Competitiveness: Denmark’s happy achievers

Continued reform and progress are main challenges for governments and administrations during the era of globalisation. International comparisons and intensive contacts within the EU institutions offer member states opportunities for improvement and chances to learn from each other.

Having looked at Denmark in the European Union and with regard to the European Semester in Finnish on Eurooppaoikeus, in English here on Grahnlaw and in Swedish on Grahnblawg, we move to international comparisons in order to offer avenues for reform by the country and others.

In this blog post we look at comparisons regarding happiness, the good life, competitiveness and the business environment in Denmark.

World Happiness Report 2017

Life, Liberty, and the Pursuit of Happiness still seem to be worthy causes for governments instituted by citizens. Among the 155 countries ranked by the World Happiness Report 2017 (page 20) Denmark scored second, just after Norway, but ahead of the rest of the top ten: Iceland, Switzerland, Finland, the Netherlands, Canada, New Zealand, Australia and Sweden. (We take note that five Nordic countries fill half of the top ten places.)

OECD Better Life Index

Another international comparison for Denmark is the OECD’s Better Life Index measuring the good life from a number of angles, described and ranked among 38 developed economies (35 OECD members plus Brazil, Russia and South Africa).

Eleven topics reflect what the OECD has identified as essential to well-being in terms of material living conditions (housing, income, jobs) and quality of life (community, education, environment, governance, health, life satisfaction, safety and work-life balance). Each topic is built on one to four specific indicators.

Frequently Asked Questions offer more information to those interested.  

Global Competitiveness Report

According to the Global Competitiveness Report 2016-2017, from the World Economic Forum (WEF), Denmark was ranked twelfth among 138 economies, the same as the previous year.

As for other countries, Denmark’s country profile (pages 162-163) offers a detailed picture of strength and weaknesses through the rigorous health-check by indexes and sub-indexes around the twelve pillars of the developing global competitiveness index.

The executive opinion survey highlighted tax rates, tax regulations, restrictive labour regulations, access to financing and government bureaucracy as the five most problematic issues for doing business.   

The fascinating WEF report with a broad perspective grapples with the importance of skills and innovation in the light of the fourth industrial revolution.

Doing Business 2017

There is a short presentation on the World Bank’s Doing Business 2017 web page, where the 14th edition can be opened or downloaded:

Doing Business 2017: Equal Opportunity for All, a World Bank Group flagship publication, is the 14th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe—and over time.

Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures labor market regulation, which is not included in this year’s ranking.

Data in Doing Business 2017 are current as of June 1, 2016. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why.

What does Doing Business 2017: Equal Opportunity for All tell us about business regulation in Denmark?

The country table for Denmark (page 202) offers a more detailed view of the country’s ease of doing business rank as third out of 190 economies, after New Zealand and Singapore, but ahead of Hong Kong SAR, the Republic of Korea, Norway, the United Kingdom, the United States, Sweden and Macedonia (FYROM).

Index of Economic Freedom

The 2017 Index of Economic Freedom from the  Heritage Foundation’s is grouped into four broad categories, or pillars, of economic freedom:

1. Rule of Law (property rights, government integrity, judicial effectiveness)
2. Government Size (government spending, tax burden, fiscal health)
3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
4. Open Markets (trade freedom, investment freedom, financial freedom)

Given the libertarian perspective, it is hardly astonishing that the Nordic welfare state Denmark ends up number 18 in the  the country ranking (among 180 economies), but attitudes among world business leaders are worth considering.    

The 2017 Index of Economic Freedom deals with Europe (from page 197). The table on economic freedom in Europe offers an overview of scores for Denmark and the rest of the countries in the region (pages 203-204).

Denmark may be fiscally sound, but the Heritage index disagrees with the tax burden and abhors the level of government spending.

The country pages concerning Denmark (226-227) start with the following summary, before commenting briefly on the different factors:

Denmark’s economy performs notably well in regulatory efficiency. Open-market policies sustain flexibility, competitiveness, and large flows of trade and investment, and the transparent and efficient regulatory and legal environment encourages robust entrepreneurial activity. Banking regulations are sensible, and lending practices have been prudent. Monetary stability is well maintained, and the judicial system provides strong protection for property rights.

Government spending has been expansive, and the overall tax regime needed to finance the ever-growing scope of government has become more burdensome and complex. However, such institutional assets as high degrees of business efficiency and regulatory flexibility have counterbalanced some of the shortcomings of heavy social spending.

However, in terms of economic freedom Denmark has been on a slightly downward trend.

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Detailed study of these comparisons offers stuff for a structural reform agenda, but we are going to look at a few more in a later blog post.

Ralf Grahn

European Semester 2017 start: Denmark

Last autumn the European Commission launched the European Semester 2017 by publishing the:

Annual Growth Survey 2017; Brussels, 16.11.2016 COM(2016) 725 final (16 pages)

The Annual Growth Survey (AGS) offered a summary of the Commission’s priorities at EU level and the need for action at the national level in order to promote investment, structural reforms and responsible public finances in 2017 and beyond. However, the AGS did not mention individual countries.

Against the broad AGS background, the Commission analysed individual member states in the:

Alert Mechanism Report 2017; Brussels, 16.11.2016 COM(2016) 728 final (47 pages)    

A summary of Denmark is presented on the pages 26-27 of the Alert Mechanism Report (AMR) 2017, with the macroeconomic imbalance procedure (MIP) at least postponed:   

Overall, the economic reading points to possible issues related to private debt and the housing sector, but risks still appear contained. Therefore, the Commission will at this stage not carry out further in-depth analysis in the context of the MIP.

The AGS was accompanied by the mandatory:

Draft Joint Employment Report; Brussels, 16.11.2016 COM(2016) 729 final (83 pages)

Flexicurity being almost a trademark of Denmark, Danish representatives probably saw it as indirect praise, when the draft Joint Employment Report (JER) underlined that reforms promoting resilient and inclusive labour markets must continue in the European Union countries, stimulating job creation and labour market participation while properly combining flexibility and adequate security (page 3).

But the youth unemployment rate and the rate of thosen not in employment, education or training (NEET rate) had risen in Denmark (p. 17). In the summary of the scoreboard of key employment and social indicators (p. 18) Denmark performed better than average regarding the unemployment rate, the at-risk-of-poverty rate, inequality (S80/S20 =  the ratio between the incomes of the 20% of the population with the highest incomes and the incomes of the 20% with lowest incomes) and was among the best performers with regard to gross disposable household income.

Ralf Grahn

Energy Union: Commission work programme for 2017

The blog entry Second Report on the State of the Energy Union offered a glance at the state of play until 1 February 2017.

Energy Union strategy

First, a reminder of the points of departure for the Energy Union.

In the publication A New Start for Europe you find a resilient energy union with a forward-looking climate change policy outlined as the third of the ten priorities of the Juncker Commission.

Soon enough, the new Commission launched its Energy Union Package, featuring most prominently the framework strategy communication and the annexed roadmap, with tens of promised actions and legislative proposals:

A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy; Brussels, 25.2.2015 COM(2015) 80 final

Roadmap for the Energy Union; Brussels, 25.2.2015 COM(2015) 80 final ANNEX 1

The Grahnlaw blog post State of the EU Energy Union mentioned the earlier entries in Finnish and Swedish, then compiled most of the press materials and official documents needed to bring us almost up to date.

In this blog article we turn our eyes to the near future, through the Commission work programme (CWP).

Commission work programme for 2017

Last autumn the European Commission published its annual communication:

Commission Work Programme 2017 - Delivering a Europe that protects, empowers and defends; Strasbourg, 25.10.2016 COM(2016) 710 final

On page 7 we find enough for a general orientation about promised 2017 actions regarding energy and climate change:

3. A Resilient Energy Union with a Forward-Looking Climate Change Policy

A Europe that takes responsibility for delivery on promises made. The swift ratification of the Paris Agreement has shown that Member States can find common ground when it is clear that acting together the Union's impact is bigger than the mere sum of its parts. Moreover, it has confirmed the EU's global leading role on climate change. Delivery on our commitments is now needed to make the modernisation of our economy a reality whilst ensuring a socially fair transition. The implementation of the Paris Agreement and of the international agreement on emissions from aircraft (International Civil Aviation Organisation) is a priority here.

As already announced, we will continue to deliver on our Energy Union Strategy and present, by the end of this year, a comprehensive package aimed at managing the modernisation of the economy by placing energy efficiency first, pursuing the ambition to become world number one in renewable energies and providing a fair deal to consumers. This will encompass legislative action on energy efficiency, renewable energy including bioenergy sustainability, the design of the electricity market and the governance rules for the Energy Union. An initiative to Accelerate Clean Energy Innovation will support the research and market uptake of technological innovation needed for energy efficiency and renewables to meet the decarbonisation goals set by the Paris Agreement and our 2030 targets. All the Energy Union related legislative proposals presented by the Commission in 2015 and 2016 need to be addressed as a priority by the Parliament and Council. These include the above-mentioned package, the security of gas supply package24, the EU emissions trading system25 and related rules on effort-sharing26 and landuse and forestry27 .

We will also follow up on our Strategy on low-emission mobility presented in July. The aim will be to increase the efficiency of transport by responding to the mobility needs of people and goods and promoting lower emissions, including a gradual shift to zero emission vehicles, which will also enhance the competitiveness of the industry. To achieve this, as a first step we will present REFIT revisions of the car and light commercial vehicles Regulations, presenting strategies establishing zero- and low-emission standards post-2020, and the clean vehicles Directive to improve procurement incentives and rules. Applying the user-pay and polluter-pay principle, we intend to propose improvements for those Member States who choose to use road charging, including for the interoperability of electronic tolling services.

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24 COM(2016)52 final and COM(2016)53 final/2.

25 COM(2015)337 final/2.

26 COM(2016)482 final/2.

27 COM(2016)479 final.

New energy initiatives  

The first CWP annex with new initiatives COM(2016) 710 final ANNEX 1 promises:

A Resilient Energy Union with a Forward-Looking Climate Change Policy

5. Implementation of the Energy Union Strategy: low-emission travel and mobility

REFIT revisions of several key pieces of legislation highlighted in the low-emission mobility action plan: post-2020 strategies on cars/vans and on lorries, buses and coaches (legislative, incl. impact assessment; Q2/2017); the Clean Vehicles Directive (incl. impact assessment; Art. 192 TFEU; Q2/2017); and the Eurovignette and European Electronic Toll Service (EETS) Directives (incl. impact assessment; Art. 91 TFEU; Q2/2017). This initiative includes the implementation of the international agreement on emissions from aircraft (ICAO) (legislative, incl. impact assessment; Art. 192 TFEU; Q1/2017) .

Energy REFIT

In the policy area of energy the second CWP annex COM(2016) 710 final ANNEX 2 with REFIT initiatives offers:

4. Combined Transport  

Revision of Directive 92/106/EEC on the establishment of common rules for certain types of combined transport of goods between Member States aimed at improving efficiency and effectiveness and ensuring further promotion of intermodal transport in EU (incl. impact assessment; Q4/2017). This revision follows-up on an evaluation concluded in 2016.

Pending energy proposals

The third CWP annex COM(2016) 710 final ANNEX 3 lists the priority pending proposals, with the following ones related to energy and climate change:

13. EU Emissions Trading System

Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC to enhance cost-effective emission reductions and low carbon investments

COM/2015/0337 final/2 - 2015/0148 (COD) 03/09/2015

14. Efforts Sharing Decision

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 for a resilient Energy Union and to meet commitments under the Paris Agreement and amending Regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change

COM/2016/0482 final/2 - 2016/0231 (COD) 20/07/2016

15. Security of Gas Supply Package

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning measures to safeguard the security of gas supply and repealing Regulation (EU) No 994/2010

COM/2016/052 final - 2016/030 (COD) 16/02/2016

Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on establishing an information exchange mechanism with regard to intergovernmental agreements and non-binding instruments between Member States and third countries in the field of energy and repealing Decision No 994/2012/EU

COM/2016/053 final/2 - 2016/031 (COD) 02/06/2016

Ralf Grahn

Second Report on the State of the Energy Union

In the blog entry State of the EU Energy Union, I listed various official documents, including:

Second Report on the State of the Energy Union; Brussels, 1.2.2017 COM(2017) 53 final (15 pages)

Updated Roadmap for the Energy Union; Brussels, 1.2.2017 COM(2017) 53 final ANNEX 1 (21 pages)

The Energy Union’s five dimensions: policy observations at Member State and EU level; Brussels, 1.2.2017 COM(2017) 53 final ANNEX 2 (6 pages)

2nd report

The Second Report on the State of the Energy Union covers a lot of ground in clear prose, but I think we get the most mileage out of a fairly short excerpt if we go for the two introductory paragraphs:

For the Energy Union, 2016 was the year of delivery. It was a year in which the vision of the Energy Union Framework Strategy1 was further translated into concrete legislative and nonlegislative initiatives, most recently with the "Clean Energy for all Europeans" package presented on 30 November 2016. As a next step, the low emission mobility strategy2 will also be translated into concrete initiatives, in line with the Commission Work Programme for 2017. 3 It is important that the co-legislators work towards the adoption of the proposed initiatives without delay and in line with the Joint Declaration of the three institutions on the European Union's legislative priorities for 20174 , to allow for a swift energy transition on the ground.

The Energy Union is a European priority project, identified by the Juncker Commission as one of the 10 political priorities5 , in which five dimensions are closely interlinked: energy security, solidarity and trust; a fully integrated European energy market; energy efficiency contributing to moderation of demand; decarbonising the economy; and research, innovation and competitiveness. Progress has been made on all these dimensions.

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1 COM(2015) 80.

2 COM(2016) 501.

3 COM(2016) 710.

4 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016C1224(01)&from=EN.

5 https://ec.europa.eu/priorities/sites/beta-political/files/juncker-political-guidelines-speech_en_0.pdf; see also the European Council's Strategic Agenda for the Union in the times of change, Annex I to the European Council conclusions of 26/27 June 2014.

Updated roadmap

The annexed Updated Roadmap for the Energy Union provides the state of play: an update per 1 February 2017 for the framework strategy initiatives, which have already been adopted or where the time schedule changed. You find the references to the proposals and actions.

Policy observations

The annex on the Energy Union’s five dimensions: policy observations at Member State and EU level offers main observations which can be drawn from national developments during 2016. The policy observations are the basis for a more in-depth analysis of Member States’ policies which the Commission intends to carry out in 2017.

On six pages only, the summaries offer a good overview.

Just a reminder to those, who want more:

Monitoring progress towards the Energy Union objectives – key indicators; Brussels, 1.2.2017 SWD(2017) 32 final (137 pages)

The Commission staff working document (SWD) is presented in the following manner (pages 4 and 5):

This SWD is an update of the one presented in 2015, building on exchanges with and feedback from the Member States and taking account of stakeholder opinions collected from related reports and events. The current set of indicators may be refined in the years to come depending on the availability of data for new, more suitable indicators, and on the development of new indicators able to provide more accurate evidence on particular policy lines or sub-sectors.

• The purpose of defining a set of energy and climate indicators and reflecting them in a scoreboard is threefold:

o to streamline the monitoring process and ensure coherence in the assessment of energy and climate policies;

o to provide a commonly-agreed metric to support policy-making process by monitoring progress on EU energy and climate objectives;

o to summarise, on a scoreboard, latest data and recent changes affecting the most relevant aspects of the five dimensions of the Energy Union.

Ralf Grahn

Blog posts about digital single market

For the sake of order, until we return to the theme, here is a compilation of blog posts about the future European digital single market (DSM) on my Finnish, Swedish and English euroblogs:  

Eurooppaoikeus (in Finnish):

EU:n digitaalisten sisämarkkinoiden strategia

Digitaalisten sisämarkkinoiden strategia Euroopalle

Euroopan parlamentin roolista

EU:n digimarkkinastrategia Euroopan parlamentissa

Grahnblawg (in Swedish):

EU:s strategi för en digital inre marknad

Huvudpunkter för en digital inre marknad

En digital inre marknad: namnkrångel i Europaparlamentet

En verklig digital inre marknad: krav och potential

Digitala allmänningar (digital commons) i Europaparlamentet

Bloggartiklar kring strategin för en digital inre marknad  

Grahnlaw (in English)

The EU digital single market strategy

Main points of EU digital single market strategy

Digital single market litmus test

Elements of style: digital single market in European Parliament

Digital commons in the European Parliament

EP breaking down national silos in digital markets?

A union of shopkeepers?

It is fascinating to see, if Europeans still have the collective will and ability to succeed in interstate and international commerce and in the digital world, but before we return to these subjects, we are going to collect impressions in another policy area (energy) and in one EU member state (Denmark).

Ralf Grahn