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Denmark's Welfare State


As the world looked ahead in 2021 to a post-COVID-19 future, the citizens of Denmark reflected on the politically tumultuous recent decade and the new challenges to their welfare state on the horizon.

COVID-19 arrived on the coattails of a highly contentious 2019 election. The Social Democrats, the primary architects of Denmark's welfare state and the country's most established left-leaning political party, cinched victory thanks to their adoption of many of the far-right's policies on immigration. By 2020, new immigration policies resulted in the acceptance of fewer than 500 asylum seekers, compared with over 10,000 in 2015.

Denmark's labor market model, referred to as "flexicurity," had delivered increased job flexibility, as well as growth in employment, wages, and the overall economy in recent decades. It also helped continue to fund welfare state benefits, which were more than a third of GDP in 2019. Despite these successes, challenges remained. Economic growth had slowed in the 2010s. Projections put the population growth rate of persons of Danish descent at barely 0.1 percent per year, and with newly tightened immigration restrictions, the largest expected source of growth was descendants of immigrants already in the country. By 2060, the segment of the population of working age was expected to be 59 percent, a decline of more than 4 percentage points from 2020 figures. The segment of the population older than 80, which was most reliant on social programs such as pensions and universal healthcare, was expected to grow five to 10 times faster than any other segment. Proposed solutions to these challenges also needed to contend with the increasing heterogeneity in the country. In 2020, 86 percent of the Danish population was of Danish descent; by 2060, this figure was expected to decline to 80 percent. At the same time, Denmark's welfare state proved robust during the pandemic, resulting in renewed interest in maintaining the social protections that enabled such a healthy performance. Although the future was unclear, these challenges were certainly not the first faced by the welfare state.




David Besanko, Jacob Keal

Date Published



Strategy;Business and Government Relations


Besanko, David, and Jacob Keal. Denmark's Welfare State. Case 5-321-508.


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