Welfare State

Tá... eu sei... isso aqui tá virando uma coleção de artigos do CPH post. Mas acho todos eles interessantes e importantes para entender a cultura dinamarquesa. Eu comentei sobre os extrangeiros algumas vezes. Aqui está outra explicação (bem longa, eu admito):

http://cphpost.dk/news/1-latest-news/51098-how-the-welfare-state-broke-the-national-economy.html

How the welfare state broke the national economy

THURSDAY, 03 MARCH 2011 11:23 DANN VINTHER NEWS

In the first in an ongoing series on the condition of the welfare state, researcher Gunnar Viby Mogensen tells us how we’ve got into the mess we’re in

Gunnar Viby Mogensen is an author of several books on the welfare system

According to a slew of economic experts, the Danish economy is in a mess and time is running out for the welfare model in its present form. Originally meant to serve the weakest members of society, the welfare state widely expanded in the 1970s, resulting in an explosion in public expenses in what is perhaps the world’s most comprehensive and generous welfare system.

The repercussions of this explosion are very clear in today’s economy as the doomsday reports are piling up, and experts predict public deficits as far as the eye can see.

So what went wrong?

The Copenhagen Post spoke to Gunnar Viby Mogensen, an author of several books on the Danish welfare state, and co-founder and former head of the Rockwool research unit, which has compiled several reports on the welfare system.

The decades up to 1993 saw a massive increase in public spending: from 1970 to 1993, public social spending soared from 19 percent of GDP to 32 percent. According to Mogensen, this rapid increase can be put down to three specific periods where the finances of the welfare state received decisive nudges tilting it out of balance.

The first one, he explained, started in the early ‘70s when the role of the state extended into several new areas. The levels of existing benefits were increased across the board, and new schemes were introduced. First came a full old-age pension for all, regardless of income; then came an increase in unemployment benefits and social security payments, and the decade finished with the introduction of the early retirement benefit scheme in 1979.

“That was a period of irresponsible economic policy, including a lax attitude towards huge wage increases,” said Mogensen.

The second period of increase started in 1983 with the liberalisation of the immigration policy, which opened the borders to the social cash register. For example, he explained, a single mother from Iran could bring her four kids to Denmark and from day one collect social security, housing benefits, child benefits, free places in nurseries and free healthcare.

“The following years saw an influx of people from developing countries with low levels of education and, it was to prove, very low capabilities with regards to abiding by the welfare society’s ‘generation contract’, whereby people of working age bore their share of financing the welfare system through earning money on the labour market,” said Mogensen. “This resulted in a massive rise in expenses for the welfare state because the new rules accommodated very large groups of the population who would never come to contribute anywhere near what they could claim in benefits.”

The third expansion period started in 1987 when the government – eager to accommodate voters in the the public sector – let their salaries increase by seven percent, while at the same time the working week was reduced from 39 to 37 hours.

“The economy was heading the wrong way and the only right thing to do would have been to take it easy with the pay increases – we simply couldn’t afford that seven percent rise, and it resulted in a big dent in our long-term economic sustainability,” he said.

There were also factors in play that tended to create self-perpetuating growth in the public sector, he explained. These related to the fact that it is harder to increase productivity in the state sector than in the private sector, while salaries in the state sector automatically track increases in the private sector. In addition, there was pressure for continued growth in the state sector from the ‘welfare coalition’, the rapidly increasing percentage of the population – now a clear majority – who were either employed by the state or received benefits from the public sector.

Mogensen sees the tide slowly starting to turn as the seriousness of the problem is becoming ever clearer, though many fear it might be too little too late. Total public social spending in Denmark has fallen slightly from 32 percent of GDP in 1993 to 28 percent in recent years: unemployment is now lower than it was prior to 1993, and benefit levels for the unemployed have been gradually reduced. At the same time, access to the early retirement benefit scheme has been made somewhat less liberal, and could be cut entirely.

“On the other hand, public social expenses are under pressure from the large group of immigrants living on welfare, as well as from the self-perpetuating pressures for more resources generated within the public sector,” he explained.

In his New Year’s speech, Prime Minister Lars Løkke Rasmussen said that for every five people leaving the job market to go on a pension, only four people are ready to take over.

“The cost of supporting the growing number of elderly people in the population is another major challenge,” he added.

According to Mogensen, economic experts in Denmark generally agree that decision-makers from both sides of the political spectrum are only making half-hearted efforts to resolve the financing difficulties currently faced by the welfare state.

“In the long term, however, the financing problems of the Danish welfare state will be resolved – if in no other way, then through borrowing that future generations will have to repay. And there is no guarantee that the foreign lenders will share the Danish perception of an ideal society whose main priority is the public redistribution of income.

Parte 2:

http://cphpost.dk/news/national/88-national/51129-why-earn-a-living-when-you-can-demand-one.html

Why earn a living when you can demand one?

THURSDAY, 10 MARCH 2011 12:27 DANN VINTHER NEWS

In the second part of our series, Gunnar Viby Mogensen talks about what the welfare state has done to our work ethic

Gunnar Viby Mogensen argues that when you know so much will be handed to you, you lose the will to work

In the first part of our series, researcher Gunnar Viby Mogensen told us how the Danish welfare state brought the economy to its knees.

This week he talks about how the welfare ideology has affected our work ethic. As we reported last week, the rapidly expanding welfare state has left Denmark with a massive public deficit as well as the world’s highest tax rates. At some point this spiral will have to stop or else the country’s economy will spin out of control.

And that point is now, according to Gunnar Viby Mogensen.

First of all, he explained, the high tax pressure makes people want to leave the country. A decade ago, 85 percent of all emigrated Danes returned within ten years. That figure is now down to 75 percent.

“The high tax burden leads to a loss of taxpayers, especially the high earners, which are the most profitable for the country’s economy.”

A study from 2007, conducted by Saxo Bank, illustrates the point: Danish mid-level managers on 800,000 kroner a year would net ten million kroner more over their lifetime if they moved to England.

Secondly, those Danes who do decide to stay often find themselves tempted to engage in various forms of tax speculation.

“These are only some of the areas where the financing of our welfare is lost,” Mogensen said while flipping through the pages of his latest book – a look at the history of the welfare state since 1970.

“Sure, the politicians can go and increase taxes in areas where there is little risk of evasion, such as property. But we’re seriously running out of resources to finance our welfare state.”

As a consequence, he argued, the Danish ideal of more welfare – better schools and hospitals, for example – can only be met if we work more.

Mogensen noted three paths along this road. “First, we need to start working at an earlier age, i.e. we need to shorten the long education programmes. Secondly, working age people must work more than they do today, and thirdly, those over 60 need to stay in the job market for a few years longer.

Regarding the early start, he said that on an international scale the standard of efficiency in Denmark’s education system is low, despite higher public funding than in most other welfare societies. In the ‘70s and the ‘80s, he explained, academic levels in primary schools were deliberately deprioritised in favour of the pupils’ personal development. And in the ‘90s and ‘00s, descendants from the substantial immigration that started in the ‘80s performed consistently worse than average in the school system and in vocational training.

“This leaves us with a relatively low level of education.”

The working age group, those aged between 20 and 60, don’t work enough, said Mogensen.

The poor job incentives from the social reforms in the ‘70s created a norm that social events should never lead to a loss of income. “And there are still problems with encouraging people on low salaries to choose work over a life on benefits.”

Meanwhile, he argued, Danes in general have kept down work efforts by opting for long holidays, a high propensity towards part-time work, and liberal maternity leave schemes.

Mogensen pointed to statistics from the Rockwool Research Fund that showed that as of 2001 (the most recent numbers available) roughly ten percent of the population earned less than 500 kroner a month more from working than they would from social benefits.

“Furthermore, up to 2001, by means of a liberal immigration policy, there has been a political majority for importing more of the workforce we need the least – those in low income groups – where the financial gains from working are often small.”

Although the unemployment figures for working age people have been pushed down to six percent in Denmark, compared to 9-10 in the Eurozone and in the US, this is not an unconditional success, Mogensen argued.

“One in five of them isn’t idle at all. According to Denmark Statistics, they’re not officially available for work. Some say they are awaiting a job offer; for some, it could well be because they want a temporary ‘free holiday’, while there are some extreme cases of people living in poor environments where there are plenty of leaflets in circulation detailing their rights as recipients of welfare benefits,” he said.

He then went on to quote a Danish author, Karina Pedersen, who grew up in a poor environment. In 2009, she told of her early days in a community where “securing an incapacity pension at a young age is viewed as a victory over the system and is often celebrated with a party.”

Mogensen also pointed to the significant costs of bringing unemployment rates down to the EU average.

“The activation programmes, for example, have had little or no effect, and studies by the National Bank and others have shown that a majority of those who were removed from the ‘unemployed’ section are currently to be found among those who receive more permanent benefits such as the incapacity ones.”

For those aged 60 or over, the pension age has been raised, but only very gradually and not in line with the speedy increase in the average human lifespan.

“We Danes still believe we deserve a long period without work in our ‘third age’,” said Mogensen.

He argued that up to now there has been a majority – among politicians as well as the public – in favour of maintaining the early retirement scheme. “In other words, there is a majority in favour of having a section of the population, where some 85 percent are in good health, paid for by the state for not working.”

So, Mogensen argued, we’re not likely to get better schools and hospitals any time soon as none of the three options seem viable.