TRANSFER INCOMES (3)

There are a lot of people in Denmark who are on transfer incomes, that is they are of working age, but are not working. In the third quarter of 2014, the number was 772,400, or roughly a fifth of the population. Economists and politicians spend a lot of time worrying about how to get these people into work, since if they could, there would be a positive double whammy to the state's finances; higher taxes and lower benefits. Is it possible?

Of the total, 221,500 of them were on "before time pensions"; in other words they have been medically diagnosed as being incapable, either physically or mentally, of ever working again and so get a pension for the rest of their lives. 86,600 were on efterløn, in their 60's but having retired early. 56,300 were sick and 53,800 were on maternity leave. A further 68,300 were working part-time, because they are not capable of holding down a full-time job.

Not much can be done about any of these groups. Of the remainder, roughly 160,000 were on kontanthjaelp, the lowest possible state benefit; and roughly 120,000 were unemployed. There are many reasons why people end up on kontanthjælp. One is that they lose their job and don't find another one, before their right to unemployment benefit (which is higher than kontanthjælp) ends. Another is that they are drug addicts, or have similar social problems, but are not considered in such a bad way that they can get a before time pension. Another is young people who have neither an education nor a job. Whatever the reason, getting these people off kontanthjælp is not easy.

Which leaves the unemployed. The 120,000 is a gross figure, meaning that some of those classed as unemployed will find a job in due course (and may well already have done so). Reducing the figure further depends - realistically - on the state of the economy, which is getting slowly better. So that figure could fall, albeit slowly.

All of which shows that if you have built up a big welfare state, it is extremely difficult to dismantle it. The only way the number on transfer incomes will fall markedly is when those people become pensioners, itself a transfer income, but not included as such. There are difficult times ahead.

Walter Blotscher