February 18 2016

Denmark: Globalization and the Welfare State

Denmark is the seventh wealthiest country in the world in terms of GDP per capita,

because of its ability to adapt rapidly to a global economy as a welfare state. Specifically,

Denmark was quick to embrace globalization and plan for the future of the labor market. As the

world became increasingly globalized, Denmark was quick to respond to the economic threats

posed by the global market. Through a combination of its welfare state and its quick responses to

economic threats, Denmark’s welfare state encouraged forward propulsion of the country’s

development. For example, during the 80s and 90s, international competition and offshoring

strategies created a growing unemployment rate. The best example of Denmark’s ability to adapt

to a growing unemployment rate is known as Flexicurity. Through this policy, the country

created jobs, protected current employees by allowing them wage insurance, avoided creating a

permanent class of welfare recipients, and attracted new industries with new education programs.

When new industries emerged and created unemployment, the labor unions, which were

supported by the flexicurity reforms, would push to educate and adapt these workers to an

emerging industry. Danes shed the idea that unions should demand lifelong employment and

retention of traditional industries- instead Danish unions focused on fostering employee

education, which subsequently resulted in employment stability and employee satisfaction. Since

more than half the population takes part in supplementary training (in addition to their daily jobs)

employees who lost their jobs felt that they could find new ones rather quickly. Additionally,

employees were happier knowing that they would be able to rather fluidly move to different jobs

if they were unsatisfied with their current one.

The case highlights two businesses that The Danish welfare state encouraged through its

pro-trade, pro-education and pro-union policies. LEGO and Novo Nordisk, were both successful

companies because they focused engaging their workers on global business strategy. LEGO

opened up its strategy to software games featuring its plastic brick toys when it saw that

competitors with cooler gadgets were slicing away sales. As soon as LEGO saw a shift in

consumer demands, it was quick to adapt. Meanwhile, Novo Nordisk established programs that

increased production competencies so that blue collar employees were generalists and adapted to

the evolution of the different manufacturing jobs.

In my opinion, Denmark’s state faces issues like increased immigration, unemployment

but it was ultimately the welfare state that cultivated a competitive and forward looking culture

by education and bringing up the root of the unemployment problem, that makes Denmark

prosperous and successful.