Business interests lauding the welfare state?

Jennifer Blanke is director of the Centre for Global Competiveness and Performance at the World Economic Forum, which produces the annual Global Competitiveness Index, on which Denmark consistently ranks highly. In a phone interview, Blanke said that Denmark is a testament to the fact that you can provide social protection without losing competitiveness, but that Denmark’s example hinges on maintaining high educational attainment.

“The Danes have been very successful at this, generally,” she said. “The system of education does seem to work quite well. It’s an important example, but it’s also very expensive, which may explain why more countries have not adopted the Danish model.”

But Danish business leaders emphatically insist that the investment is worth it.

“I don’t think we would last very long if we didn’t have these policies,” Bosse said, referring specifically to Denmark’s system of worker training and free higher education. “We would begin to lose ground pretty fast.”

Race to the top

According to Pedersen, the constant need to increase educational performance is indicative of the way that relationship between the Danish state and Danish businesses facilitates a “race to the top,” in terms of living standards and well-being.

“You could say that there is a kind of virtuous circle at work,” he said. “The welfare state generates a high-skilled, healthy workforce which contributes to successful businesses and higher wages, which then go to finance the welfare state for the next generation,” he said.

Friis Larsen agreed. “We always have to look to the future to continue to be competitive, to hold up our end of the bargain,” he said. “It’s very important for Danish businesses to make sure that each generation is getting better off.”

The only way to do that, he went on, was to increasingly invest in the kinds of programs that have helped make Denmark competitive in the last few decades, albeit modifying them as conditions and evidence dictate. “You think in 10 years we will be making textiles in big factories and paying low wages?” he asked. “If that is how things happen, it will be a disaster.”

Larsen explained that trying to compete on wages with developing countries would inevitably force a “race to the bottom,” which would risk undermining the Danish middle class and take the emphasis off of education. The result, he said, was that Denmark would eventually lose its status as a nation with a high standard of living.

Of course, not every government program in Denmark has the business community’s wholehearted support (see box at the bottom of the next page). For example, several business leaders spoke of the need to reduce the amount of assistance that unemployed workers receive, because that would incentivize them to return to the labor market faster.

Muntzberg shares this view, but added that now is not the right time to make any changes to the level of unemployment benefits, because Denmark is still experiencing a modest surplus of labor after the financial crisis. “We are not trying to punish people,” he said, “but we need to always make sure that working is the natural thing for people to be doing.”

Kim Nøhr Skibsted, the group vice-president and head of corporate communications at Grundfos, which is the world’s largest manufacturer of pumps and one of Denmark’s largest employers, agreed. “It’s not good for the state, the businesses or the individual if you have a lot of people on the monthly dole,” he said. “The first priority should be to protect people from hardship, but the second priority should be to make sure everybody is contributing.”

Skibsted said that these responsibilities should not be limited to the state, however, and that businesses need to play their part. Grundfos, for example, has long had a policy in place requiring that at least three percent of its workforce be comprised of people who would not otherwise be integrated into the labor market, such as people with mental and physical disabilities.

“Businesses are also part of the society and should act as a responsible part of it, as well,” he said. “We all have to do our part.” The partnership between the state and the private sector, Skibsted said, “has created a stable and calm labor market where it’s been easy to recruit people to work for us, and an atmosphere between businesses, unions, and politicians where we can say, ‘this is our goal, to make the whole society better off, and this is what I’m going to do and this is what you’re going to do.’”