SGI 2015 | Denmark | Key Challenges

Key Challenges

Recent Governments Experts

SGI experts on Denmark

Robert Klemmensen

Robert Klemmensen is a professor of Comparative Politics at the Department of Political Science, Lund University. He specializes in voter behavior, party strategies and the interactions between political institutions and voter preferences. He serves as an associate editor for the journal Political Psychology and he has published in journals such as Comparative Political Studies, European Journal of Political Research and Psychological Science.

Torben M. Andersen

Torben M. Andersen is a professor in the Department of Economics and Business, Aarhus University. He has published widely on labor economics, public-sector economics and the economics of the welfare state. He is affiliated with a number of research centers including CEPR(London) CESifo (Munich) and IZA (Bonn). Mr. Andersen has also been extensively involved in policy advice in Denmark, Norway, Sweden, Greenland and a number of other countries. Among other he has been He has held several chairperson posts, including those for the Danish Economics Council, the Welfare Commission, and has acted as deputy chairman of the Swedish Fiscal Policy Council.

Mi Ah Schøyen (Coordinator)

Mi Ah Schoyen is Senior Researcher at NOVA Norwegian Social Research. She holds a PhD in political and social sciences from the European University Institute and works mainly in the field of comparative welfare state research. Her interests include the welfare mix, the politics and social consequences of welfare state reforms, intergenerational solidarity and the interplay between climate and social policy. She has published on topics such as the Nordic welfare state model, the eco-social agenda in Europe and cross-national comparisons of consequences of early job insecurity. She has experience from several large collaborative international research projects.

Denmark is a well-functioning democracy with a comprehensive welfare state and strong economic performance. The country enjoys high average income and relatively low levels of income inequality. Looking ahead, Denmark is well-prepared to cope with its aging population, thanks to a financially robust pension system. A tradition of open dialogue, cooperation, and broad-based reform goals contributes to the country’s adaptability. Trust between different actors and societal groups, often referred to as social capital, has also been an important factor. However, to remain among the leading industrialized nations, Denmark must continue to monitor its policies and institutions, necessitating additional changes and reforms.

Key challenges include:

Shifting geopolitics have affected political discourse, leading to initiatives including increased military spending and discussions on protecting supply chains and enhancing resilience to international hazards. Denmark’s territory also includes the Faroe Islands and Greenland, adding developments in the Arctic to these challenges.

Climate and environmental policy frameworks are in place, but a significant gap remains between policy objectives and projected developments. While current policies are based on the assumption that targets can be met without significant changes to the country’s economic structure, this ambition’s feasibility is questionable, particularly concerning the relatively large agricultural sector.

Technological developments, including AI, could have wide-ranging implications for the country’ economy and society. Given the ambitions of the welfare state, it is crucial to maintain high employment rates and relatively low levels of income inequality. Failure to meet these conditions could jeopardize the financial viability of the welfare state and lead to political repercussions due to societal fragmentation.

Although there have been improvements in recent years, integrating immigrants into the labor market remains a challenge. Despite significant efforts, many young adults are neither employed nor in education. A key question in this debate is whether the education system is adequately equipped to provide the type and quality of education and skills needed by employers in both the private and public sectors. Population forecasts suggest that the size of the labor force will remain relatively constant over the next couple of decades, exacerbating labor market challenges.

A sequence of reforms has ensured that the welfare state can cope with an aging population and that fiscal policy is sustainable. However, several challenges remain. Expectations and demands for welfare services, particularly healthcare, are likely to increase, while working hours may decrease, reducing tax revenue. Designing welfare policies requires balancing concerns for equality and social insurance with incentives for education and work. The hallmark of Danish society has been its ability to reconcile low levels of inequality and an extensive public sector with a well-functioning and sound economy that supports high income levels. Balancing these objectives remains an ongoing challenge.