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February 26th, 2013

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The traditional political alignment in the hallways of parliament is being severely tested following the government’s latest reform of the welfare state.

This morning, Prime Minister Helle Thorning-Schmidt (Socialdemokraterne) revealed a growth and jobs bill which makes up the final piece in the 'Big Bang' reforms after earlier proposed cuts to both the least generous unemployment benefit, kontanthjælp and the student grant system, SU.

The Socialdemokraterne-Socialistisk Folkeparti-Radikale (S-SF-R) government has been accused of pursuing liberal politics after announcing that it plans to use the welfare cuts to pay for the a reduction of taxes and levies on businesses, leading to uproar from the political left.

Far-left support party Enhedslisten (EL) has been particularly vehement in its reaction to the news and have urged Danes to meet up and demonstrate against the government.

”Tax exemptions for businesses with record profits paid for by the unemployed and students through such things as the kontanthjælp reform, which means that unemployed parents under 30 lose thousands of kroner every month,” Johanne Schmidt-Nielsen, EL’s political spokesperson, wrote on her Facebook page. “I urge everyone who disagrees with the government’s asocial course to turn up [to a demonstration scheduled for Thursday] because to penetrate the likes of Corydon, Vestager and Thorning, we need a lot of voices.”

Enhedslisten found some support in a rebellious SF, where many members are outraged that their party is part of a government that is catering to reforms that are so distant from their own political ideology.

“We feel powerless and if this passes, then we will withdraw from the elections this autumn. We don’t want to be a part of this project anymore,” Tenna Vebert Birk (SF), who is scheduled to represent SF in regional elections, told Politiken newspaper. “The government is involved in some sort of reverse-Robin Hood ploy and the kontanthjælp reform is the straw that broke the camel’s back.”

SF’s leader, Annette Vilhelmsen, who is also the business and growth minister, was oddly absent from Thorning-Schmidt’s press conference this morning, which could indicate considerable internal conflict within the ranks of one of the government’s most important coalition parties.

However, Thorning-Schmidt and the embattled government did find praise from opposition parties and traditional nemeses, Venstre and Konservative, who have long been a driving force behind a political ideology that centred on reducing corporate taxes in Denmark in order to increase competitiveness.

“I am really impressed by the government these days. Without wavering, they have executed the reforms, shortened the unemployment benefit period and are aiming at further ambitious structural reforms,” Jakob Engel-Schmidt, a Venstre spokesperson, told Politiken newspaper. “All in all, a solid combination of the carrot and the stick based on classical centre-right and liberal financial premises.”

And while the government reforms also yielded some positive words from think-tank Cepos for reducing growth in the public sector next year to the benefit of lower corporate taxes, Liberal Alliance (LA) maintained that the government’s reforms lacked courage.

“The proposals are guarded. They are just more of the same. A number of small initiatives that move a minimal number of kontanthjælp recipients into the employment ranks,” Joachim B Olsen, the employment spokesperson for LA, said on the party's website. “The government admits that financial incentives play a role, but they don’t dare to reduce benefits so it will be less attractive to receive social benefits.”