Towards the Union

All eyes are on Copenhagen to see if this economic “little-engine-that-could” can turn its human resource capital into a viable source of wealth for future welfare. To be sure, the odds are stacked against the city in a few key ways. Stringent, xenophobic immigration policies in effect since 2001 have put a damper on the country’s efforts to import qualified professionals from abroad to fill the gaps posed by Denmark’s imminent labour shortage. Add to that the sizable Danish income and property tax liability – second only to Sweden in the OECD – its heavy welfare burden and high cost of labour, and Copenhagen looks like a guaranteed underdog in the race to attract foreign investments and high-level professionals.

But it’s not that simple. In 2005, the Economist Intelligence Unit (EIU), the Economist magazine’s business analytical unit, actually named Denmark the best country in the world in which to conduct business over the next five years. Topping the study for the first time ever, Denmark outperformed Canada, the United States, the Netherlands, Singapore and Hong Kong in terms of attractiveness to foreign businesses. Why?

The EIU touted Prime Minister Anders Fogh Rasmussen’s sweeping campaign of tax reforms and the country’s large-scale municipal reform plan as effective strategies to cut through bureaucratic red tape and ease restrictions for foreign companies. The nation’s banking sector and stock exchange were also listed as strong suits, along with its highly developed infrastructure, skilled workforce, and political and economic stability. If the EIU’s study is any indication of what’s to come for Copenhagen between now and 2010, it’s proof that it is indeed possible for a country to have it all – a comprehensive social welfare system in which no one loses out in the race for prosperity, without crippling public services and local infrastructure through high taxes and budget cuts. Copenhagen and the surrounding Øresund region have become favourite sites for industrial clusters in biotech, IT/telecom and nanotechnology, and these are fields to watch in the coming years. Immigration and integration of resident foreigners are inevitable challenges that Copenhagen will have to grapple with in the coming years, however, as the country attempts to reconcile its need for foreign manpower, brainpower and tax revenues with the nation’s general aversion and resistance to outside influences.

Population growth is occurring at too slow a rate to avoid a squeeze unless some kind of “green card” ordinance is adopted for highly qualified foreigners to gain access to the Danish job market.