The Scandinavian welfare model in crisis? Achievements and problems of the Danish welfare state in an age of unemployment and low growth

Abstract

The "Scandinavian welfare model" is often considered vulnerable to mass unemployment. The Danish welfare state provides an opportunity to examine the capacities of the "Scandinavian model" to adapt to this situation. This article explores a number of alleged crisis problems of the welfare state, grouped into budgetary pressures, incentive problems and legitimacy problems. It is concluded that most of these problems have been exaggerated and that the real threats to the economic foundations of the welfare state should be found in political steering and incentive problems rather than in the exogenous pressures from the social and economic system, or in pressures from the unintended side effects of welfare arrangements. It is furthermore argued that one of the main achievements of the Danish welfare state has been to prevent unemployment and labor market marginalization from developing into a broad-ranged social marginalization and a political polarization which could undermine citizenship and solidarity in society.