EFTERLØN (2)

In my earlier post on efterløn, I said that all of the Danish political parties faced a tricky decision. There's a big hole in the state's public finances, yet the obvious way to plug it, by raising the state pension age and getting rid off/worsening efterløn, would run up against commitments not to do exactly that. What to do?

One answer came today, with an agreement between the minority Government, its steadfast supporters the right-wing Danish People's Party, and the middle-of-the-road (and somewhat mis-named) Radical Left. The pension age will be raised from 65 to 67; and the starting age for efterløn from 60 to 64, thereby reducing efterløn from 5 years to 3. The two measures will save some kr.18 billion by 2020, and keep an extra 65,000 people in work. The economic hole is thereby plugged.

Although the negotiations have been going on for some time, they were probably the easiest part. The difficult bits concern the political posturing that comes from ditching all those commitments. To give you a flavour:

1. The agreement will not come into effect until after the next election, due to be held this year. The parties to the agreement may not have the necessary 90 votes in the Folketing after the election, so the changes may never happen.

2. The opposition Social Democrats/SF Party will campaign in that election to maintain the existing 2006 deal. However, they have also said that if they don't get the necessary 90 votes which will give them power, then they will want to try to renegotiate today's agreement. Left-of-centre voters are already confused.

3. So too are DPP supporters. Having said that "under no circumstances" would they tinker with the 2006 deal, they have just done so. Is this a breach of promise, or an unfortunate necessity?

4. The Radical Left are also in difficulties. Having said long ago, that they would support the Social Democrats' leader Helle Thorning-Schmidt as the next Prime Minister, the Social Democrats/SF Party alliance promptly ignored them. Getting rid of efterløn was, and is, a key Radical Left policy, so today's agreement is a great success for them. But they have also said that they will still support Helle Thorning-Schmidt for Prime Minister after the next election. Can you support both sides of the political divide at the same time?

The biggest beneficiaries appear to be the minority Government, who sought a deal to reform efterløn and got one. Their only problem was that in order to get it, they (but not the Radical Left, another complication!) had to go along with one of the DPP's anti-immigrant tub-thumps. This was to reintroduce permanent border controls, ostensibly in order to reduce the influx of East European criminals, but really to distance Denmark from the E.U. The E.U. Commission has already said that this probably breaches E.U. law and the Schengen agreements, in which case it won't come to pass. The Government will say otherwise, but probably won't mind that.

Clear?

Walter Blotscher