International review of approaches to tackling child poverty: Denmark

3. Assessing the role of Government intervention in child poverty reduction

This section brings together the policies and wider context discussed in previous sections to provide an assessment of how far interventions and their outcomes were designed to tackle child poverty. To do this, we assess interventions according to the following criteria:

• Direct: The intervention was the result of Government action specifically targeting reducing child poverty, or by maintaining it at low levels.
• Indirectly targeted: The intervention was the result of Government action targeted at improving the wellbeing of families and children, but not specifically targeted at reducing child poverty or maintaining it at low levels.
• Indirect: The intervention was the result of Government action targeted at broader aims or objectives that have had a positive – if indirect – impact on reducing child poverty or maintaining it at low levels.
• Induced: Action was instigated by wider social and/or economic change, an outside body or a non-governmental organisation.

Level of Government intervention in poverty reduction factors

The interventions mentioned in the case study and their outcomes are classified as below:

1. Direct

• Temporary child subsidy

2. Indirectly targeted

• Childcare system
• Parental leave and allowances
• Child and Youth Benefit
• Child supplements
• Social assistance
• Progressive and redistributive tax system

3. Indirect

• Active labour market policies and decentralised Public Employment Service
• Unemployment benefit replacement rates
• Employment allowance for single parents
• Women’s labour market participation and preference for full-time work

4. Induced

• Collective bargaining for wages and unregulated labour market
• Flexicurity Model.

In the case of Denmark, most policies are indirectly targeted, as family policies intended to support the wellbeing of children, rather than tackle child poverty itself. Other policies have an indirect but positive effect on poverty – either through providing income security for all households or by supporting labour market participation. The temporary child subsidy was a direct attempt by the Government to address increasing poverty amongst large families as a result of earlier social security reforms.

Lessons for Scotland

The path dependency is important to consider when drawing lessons from Denmark. As such, there are five key lessons 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 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, they have 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 take wider lessons 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.