Business interests lauding the welfare state?

Original Reporting | By Mike Alberti |

In addition to health care, Bosse pointed out that free and universal childcare, which is provided by the government, also relieves stress on businesses because it allows workers to stay in the workplace. Denmark also offers one year of paid maternity leave to women after having a child, and six months of paternity leave to men.

“It’s obvious that if you want the female workforce to come in and participate at the same level as men you need those policies in place,” she said. “I have never understood why the U.S. would not have those policies, because you’re denying businesses a big share of the labor force.”

Søren Friis Larsen of the Danish Chamber of Commerce said that it was not appropriate to base a discussion about the welfare state on the high tax rates that finance it. “The question you need to ask first is, ‘what kind of welfare state do we want?’” he said. “Then you ask, ‘how do we pay for it?.’”

Søren Friis Larsen, vice-director of the Danish Chamber of Commerce, which also serves as an advocacy organization representing over 20,000 Danish businesses, agreed, and added that maternity and paternity leave and free or subsidized care for the elderly in the form of in-home caregivers or nursing home also has a positive effect on the work environment.

“Businesses and the government have both been working for a long time to make the workplace more family-friendly, because we recognized that giving parents leave will actually increase the chance that they will come back into the workforce later. And if employees don’t have to worry about taking care of their parents, they can be more focused on work. Those things are very good for businesses in the long-run.”

And what about the high cost of those programs and the relatively high tax rates necessary to do so?

“That’s not the right question to be asking,” Friis Larsen said. “The question you need to ask first is, ‘what kind of welfare state do we want?’ Then you ask, ‘how do we pay for it?’”

Denmark has a relatively low corporate tax rate, which is compensated for by one of the world’s highest income tax rates and a 25 percent value-added tax on most goods and services. “Yes, ideally we would like to have lower taxes, of course,” Muntzberg said. “But you have to be careful. We know that usually when you cut taxes you also have to cut some programs, which could be bad for business.”


“We better smarten up”

Ove Kaj Pedersen from the Copenhagen Business School said that, because Denmark is a small country and lacks a large market for domestic consumption, it was forced to adapt to the changes wrought by globalization earlier than some other countries.

“We do not have the same ability to influence the global market like the U.S. does,” he said, “so we’ve always had to adapt.”

The challenge, Pederson said, was how to balance a strong national commitment to equality and social security with new obstacles, like increasing immigration and wage competition. “It took us a couple of decades to get the combination right,” he said. “We’re constantly in the process of making changes and adapting, but it looks like, for the most part, we’ve found a model that works for everyone.”

Health care costs that Danish businesses don’t have to pay

The Bureau of Labor Statistics estimated in March 2011 that private employers in the United States paid $2.12 per every hour worked on health benefits, or 7.5 percent of total compensation. Many American companies have claimed that the health care system in the U.S., in which most health insurance is provided by employers, has been a drag on their businesses, leading some — such as the Big Three automakers, Ford, Daimler-Chrysler, and GM — to advocate for a single-payer health insurance system provided by the government, such as Canada’s or Denmark’s.

According to the Kaiser Family Foundation, which conducts an annual survey of about 1,800 businesses, most of which provide health benefits, the average annual premium that U.S. businesses pay per-employee for family health insurance coverage was nearly $10,000 in 2009, more than twice what it was in 2000. The high burden that providing health insurance costs businesses — especially small businesses — has caused an increasing number of them to simply stop providing it in recent years. Kaiser found that the percentage of employers providing health insurance fell from 69 to 60 between 2000 and 2009.

Send a letter to the editor