Immigrants in Denmark, both from Western and non-Western countries, are less likely to start their own business based on necessity, a recent analysis and calculations by the liberal think-tank CEPOS shows.
Denmark’s gross domestic product (GDP) would increase by 4.5 billion kroner annually if immigrants created businesses in Denmark at the same level as other countries.
Social benefits too high
“It looks like the low entrepreneur activity amongst immigrants can largely be explained by the high amount of social benefits for the unemployed,” Otto Brøns-Petersen, the head of research at CEPOS, told the Weekly Post.
“The benefits mean that the pay rate is already so high that many can’t find a job where the productivity is high enough for the pay. If we want more Danes and immigrants to become entrepreneurs motivated by good business opportunities, it will require a lower and less progressive taxation on investment income.”
Low immigrant employment
The numbers from the Global Entrepreneurship Monitor show that only 10 percent of immigrant entrepreneurs start a business due to necessity, compared to 16 percent in the UK, 23 percent in the US and 32 percent in Germany.
It would take a further 17,000 immigrants becoming entrepreneurs before Denmark was on an equal footing with Britain.
The employment rate difference between Danes and immigrants is also much higher compared to other countries. In Denmark the difference is 13.1 percent, whereas the UK only has a difference of 4.1 percent, and the US actually has 2.1 percent more immigrants employed.
Furthermore, Cepos’s findings show that countries like Sweden, Norway and the UK are better at giving immigrants a leg-up as entrepreneurs.
A nation of employees
“Denmark is in many ways a nation of employees,” Sidsel Dyrholm Holst, the head of MMV & Entrepreneurship at Dansk Industri, told the Weekly Post.
“The risk of starting your own business is very high, and in this country we have too many other opportunities. The fact is that half of all entrepreneur businesses close within five years.”
Holst explained that there generally aren’t as many entrepreneurs in Denmark, whether it be immigrants or Danes, which also means that the gap between the numbers is smaller.
She said that being an entrepreneur isn’t a necessity, because most people in Denmark have many other options, such as social benefits and free education.
Andreas Kamm, the secretary general of Dansk Flygtningehjælp, the Danish refugee council, believes that there is great potential among immigrants.
“They have the drive and courage to create businesses because they have been accustomed to fending for themselves,” he told Børsen.
“Immigrant entrepreneurs might have connections to their home countries that could be useful to Denmark and their businesses, and their network is likely to be vast as well. Many immigrants also speak several languages and can easily communicate with different people. Immigrant entrepreneurs have lots to offer Danish industry.”
Lacking in entrepreneurs
The head of the Danish entrepreneur association, Christian Walther Øyrabø, said that what stuck him the most about the numbers was that in other countries the numbers are much higher.
“To me it shows that entrepreneurships have stopped being beneficial here in Denmark,” Øyrabø told the Weekly Post.
“The numbers for both immigrants and Danes are as low as they can possibly be for a country to still function.”