Discussions in Denmark about home equity, flat screens and kitchen modernisations ended abruptly in 2008, and the changes the recession has brought with it has been the source of many a worry for Danes: will I get laid off? Can I make my next mortgage payment? Or whether we can even afford to keep the welfare state intact.
That being the case, you can forgive Danes if they’ve gone around asking themselves when the good times will be back. But, here, five years into the recession, the more relevant question is whether we’re ever going to return to ‘normal’.
The world and the economic reality of the mid-2000s are gone for good. The ‘norm’, in which the EU and the US dictated the pace of growth, dominated the markets and were responsible for much of the world’s innovation, isn’t looking so normal anymore. Even though we in Europe and the US speak of the recession as a global economic downturn, the situation is far different in countries like Brazil, India and China. And while the white-hot growth rates in the so-called BRIC countries may have cooled, that hasn’t meant that growth – or ‘the norm’ – has returned to Europe. Instead, ‘the next 11’, as growth countries like Indonesia, Mexico, Nigeria, Pakistan, Turkey and South Korea have been dubbed, are preparing to lift hundreds of millions of people out of poverty and into an emerging middle class.
The tectonic plates of the global economy have shifted in the matter of just a few years, leaving an entirely new landscape for Danes to consider.
Fortunately for Denmark, we weren’t hit as hard by the recession as other European countries. The jobless rate – compared with other countries – remains modest, and the economic situation has forced Danes to accept a few things and lawmakers to try new approaches. We no longer take our standard of living for granted. We’ve accepted that if we want Denmark to remain prosperous, growing and balanced, we’re going to need to put up a fight!
The television programme ‘9.z mod Kina’, in which Danish students competed with Chinese students in academic prowess, became not just a prime-time hit, it also got Danes talking. We’ve become more conscious of the intense competition Denmark faces. Today, far more Danes understand that if we can’t compete with other countries in terms of wages or knowledge, then all is lost.
One of the most oft-repeated fallacies these days is that “Denmark doesn’t need to compete with China.” That is – and has always been – a load of nonsense. Danish companies and their employees compete with Chinese companies and their employees each and every day. We need to be able to compete with China or any other country, lest our companies lose orders, our country loses jobs and we lose quality of life.
The government’s economic stimulus package, Vækstplan DK, is an important step towards putting Denmark back on the path to growth. Parliament has acted resolutely – more resolutely, in fact, than we’ve seen it do for quite some time – to shore up the private sector and keep public spending down.
It isn’t just lawmakers that deserve praise. Before Vækstplan DK was passed, the prime minister invited union representatives to meet her. When she asked what initiative they felt was most important for getting the economy up and running, they answered: lower taxes on the companies they worked for!
The challenge now is to stay the course and keep costs and wages down so that we can create new jobs. We need to remain focused on our competitiveness and not relax the fiscal discipline that has bolstered confidence in the economy during trying economic times.
But, our productivity is more than just wages and costs. If we want to create growth and new jobs and raise wages, we need to be more productive in the public as well as the private sector. As one of the most expensive countries in the world to do business, each and every hour we work needs to be spent doing something that is of greater value than anyone else.
Danish companies and employees need to add so much value to their products that consumers in China, Mexico, India, Brazil or whatever economy follows them demand our products. In order for that to happen, our products need to be so much better that consumers will be willing to pay a higher price for them.
Such thinking forms the basis for the Confederation of Danish Industry’s (DI) Productivity Panel, which gathers executives from some of the country’s most productive companies to identify the challenges and the solutions for increasing productivity.
One source of our failing productivity appears to be our educational system – something we once saw as a national strength.
We should demand that teachers as well as students take more responsibility for improving schools. Today, far too many young people slip through the cracks. One in five young people will never get an education, and many of them will be functionally illiterate. Over 4,000 young people completing upper-secondary school each year won’t get a degree by the time they turn 35. For vocational students, the statistics are just as depressing: 50 percent will drop out!
Such figures add up to a grim reality for a country that expects to be able to sell knowledge-based products to the rest of the world. This is a problem DI is seeking to address in close co-operation with unions and students themselves. Lawmakers, too, have also begun to address the issue.
The ‘norm’ of the 2000s caught us resting on our laurels as the economy came crashing down around us.
Fortunately, many Danish companies have been able to improve productivity and today they are in a better shape to meet their global competitors than they were before the recession hit. And if we look at the political decisions that have been made – as well as the responsibility shown by unions by not demanding higher wages – we can see that the recession has brought with it important changes that make it possible for Denmark to work its way back to prosperity.
And when it comes to our schools, the attention shown ‘9.z mod Kina’ gives reason to hope change is on its way to our school system as well.
The recession has us thinking differently. We need to step up our game if we want to be a part of the developments in the global economy, and we need to think differently if we want to maintain the way of life and the quality of life we’ve become accustomed to.
The author is the managing director of Dansk Industri (the Confederation of Danish Industry).