DENMARK’S PATH TO PROSPERITY

Monita Pesumal is curious as to what makes this kingdom one of the happiest countries in the world

International surveys rank Denmark among the world’s happiest countries. This is intricately linked to social equality and community spirit, says the World Happiness Report, and the country continues to occupy second place in its rankings. So what makes Danes so content with their daily lives?

The average annual GDP per capita among Denmark’s population of six million is around US$ 68,000 – making it one of the most prosperous economies in the world. Often referred to as a welfare state, the nation uses progressive taxation as a tool to provide its people with a safety net and ensures that a third of all taxes collected by the state are paid back to citizens as transfer income.

According to Statistics Denmark, the average salary in the country is Danish Kroner 44,545.6 – roughly 6,400 dollars a month.

Generally, the Danes’ tax bracket covers everything from national income to municipal and labour market taxes. Then there is kirkeskat – or church tax – which is imposed at a flat rate, depending on the municipality in question. The national average for church taxpayers is approximately 0.9 percent.

In some cases, the total tax burden on an individual could be as high as 51 percent of gross income. On top of this, Danes pay an additional 25 percent VAT on most items and a tax of up to 150 percent on new cars.

But instead of revolting, taking to the streets or protesting, people in the Kingdom of Denmark see taxes as an investment in their quality of life. Most Danes are happy to pay taxes because they are familiar with what these yield in return.

A majority of healthcare services in the country are provided free of charge.

University students aren’t required to pay college tuition fees and even receive grants to help them cover expenses while studying. Childcare is subsidised. The elderly receive a pension from the state and are provided with carers who visit them at home. According to the World Bank, the social welfare programmes apply to all citizens and some of these include maternity or paternity leave for up to one year.

Denmark’s economic freedom score is 78, making its economy the 10th freest in the 2022 Index of Economic Freedom. With its high income, developed society, state-of-the-art infrastructure and distribution systems, and skilled labour force, the country presents itself as a strategic distribution point for the Scandinavian, Northern European and Baltic markets.

Its economy depends heavily on foreign trade and key ex­ports, which include machinery and instruments, processed food and beverages, meat, dairy products, fish, pharmaceuticals, apparel, furniture, wind turbines, Christmas trees, mink and fox fur. Denmark’s major export markets include Germany, the US, the UK, Norway and the EU.

While many nations are still recovering from the effects of the pandemic, the impact of COVID-19 on poverty in Denmark was negligible due to the country’s social welfare policies. Denmark was one of the first European nations to begin pandemic protocols by imposing a lockdown as early as 16 March 2020.

Some measures the Danish government implemented in response to COVID-19 includ­ed compensation of 90 percent of the revenue that self-employed people lost with a fixed cap every month, setting aside 60 million kroner to improve qualifications for the unemployed and extended unemployment benefits.

Denmark was also the first country to halt its COVID-19 vaccination programme because the virus was brought under control as early as April last year. As many as 4.8 million citizens are vaccinated, accord­ing to the Danish Health Authority – with over 3.6 million people having received a booster shot.

Wise decisions are often the result of good governance and great leadership. Mette Frederiksen has served as Prime Minister of Denmark since June 2019 and leader of the Social Democrats since June 2015. Owing to her government’s decision to cull 15 million minks in November 2020 because of fears they could transmit a mutated form of the coronavirus to humans however, things turned sour.

This scandal raised questions over the government’s handling of the pandemic and a snap parliamentary election was held in November last year after the Danish Social Liberal Party withdrew its support for Frederiksen.

The election resulted in the socialists winning 50 seats of 179, forming the largest parliamentary group. Following negotiations between the parties, Frederiksen formed her second government in mid-December in a coalition with the liberals.

Recently, her government’s plan to get rid of a public bank holiday and use the money to raise the defence budget to NATO’s target of two percent of GDP by 2030 following Russia’s invasion of Ukraine has come under fire.

While the move is expected to provide an extra three billion kroner to state coffers, the cancelled holiday would mean that Danes will have to work an extra day, which will be paid for by employers. But people are opposing the move, claiming it’s a threat to their cherished hygge (contentment from simple pleasures).