Danish Model of Success

Yesterday was a busy day back and forth to Copenhagen for discussions with different political leaders there.

Denmark is doing extremely well these days - and that's part of its political problem.

With more foreasight than most other nations - certainly than Sweden - it has started to tackle some of the long-term demographic and welfare issues. A big reform commission has produced an agenda for necessary reforms, and the centre-right government under Prime Minister Fogh Rasmussen is now negotiating with parts of the opposition to see where a broad consensus can be established.

But to undertake painful reforms when the economy is positively booming isn't the easiest thing.

We'll see what comes out of it.

For a Swede it is striking to note the difference between how the Swedish and the Danish labour markets work. In this country, the market is fairly heavily regulated, and the Social Democrats under trade union pressure are doing their utmost to preserve that situation.

In Denmark it's very different. They have a very flexible labour market in combination with good levels of unemployment support. And it works just beutiful!

Youth unemploymment in Denmark is now - and these are the official figures - less than half of what it is in Sweden - 22 versus 9 %.

And while Sweden has one of the highest rates of unemployment in the European Union, Denmark is starting to suffer the problems of the lack of manpower. Business is starting to see the tight labour market as a major restrictions on its expansion.

For Sweden, there is now a Danish model to follow. And for others.