Increasing child poverty in the Danish welfare state
Denmark is internationally known for its highly developed welfare state and for having low levels of inequality and poverty. However, since the millennium, both inequality and poverty have increased, and within the last couple of years, child poverty has increased dramatically – from 42,500 poor children in 2016 to 64,500 in 2017. This has created a growing divide between the vast majority of the Danish population and those on the margins, mainly lone mothers, and refugee and immigrant families.
One of the main reasons for this is that during the last two decades, social assistance benefits have been reduced for certain groups. These changes have specifically affected (and were intended to affect) newly arrived refugees and immigrants, as well as other vulnerable groups, such as minority ethnic Danes. Justifying these cutbacks, the Liberal-Conservative government, elected in 2001, argued that this would increase their incentive to find work. The explicit intention of the new policy was therefore to send a signal to refugees and immigrants that they could not expect to be treated equally by the Danish welfare system before they had earned this right by working in the mainstream labour market.
Employment or poverty?
An important question in evaluating the effects of the reduced social assistance benefits for immigrants and refugees – known as Start Aid – is what the intention behind this change of policy was and if it did indeed ‘motivate’ recipients to seek out and take up employment. If rates of unemployment did not get reduced, then, alongside a reduction in the monetary value of the benefits – rates of poverty would necessarily increase. In the short-term, a few years after the policy change (which began in 2002), there appeared to be a small increase in employment rates among these groups. However, employment rates have been monitored for a longer time period now and the results suggest that employment outcomes after 9-10 years of the policy change are very close to zero (Andersen et al., 2019). Another study has shown that there are several explanations for the lack of long-term employment effects – for example a low level of education and poor mastery of the Danish language makes sustaining employment more difficult too. However, the single most important factor has been found to be claimants’ poor health (Müller et al., 2015).
As employment has not risen among recipients of the reduced social assistance benefits such as Start Aid, but the monetary value of the benefit has remained low – poverty among arguably the most vulnerable members of Danish society has risen. In Denmark, a commonly used poverty line defines poverty as those living on an income below 50% of the median income (the middle of the income distribution). In measuring whether someone lives in poverty – adjustments are made to this poverty line for those living in households with two or more persons, including children.
In 2002, about 27, 000 children (aged less than 18 years) were living in poverty. In 2011, the figure increased to more than 40,000. In the period from 2012 to 2015 where the lower levels of benefits were temporally abolished by a new government, the figure decreased slightly to about 35,000. Since the reintroduction of the lower levels of benefits in 2015, the figure has increased to 64,500 in 2017. This figure represents 5.5 % of all children in Denmark. Comparative figures from Eurostat for the proportion of children living in poverty in the United Kingdom and Denmark are 11.1 % and 5.4 % in 2017 respectively. This figure is an indictment for Denmark, giving its commitment to, and reputation for a strong, inclusive welfare state model, which is justified through its relatively high taxation rate.
Short and long-term consequences of child poverty
In the short term, the reduced social assistance benefits lead to different types of deprivations. Children, whose parents receive reduced social assistance benefits, were, for example, about 20-30 times less likely than children of employed parents to get new clothes and shoes, and be able to participate in leisure time activities, school trips, or enjoy celebrations of their birthday.
Research has examined how children living in poverty cope with this. Often they have to work hard to hit the fact. Take Alexander as an example. When his classmates sometimes buy pizza for lunch, he most often tells them that his is not hungry or does not fancy pizza right now. Instead, he often chooses not to have lunch or he goes home to make a sandwich. He thinks it is embarrassing to talk with his friends about not having enough money to do the same things as they do. He says:
“I don´t think it is cool to talk about. When other people can see that you are poor, then they can tease you about it. But I actually think I am good at hiding it” (quoted in Larsen & Müller, 2015).
Start Aid (re-named the Integration benefit) was so low that some families lived in absolute poverty – that is, below the subsistence level. Families and single mothers, on benefits, with two or more children are those most likely to have a disposable income below the calculated budgetary minimum poverty line. One of the unintended effects of the Start Aid has been a sharp rise in crime especially among women who were found shoplifting in supermarkets (Andersen et al., 2019).
Long-term experiences of poverty in childhood affects children’s health and behavior both in the short and long run. Furthermore, studies confirm that growing up in poverty in Denmark leads to lower educational level, a weaker attachment to the labour market, a lower wage, and at the age of 30, one is less likely to have a partner and children (Lesner, 2017).
While compared to many other countries, Denmark has relatively low levels of inequality and poverty, this has been changing over the last twenty years. In particular, the recent and dramatic growth in child poverty is likely to have grave consequences longer term – impacting possibilities for social mobility and the promotion of well-being. Given that politicians from all parties continue to, at least in public, support the Danish welfare model – reduced social assistance benefits must be understood as being driven by immigration policy rather than social and labour market policies. Here – a ‘hard line’ on immigration actually has a longer history of broad public support, where the aim is to encourage or even force refugees and asylum seekers to return to their country of origin as quickly as possible.
In fact, in 2018, the social assistance benefit for refugees and immigrants was actually renamed the Self-Sufficiency and Repatriation benefit, and the monetary value of this allocation reduced even further. Such a split between social welfare policy and immigration policy all point to a country that is keen to ensure Danish national citizens (the majority of whom are ethnically white and of Nordic origin) are able to grow up in a fairly equal society, while simultaneously limiting the opportunity for Denmark to becoming more multi-cultural and -ethnic, where all members of society are adequately protected by a welfare state.
Andersen, L.H., Dustmann, C., and Landersø, R. (2019): Lowering welfare benefits: Intended and unintended consequences for migrants and their families. Copenhagen: The Rockwool Foundation Research Unit.
Larsen, J.E. and Müller, M. (2015): Børnefattigdom (Child Poverty). In Erlandsen, T. m.fl.: Udsatte børn og unge. København: Hans Reitzels Forlag.
Lesner, R.V. (2017): The long-term effect of childhood poverty. Journal of Population Economics.
Müller, M., Hussain, M.A., Larsen, J.E., Hansen, H., Hansen, F.K, and Ejrnæs, M. (2015): Fattigdom, afsavn og coping (Poverty, deprivation and coping). København: Hans Reitzels Forlag.