Living in Denmark
Despite tough talk by Ms. Thorning-Schmidt and her predecessor about the need to get Denmark’s financial house in order, the country’s welfare and benefits systems remain among the world’s most generous. Government spending accounts for about half of gross domestic product and few Danes complain about a top income tax rate of about 50 percent that finances unemployment, pensions, health care and other benefits. The constitution even guarantees Danes the right to work and to receive public assistance if they stumble.
But sustaining this nanny state has proven to be challenging. In Denmark, employers have carte blanche to hire and fire, and laid-off people are guaranteed a majority of their wages in benefits, a figure capped for high earners. In turn, they must participate in retraining and job placement programs tailored to get them back to work, which the government has intensified.
Each year, a high proportion of Danes change jobs, knowing the system will allow them to pay rent and buy food so they can focus on landing a new position. Most belong to unions, which manage the workplace, help run the unemployment insurance program and press the laid off into retraining.
As the financial crisis erased jobs, the government — Denmark’s largest employer — has had to provide more temporary work and intensify coaching.
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