International review of approaches to tackling child poverty: Denmark

Executive Summary

Denmark has a low relative child poverty rate compared to other European countries. In 2024, 10% of children in Denmark lived in poverty (60% of median equivalised income after social transfers and before housing costs) and the child poverty rate is nine percentage points lower than Scotland’s before housing cost child poverty rate for 2023/24.^[1] Denmark has maintained a low and stable rate of child poverty since at least the late-1980s.[2]

However, child poverty itself has not been a major political priority in Denmark. Indeed, Denmark has no overall child poverty reduction strategy and, with the exception of a short window in 2013-15, has never had an official definition or measure of either child poverty or overall poverty. Instead, Danish policy has been primarily concerned with ensuring equal opportunity for all children, addressing social exclusion and boosting the labour market opportunities of parents. As seen in the case study for Finland, this emphasis on labour market opportunities has been shaped by a strong emphasis on gender equality, and a cultural norm around dual full-time earners. As such, Denmark has focused on implementing policies intended to support women’s labour market participation – in particular via a long-standing focus on childcare provision since the 1960s. These policies have had an overspill effect, helping to create conditions that support low child poverty rates more widely.

The key factors that contribute to low child poverty rates in Denmark are the provision of affordable childcare, generous parental leave, a combination of universal and targeted social security support, and using active labour market policy to retrain and re-employ people who become unemployed. Through these policies, Denmark has developed what has become known as a ‘Flexicurity Model’. Since the 1990s, this has combined strong social security protection, high levels of support to find new roles through well-developed active labour market policies, and a largely unregulated, flexible labour market with minimal legislation on pay, conditions and employment protection. This is a unique take on the wider Nordic approach to social and employment policy. However, the historical trajectory and interrelationship of the policy areas that make up the Flexicurity Model has often been fraught, making it often challenging for policymakers to strike a consistent balance between the key components of security, flexibility and support.

The key chronological time periods and specific policies that this case study focuses on are illustrated below.

The growth of family support (1964–1990): During the 1960s and 1970s, the foundations for what later became the Flexicurity Model were put in place, especially around labour market participation and a robust social security system. The biggest impact here was the development and growth of the childcare sector, alongside increasingly generous maternity leave entitlements. Likewise, the additional costs of raising a family were recognised with the introduction of child benefits. Key policies in this period include:

• Childcare Act (1964)
• Childcare Guarantee (1976)
• Introduction of childcare fee ceiling (1976)
• Expansion of parental leave and pay (1984)
• Introduction of child benefit (1986)

The development of the Flexicurity Model (1993–2010): An economic crisis during the late-1980s and early-1990s saw calls for a shift in approach to address rising unemployment. The 1990s and early-2000s saw the beginning of an extensive focus on active labour market policies such as job training programmes and subsidised employment schemes. At the same time, the generosity of childcare provision and parental leave was increased to further incentivise female labour market participation, and social security support for vulnerable groups was introduced. However, it was during this period that welfare state retrenchment began to take effect to focus on labour market activation. Key policies in this period include:

• Active Social Policy Act (1997)
• Introduction of child supplements (2000/2001)
• Further extension of paid parental leave (2002)
• Decentralisation of public employment services (2002) and creation of one-stop-shop jobcentres (2007)
• Further evolution of the childcare legislative framework (2004) and reduction in childcare fees (2006)

Welfare state restructuring (2010–present): In response to the challenges of the Great Recession (2008-2010), the Danish Government introduced several social security restrictions, including tighter conditions on access to social assistance (especially for younger people), means-testing certain benefits and introducing a social security ceiling. This contributed to an increase in child poverty and subsequent action was taken, first through targeted support for impacted families with children. This took the form of a temporary child subsidy (2019-2023), with forthcoming radical changes to social assistance that seek to simplify the system and better support families with children. Meanwhile, the challenges faced by single parents were recognised and reforms to the tax, benefit and childcare system were introduced to both support them with additional costs and incentivise labour market participation. Key policies in this period include:

• Introduction of employment allowances for single parents (2012)
• Disability reforms to incentivise labour market participation (2012)
• Means-testing of child benefit (2014)
• Introduction of benefit ceiling and work requirements in social assistance (2016)
• Overhaul of social assistance and jobcentres (2025)

There are five key lessons for Scotland that can be drawn from Denmark’s experience:

1. Denmark does not have a specific policy focus or political or public language around addressing poverty. Indeed, the country is somewhat unique in not having an agreed definition of poverty. However, this lack of overarching strategy, policy focus or indeed definition has not stopped Denmark from maintaining low levels of child poverty over a significant period. Scotland can learn from Denmark’s approach of focusing on other child and family-centric policy objectives – such as supporting wider child wellbeing, addressing the additional costs faced by families with children universally and a clear focus on encouraging labour market participation – can have positive spillover effects on child poverty outcomes.

2. Key to Denmark’s success in ensuring high labour market participation of parents is through a universal and affordable childcare system for children from the age of six months until compulsory school age at six years. This system allows more families to enter the workforce sooner. Moreover, Denmark has some of the highest public spending on childcare in the Organisation for Economic Co-operation and Development (OECD), especially in terms of providing a generous subsidy for all parents as well as targeted additional support for low-income families, larger families and single-parent households. Because of the childcare system, Danish parents can work longer and boost family income.

3. Denmark has a unique take on the wider Nordic approach to social and labour market policy through its Flexicurity Model. Unlike other Nordic countries, Denmark has a much more direct focus on labour market activation through employment schemes (and widespread childcare delivery) as well as a much more flexible labour market. Bringing together social, family and labour market policy in a cohesive way can successfully combine economic growth, low unemployment, and social stability.

4. Despite the universalism of most social provision, Denmark has also made significant advances in recognising the needs of specific at-risk groups. Successful policies have been introduced in particular to support single parents. Denmark’s approach to this is important and has not just focused on what the social security system and cash-transfers can do, but has also focused on assisting single parents to enter the labour market through targeted reforms to personal taxation, tailored parental leave, discounted childcare and – in some municipalities – active labour market policies directedly focused on boosting employment among single parents. Through this combined approach, rates of employment among single parents have increased in the last decade. Scotland could similarly have a more targeted approach to supporting at-risk groups, in particular single parents, and should explore the possibility of taking a multi-lever approach to supporting at-risk groups.

5. While social security remains generous, universal and redistributive, the system over time had become incredibly complex and not without some relatively restrictive conditions. In particular the generosity of social assistance has been reduced for younger people, work requirements introduced that are sanctionable if not met, a benefit cap introduced and unemployment benefit restricted to two years. There are similarities between the conditionality in the Danish and UK social security system. In Denmark, this conditionality was introduced to boost labour market participation and ensure income from employment remains higher than social security transfers, this has not been without unintended consequences for families with children. However, Denmark shows that the unintended consequences of policy change can be responded to and mitigated. In the first instance, this was through a directly targeted solution for larger families and then, more recently, a radical restructuring of the social assistance system. The intention of this restructuring is to simplify the system while making it more focused on supporting low-income families with children. The introduction of a Scottish Child Payment and plans to mitigate the two-child limit would follow Denmark’s policy response. Scotland can also undertake wider learning to explore how its current devolved powers over social security can be used to simplify the social security system and further support for families with children.