Denmarkauniquemixofwelfare,economicgrowth.docVIP

Denmark a unique mix of welfare, economic growth March 6, 2007 The area around the Nyhavn (Newharbour) in Copenhagen, Denmark, bustles with pedestrians. By Jeffrey Stinson, USA COPENHAGEN — Across Europe, nations such as France, Italy and Germany struggle with lackluster economic growth, high unemployment and high taxes that often fall far short of paying for their welfare states. Then there is Denmark. As most in Europe, the Danes have high taxes, which take an average of 50% of income. They have a big welfare state, which provides free public health care, education, child care and job training on top of generous unemployment benefits. Wages are high, with 87% of the workforce belonging to unions. Prices are high, too. But the Danes enjoy steady economic growth, the lowest jobless rate on the continent, a budget surplus and shrinking government debt. And they work 37 hours a week. Denmark defies much conventional wisdom that you cannot have jobs, growth and sound government finances while imposing high taxes and running a big welfare state. Its done it through what the Danes call flexicurity, a hybrid of free labor markets, unfettered business and adjusting welfare to give incentives for people to work so they can pay taxes to finance the benefits they get. Flexicurity has become an economic eye catcher of Europe, where global competition is widely feared as eroding jobs and undermining the social safety net. Western government officials are trekking here dying to copy it. Even the low-tax, small-government, free-marketeers at the USAs libertarian Cato Institute say the Italians and the French could learn from the Danes. People in other European countries are wondering: What is happening in Denmark? says Anita Vium, chief economist of the Economic Council of the Labour Movement, a labor think tank here. We have people coming to study it. The European Union has looked at it. They want to know what we are doing. They often leave disappointed, say Vium and