Public Governance in Denmark

In the twenty-first century, societies around the world are facing a wide range of daunting global mega-challenges: poverty, unemployment, income inequality, unequal distribution of political power, ageing populations, uncontrolled migration, segregated urbanisation, increasing greenhouse gas emissions and a massive decrease in biodiversity. In recent years, politicians, journalists and academic observers have singled out the Nordic countries, Denmark in particular, as model societies of trusting and happy people that have handled many of these challenges with remarkable effectiveness. And yet others warn against ‘becoming Denmark,’ painting a picture of a dysfunctional, socialist nightmare with high taxes, low job motivation and a general lack of private initiative. In this introductory chapter, the editors cut through the noise of the international debate and set the scene for the nuanced analyses presented here of contemporary public governance in Demark and its capacity to tackle some of the most pressing problems of our time. Specifically, the chapter discusses various conceptualisations of the Danish welfare state, delineates some of its most important historical and structural traits and outlines the main empirical features of contemporary Danish public governance. Finally, it outlines the structure of the book and briefly introduces each of its subsequent chapters.

As elsewhere, inequality has increasingly been on the agenda in recent years in Denmark, which has led to discussion about the redistributive role of welfare states across existing welfare regimes. Perhaps surprisingly, the Danish debate on inequality has revolved more specifically around how the country's tax system influences labour supply, especially the high level of marginal income taxation. The debate on poverty and inequality has become more prominent in Denmark in recent years, with a focus on the living standards of pensioners and children as well as the dynamic relationship between inequality and social policy. Thus, if there is a willingness to reduce inequality, a central challenge is to determine which instruments are available to counter rising inequalities in Denmark. In this context, the interaction between the issue of poverty and political support for specific social policies in Denmark is a challenge. Overall, the analysis suggests that tax reforms focusing on labour market supply have helped increase inequalities, thus indicating a possible trade-off between different aspects of welfare state development. Furthermore, the universality of the Danish model might be questioned in the coming years, which might also imply a debate on the generosity of a number of social security benefits, including those targeting the unemployed.

Globally, Denmark stands out in terms of achieving high employment rates, containing unemployment and providing a labour market model combining flexibility, security and activation with a strong role for the social partners. The Danish labour market institutions and policies are seen as the catalyst for the transformation from industrial economy to a globalised, post-industrial and knowledge-based economy in which socio-economic equality and workforce security go hand in hand with competitiveness and the adaptability of business. In the 2000s, this mutual relationship came to be known as the Danish flexicurity model. Meanwhile, as a policy blueprint, ‘flexicurity’ has never really influenced Danish politics, and the reforms implemented since the 2000s have deviated from the premises of the model. This paper critically assesses the Danish model and its institutional components. It tracks the emergence of the Danish collective bargaining model as well as the flexicurity model. It scrutinises the challenges and performance of the current Danish labour market institutions and policies in a comparative perspective and discusses the extent to which the Danish experiences can and should be imitated abroad.

This chapter examines how democratic innovations can strengthen participation in the social housing sector. In Denmark, social housing offers affordable housing to a large number of Danes. The sector is grounded in traditions for resident involvement and engagement, and the democratic model in the sector is unique to Denmark. The residents have the majority say in all decision-making boards, which enables them to influence both the physical surroundings and social initiatives. Despite the positive merits, the sector faces challenges concerning increased segregation, municipalities allocating an increased share of socially and economically marginalised people to the sector, and less participation in the residential democracy. This chapter studies two cases of initiatives that experiment with democratic innovations to enhance participation in local housing associations. The two cases are innovative initiatives in the social housing sector and illustrate the potential benefits of increased participation. The chapter concludes that project-based initiatives might be on the rise and seem to hold considerable potential for enhancing participation. The challenge, then, is still to secure the coordination and strategic direction of the initiatives while combining them with the formal resident democracy.

Minority governments are more common in Denmark than in any other parliamentary democracy. Internationally, the literature associates minority governments with short-lived, inefficient governments. Yet this is not the case in Denmark. Here, successive governments have served full terms in recent decades and managed to pass large numbers of substantive reforms. This chapter considers how Danish minority governments manage to cope so well and whether polarisation and populism may challenge the solutions to this apparent paradox. The legislative bargaining and agreements (politiske forlig) between government and opposition parties are highly institutionalised, giving opposition parties policy influence and procedural privileges almost akin to cabinet parties – but only on the items on which agreement has been reached. The government is therefore able to maintain flexibility. Danish governments have also increased their hierarchical coordination, both in the form of policy through coalition agreements and internally in the form of cabinet committees and a strengthened Prime Minister's Office. The argument here is that these changes make it easier for a government to negotiate as a coherent unit, and the fact that the parties on the respective ideological wings of the Folketing are also included in negotiations and agreements means that polarisation does not seem to affect minority government performance.

Although Danish democracy is not currently facing the same decline in the trust in politicians and government as seen in other countries, it faces some of the same destabilising forces as do other ‘old’ representative democracies. While the various forms of citizen participation introduced in the 1980s and 1990s enhanced politician–citizen tensions, we are currently witnessing a wave of highly innovative, hybrid forms of democracy that both integrate representative and direct forms of democracy and push elected politicians towards an interactive political leadership style. These hybrid forms provide occasion for citizens and politicians to meet and debate pressing political matters. Although we are still in early days and dilemmas remain to be addressed, this development holds considerable potential for democracy in Denmark and elsewhere.

Denmark is characterised by high levels of trust between citizens and public authorities as well as between public leaders and employees, providing a comparative advantage when it comes to expanding public welfare, enhancing economic performance and handling a crisis like COVID-19. Public governance, however, requires a delicate balance between trust and the legitimate need for control to secure accountability This chapter explains how the high levels of trust in the Danish public sector are wedded to a pragmatic combination of various public governance paradigms, which has produced a ‘hybrid governance system’ balancing the legitimate demand for control with widespread trust in public employees. Traditional Weberian bureaucratic values of regularity, impartiality and expertise are combined with a limited and selective introduction of New Public Management reforms. Simultaneously, a dynamic neo-Weberian state works to satisfy an increasingly demanding citizenry while new platforms for developing collaborative solutions to complex problems are designed and developed at the municipal level. This hybrid governance system produces a virtuous circle of trust sustained by trust-based systems of evaluation, assessment and accountability developed in close dialogue between public managers and employees. The chapter demonstrates how a long-lasting political-administrative culture based on trust and a pragmatic, non-ideological combination of different governance paradigms has generated a positive trust‒public governance feedback loop. Striking the right control‒trust balance remains a continual challenge, however, to avoid governance failures eroding citizen trust in the public sector and to safeguard public values of transparency, accountability and performance.

For many years, one of the central ambitions of shifting Danish governments has been to maintain the position as an e-government frontrunner. The overall dream of administrators has been and remains to produce personalised social services efficiently. Shifting Danish governments have followed a centralised, party-neutral and consensual path to digitalisation. The efforts have been based on a centralised civil registration number system (CPR) established in 1968. However, the quest for efficient, personalised services has also stimulated debate in Denmark as to whether the state is obtaining too much personalised information and risks violating the privacy of its own citizens. Digitalisation efforts, especially the out-of-office efforts, cannot be pushed without public legitimacy attached to the process. Furthermore, Danish legislation must be changed substantially to pave the way for the increased use of advanced digital tools. Algorithmic tools cannot be trusted to solve all tasks. These dilemmas illustrate that the days of high political consensus in the Danish digitalisation efforts may very well be over. Other countries can learn four overall lessons from the Danish experiences: (1) although a high level of digitalisation can be reached using a top-down, nonpartisan approach, digitalisation will always be political, (2) experimentation and the failures attached to digitalisation can come at a very high cost, (3) effort will benefit greatly from citizen trust, especially in out-of-office efforts and (4) the public legitimacy of digitalisation must be based on strong mechanisms of social and political accountability.

Sustainable energy has been on the political agenda in Denmark for decades. This chapter will highlight how wind turbine production quite unforeseen became a great success in Denmark before the turn of the Millennium. An integrative public leadership approach using a mix of supportive institutional designs and instruments, combined with an unexpected bottom-up pressure for alternatives to nuclear power, promoted ways for wind turbine innovation and production in the 1970s. After the turn of the Millennium, being a huge financial success creating many new jobs and export has it developed into a cluster based on huge investments and professionalised developers. The comprehensive transition of wind turbine production in Denmark, from small scale to large scale, has however provided a counterproductive decrease in community commitment for local renewable energy production.

Denmark is known internationally as a climate frontrunner and not only due to wind turbine production and planning. The status is obtained by polycentric governance applied in cooperative-owned energy systems. The Danish response to climate change is a concerted effort of a plethora of public and private actors, providing a crucial momentum and robustness in climate politics not at least generated from a genuine civic society involvement. ‘The Danish Energy Model’; a withhold strategic effort to combine ambitious renewable energy goals, energy efficiency targets and political support of technical and industrial development has for four decades, succeeded in providing high levels of cheap energy supply, while partly reducing fossil fuel dependency at the same time.

Being constantly exposed to emerging economic and environmental challenges and other external shocks, such as the recent pandemic, agrifood systems must be resilient and adaptive. The Danish AgriFood System (DAFS) adopted a number of organisational changes in response to environmental demands and external shocks, both in the sector and the management by public authorities, leading to the development of new strategies and instruments. The DAFS has demonstrated an ability to anticipate, to be proactive and to recover quickly from difficulties, exhibiting remarkable resilience and the capacity to adapt and to position itself as a frontrunner in sustainable agrifood. In this process, the organisational institutional settings play a prominent role, where public and private actors interact and coordinate their activities, develop synergies and resolve conflicts within collaborative governance structures. The DAFS provides four interlinked and equally important success stories worth emulating: governance, cooperation, professionalism and social capital. Governance structures incorporating the state-administration-agrifood sector in close collaboration provide the necessary institutional conditions for adaptation and the accommodation of new solutions to emerging problems. Integrated cooperative organisation ensures the fair distribution of the added value and enables the resolution of conflicts and consensus-driven decisions. High levels of expertise and professionalism support the sector to identify new strategies and viable innovative solutions in the long term, responding to new demands while remaining competitive by promoting and externalising sector interests. Strong social capital binds everything together and ensures sustainability and resilience.

The transition from large to small working age cohorts and perpetually increasing longevity presents major challenges to pension systems around the world. In this context, the Danish system has been highlighted as particularly adequate and sustainable, although often developed more as element in macro-economic and fiscal policies than pension visions and certainly enabled and bolstered through other policies, such as fixed exchange rates, debt reduction, wage restraint, employment maximation and tax reform. The combined effect of six distinctive pension policy features places Danish pensions in the super-league of national systems: (1) a generous minimum pension providing all residents with basic old age security; (2) progressive redistribution resulting from the integration of public and private pension benefits; (3) high occupational pension coverage, with sizable contributions offering immediate membership, vesting and full portability of rights; (4) the tax regime, where investment return taxation substantially reduces the fiscal pressure from tax-exempting gross income in the build-up period and deferral of income tax until benefits are paid out, secures a revenue windfall at the height of ageing; (5) the linking of pensionable ages to life expectancy, which aims to lower pension costs, increases labour supply, growth and tax revenue and (6) the regime for third pillar schemes preventing their use in tax planning. Although the Danish pension experience has its obvious peculiarities, lessons for other governments can be found in the public‒private benefit integration, the tax regime, the life expectancy indexing of pensionable ages and the use of pensions in economic policies.

Healthcare provision in Denmark reflects some of the key principles of the welfare state. By securing relatively easy and equal access for all Danish residents regardless of income via general tax financing, the Danish healthcare system has strong ethical merits. All residents are entitled to comprehensive healthcare services. The Danish healthcare system is also relatively efficient. Total healthcare expenditures – including public and private – amount to 10% of GDP, above the OECD 8.8% average but well below the costs in the other Nordic countries, Germany, Switzerland and the United Stated. Notwithstanding its merits, healthcare in Denmark shares key predicaments with other OECD countries, primarily how to improve health outcomes while containing care expenditures. All of the OECD countries aim to improve population life expectancy and health quality. Yet their ageing and increasingly obese populations are exacerbating the demands on their respective healthcare systems. This chapter examines changes in how Denmark has managed these challenges. The main argument is that the healthcare system performance on managing health outcomes and costs improved remarkably from the 1990s to the early 2020s, although outcome inequalities remain. Notable changes in the system were targeted innovations in treatment procedures and expansion of municipal rehabilitation and preventive efforts, along with strict budget controls.

International migration is a global challenge affecting peoples and nations all over the world. In the advanced economies and welfare states of Western Europe, integrating migrants presents political, social as well as economic challenges. Over the past 50 years, Denmark has made a remarkable U-turn on the immigration question. Once the author of one of the most liberal immigration policies in Western Europe, Denmark presently has one of the strictest. This chapter addresses the causes behind the Danish policy U-turn, and how it has affected the social, economic and political integration of immigrants in Denmark. The chapter shows how Danish immigration politics have turned from low to high salience and have undergone radical changes resulting in a tightening of both internal and external immigration policies. It has become far more difficult to obtain residence and citizenship in Denmark. These measures have limited influx although international refugee crises are difficult to control at the borders. Moreover, Danish integration policies have focused increasingly on obligations and incentives, primarily by cutting benefits. The Danish case however shows that reduction of social benefits only has a marginal positive short-term effect on employment but with some negative side effects. When it comes to education, the Danish welfare state has been relatively successful in integrating immigrants and descendants in the educational system.

In this concluding chapter, the editors provide an overall assessment of contemporary Danish public governance based on the main findings in the preceding chapters of the edited volume. Surveying the Danish governance responses to contemporary mega-challenges, the chapter reflects on policy implications and contemplate the future of both research and practice related to public administration, politics and governance in Denmark. The chapter argues that recent public governance reforms have turned the Danish welfare state into a mix of a neo-Weberian state and an enabling state, which deploys its considerable resources to create economic growth for the benefit of the large majority of Danes, to satisfy the needs of citizens and businesses and to develop collaborative solutions to complex problems. While the chapter concludes that this modified version of the well-known universal welfare state is largely apt for meeting the mega-challenges of the twenty-first century, recent reforms seeking to enhance job-seeking incentives for the unemployed and to integrate immigrants have resulted in new forms of marginalisation of weaker societal groups. Moreover, evolving problems such as climate change, an ageing population and digital citizen privacy will require further public governance reforms in the years to come.