’s global environment.
According to this assumption, alternative conceptions of the role of the state exist only in the province of unrealistic dreamers — or in the wreckage of failed or failing states.
Conceptions of the public interest arising from different historical periods or by different political systems are often ignored (unless providing an example of learning the lesson that what might have been affordable in the past is no longer), or trivialized (how many articles have there been that can be summarized as “the French just don’t realize that they need to work more”?).
But right now, in real life, in a country that is not failing, there is not only a markedly different set of public policies in place — unmistakedly those of a full-blown welfare state — the entire range and tenor of debate is altogether different from that which is permitted to be heard in the U.S.
Starting with the very different views of those in the business world, we thought a cross-national look at Denmark might help create a sense that a far greater range of alternatives exist — not only in terms of particular economic, labor, health, and education policies, but in terms of what kind of society one chooses to create and nurture.
“If you come back five years from now, I guarantee that the welfare state is going to be even larger,” Ove Kaj Pedersen, an economist at the Copenhagen Business School, said in an interview in Copenhagen last month. “Why? Because for Denmark, the welfare state is our main competitive advantage.”
“Business Interest Organizations” in Denmark — whose analogues in the United States have long pushed for deregulation, lower taxes, less government spending, and less generous social benefits — agree with Pedersen: “There is a general consensus about the welfare state in Denmark,” said Steen Muntzberg, director of the Confederation of Danish Employers, which advocates on behalf of over 28,000 businesses in Denmark. “We have come to see it as a crucial part of what makes us competitive in the global economy. There is some debate around the margins, but it would be hard to find companies who don’t support the bulk of government programs.”
Stine Bosse, who until recently served as the group chief executive officer of TrygVesta, Denmark’s largest insurance company, and now serves on the board of several Danish companies, described a “symbiotic relationship” between the private and public sector in Denmark: “It’s obvious that in Denmark, both the public and business leaders regard the state as a partner,” she said. “A strong state is not just something you have to live with…it’s something we reckon is pretty important, a positive thing for business.”
Denmark and its Nordic neighbors have developed a distinctive response to the pressures caused by globalization by combining relative flexibility in the labor market with strong social security provided by the state into a system they call “flexicurity.”
According to the Organization for Economic Co-operation and Development (OECD), Denmark has some of the loosest requirements in the world when it comes to an employer’s ability to hire and fire workers, (though on the OECD’s scale, it still provides eight times as much security as the U.S. does).
At the same time, Denmark’s generous unemployment benefits and social assistance programs ensure that few people fall through the cracks.
The OECD defines poverty as having a household income of less than 50 percent of median household income. Denmark has the second lowest rate, at 6.1 percent, in the OECD in the late 2000s. Using the same OECD measurement, the U.S. rate in that period was 17.3 percent, higher than any country in Europe and more than 6 percentage points higher than the OECD average.
Additionally, Denmark has the strongest system of worker retraining in the world. When a person becomes unemployed, he or she is required, after six months of looking for a new job, to become enrolled in a job training program, which is tailored to the local job market and the individual’s skills and aspirations. Training programs range from simple job-search skills to nurse licensure to apprenticeship programs at manufacturing companies.
The adoption of the flexicurity model in the mid-1990s caused many Danes to shift their sense of security from being rooted in a particular job, trade, or industry to being one based on a more general, but fundamental, expectation of continuing employment. According to Danish employers, the flexibility in the labor market has been a great boon to them.