Europaudvalget 2005-06
EUU Alm.del Bilag 126
Offentligt
Denmark
1.
Denmark benefits from high GDP per capita (122% of EU average in 2004),
productivity and employment levels. Annual real GDP growth has been some 2%
on average in the last decade, while labour productivity growth per person
employed has been slightly above the EU average. The employment rate is the
highest in the EU (75.7% in 2004). Employment growth has been strong since
2004 and the unemployment rate (5.4% in 2004), one of the lowest in the EU, has
been further reduced.
P
ART
I: G
ENERAL
A
SSESSMENT
2.
The Danish National Reform Programme (NRP) outlines four broad challenges:
to prepare for the ageing of the population; reap the benefits of globalisation;
strengthen the framework for improved productivity; and increase value for the
users of public services. These broad challenges are translated into a number of
priorities: improving competition in certain sectors; enhancing public sector
efficiency; developing a knowledge society; securing environmental
sustainability and energy; encouraging entrepreneurship; and increasing the
labour supply. The Commission shares the NRP’s analysis of the main priorities.
The Danish reform strategy is presented clearly and coherently. The NRP’s
approach is broad, ambitious, long-term and realistic. It aims to carry out existing
policies and, if necessary, to reinforce them. Quantitative targets with timetables
are set in some areas. The target set for R&D investment is to exceed 3% of GDP
by 2010, the same level as the overall target for the EU. The employment target is
to increase employment by between 50 000 and 60 000 people, corresponding to
around 2% of the labour force, by 2010. The policies presented in the NRP often
refer to broad lines for action and relatively few specific measures are presented.
This is particularly the case for initiatives aiming at improving competition and
increasing the labour supply. The NRP states, however, that further measures to
raise labour supply and to strengthen education, innovation and entrepreneurship
will follow on the basis of the reports and recommendations of two key advisory
bodies appointed by the Government: the Welfare Commission, whose report was
presented in December 2005, and the Globalisation Council, due to report in
Spring 2006.
Consultation and efforts to develop ownership of the document have been
substantial. The NRP has been endorsed by the Government and presented to
Parliament. The views of social partners, local authorities and representatives of
civil society have been collected and are presented in annexes to the programme.
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P
ART
II: A
SSESSMENT BY POLICY AREA
Macro-economic policies
5.
The overall macro-economic aims are sound public finances, a stable exchange
rate, price stability and high employment. The Commission fully subscribes to
these aims.
The strategy to assure long-term fiscal sustainability is a continuation of the one
in place for a number of years, consisting of building up government funds by
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saving budget surpluses in combination with increasing employment by around 2
per cent of the labour force by 2010. In the medium and long term, a higher level
of employment is necessary to secure the future funding of welfare commitments.
Policy to ensure fiscal sustainability in view of an ageing population continues to
be based on the objective of an average annual general government budget
surplus of 0.5-1.5% of GDP until 2010. On the expenditure side, a key objective
is to limit the annual growth of real public consumption to 0.5 per cent up to
2010. Income taxes were cut by 0.7 per cent of GDP in 2004 and taxes will be
further reduced to the extent that there is budgetary scope. Monetary policy aims
at keeping the krone’s echange rate with the euro stable. This policy lays the
basis for price stability in line with the euro area.
7.
The implementation of the measures outlined in the programme should contribute
significantly to attaining the objectives of the macro-economic strategy.
However, few concrete measures are set out to achieve the increase in
employment necessary for long-term fiscal sustainability.
The Danish government identifies as important challenges: enhancing
competition in some sectors; strengthening public sector efficiency; developing a
knowledge society; securing environmental sustainability and encouraging
entrepreneurship. The Commission shares this analysis.
The NRP points to the objective of halving the number of sectors facing
competition problems by 2010, in order to help bring consumer prices in
Denmark, consistently the highest in the EU, more into line with the rest of the
Union. Sectors curently affected by a lack of competition include parts of the
construction sector, utilities, food processing and professional services. The NRP
describes concretely how the authorities identify sectors facing significant
competition challenges. It sets out measures to increase competition through
amendments to the Competition Act and a review of competition-restricting rules.
This will complement action already under way to make shop opening hours
more flexible and to amend the Public Tender Act. While the measures envisaged
have good potential to enhance competition, full details and clear schedules are
not always given. Against this background, a swift implementation of these
measures, including strengthening competition through combatting cartels more
effectively, would be positive.
The NRP also includes proposals to make public services more efficient. A
planned reform will lead in 2007 to a large cut in the number of municipalities
and is likely to deliver efficiency gains through economies of scale. In addition,
the NRP presents measures to increase competition in the provision of public
services, including enhanced competition between public and private providers.
Total R&D spending amounted to 2.6 per cent of Denmark’s GDP in 2003, well
above the EU average of 1.9 per cent. About 70 per cent of R&D spending is
financed by the private sector. If Denmark maintains its current strategy and
increases public R&D as intended, the 2010 target of 3 percent of GDP seems
realistic. There remains scope to maximise the results of Denmark’s relatively
high R&D spending in terms of further boosting productivity. In this respect, the
NRP includes promising plans to better exploit technological opportunitiesby
improving knowledge transmission between universities and the private sector,
though it is not yet clear to what extent these plans will change incentives for
public sector researchers to collaborate with the private sector. In addition,
Micro-economic policies
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Denmark aims to enhance the use of ICT by the public administration through its
new strategy for e-government and a public internet portal for citizens to access
government services and information.
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The NRP makes positive efforts to decouple the link between economic growth
and environmental impacts. Environmental taxes, such as the new tax on mineral
phosphorous in animal feed and the reduction in tax on suphur-free petrol, are
used to ensure that prices better reflect the costs of environmental degradation for
society. The 2005 energy strategy promotes energy-saving initiatives addressing
in particular energy consumption in the transport sector.
While Danish entrepreneurship looks healthy on the basis of the indicator of
business start-ups, few of the new firms develop into high-growth companies.
The NRP therefore includes plans to grant certain entrepreneurs a three-year
period of tax relief to provide an incentive for further growth. This is an
interesting initiative and should be followed by a careful evaluation. The
relatively small and illiquid stock market could hinder firm growth and the
measures presented in the NRP to ease access to capital will help address this
problem. An example is the Entrepreneurship Fund that provides early stage
venture capital. The government aims to reduce the administrative costs of
enterprises by 25 per cent between 2001 and 2010, and has developed a strategy
to achieve this objective. With regard to internal market policy, Denmark’s
efforts in terms of implementing internal market policy, for instance through a
special task force, are encouraging.
The micro-economic policy initiatives in the NRP are likely to make a positive
contribution to jobs and growth. In some cases, the proposed measures need to be
more concrete in order to guarantee successful implementation. For example, few
details are given on the timing of the measures to enhance competition.
Against the background of the ageing population, the Danish NRP identifies
increased labour supply through higher labour force participation as an important
challenge. In addition, the NRP focuses on improving the adaptability of
employees and enterprises, improving the basic school system and increasing the
number of students in secondary and tertiary education. The Commission shares
this analysis of the main challenge and priorities.
The NRP outlines a number of measures to attract and retain more people in
employment in order to increase the labour supply by 2010 and beyond: tighter
requirements to seek a job for immigrants who receive benefits; a lower average
age for finishing tertiary education; reducing absence due to illness; getting more
older people into the labour market; and improved functioning of the labour
market through overhauling employment policies. These measures have potential
to further increase the already high employment rates but might be insufficient to
meet the challenge of a targeted increase of 50-60,000 persons in employment by
2010.
In terms of adaptability of workers and enterprises, no specific measures have
been taken so far. However, to realise national objectives for lifelong learning,
the government and the social partners have established a Tripartite Task Force to
reform the vocational and adult training system. This is an important first step in
a long-term process. The first recommendations from this Task Force are
expected in early 2006.
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Employment policies
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18.
Regarding investments in human capital, the focus is again on addressing more
long-term challenges and preparing Danish society for the effects of globalisation
and technical change. One set of new initiatives aims at increasing the proportion
of young people completing upper-secondary education by establishing more
cohesion and interaction between subjects, and by improving apprenticeships and
vocational colleges. Another set of initiatives aims at increasing the numbers of
young people completing higher education and the speed with which they do it.
Youth unemployment, which is linked to early school-leaving in particular, will
be tackled through measures to ensure participation in individualised education or
training. These measures are adequate and focused, with overall targets identified
for 2010 and 2015, although some of those seem over optimistic.
Overall, the Danish employment strategy is wide-ranging and ambitious but
specific measures to increase employment are so far limited, partly because the
government is awaiting important advisory reports. In general, budgetary
information is scarce in the employment section of the NRP.
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