The government’s 2020 plan on how the administration plans to balance the economy has been presented by Prime Minister Lars Løkke Rasmussen. Titled ‘Reform Package 2020 – ensuring Danish welfare” the plan is designed to reap the DKK 47 billion deficit.

Here are some of the reforms the government would like to introduce, if the plan goes through Parliament..

Early retirement
The government’s retirement reform is part of its reform package and involves bringing forward the 2006 Welfare Agreement. The early retirement age is increased from 60 to 62 and the pensionable age from 65 to 67.

Over and above this, the government plans to phase out early retirement. Those of age 45 at the end of 2010 will not be eligible for early retirement. Those over the age of 57 will see no changes, and those in between will experience a phase-out.

The reform is expected to provide DKK 18 billion.

Grant reform
The grant reform will reward young people who finish their studies quickly, so that society can benefit from them for a longer time on the labour market. In practical terms this means that grants will only be available for students for the pre-determined length of a study programme. At the same time, students who begin further education early and finish quickly will receive a bonus. The government wants to stop grants for students who live at home.

A start-grant and a study start loan will be made available so students are able to manage their expenses in starting an education, and it will be made easier for students to earn extra over and above their grants.

The grant reform is expected to provide DKK 1 billion.

Incapacity benefit
The incapacity benefit and flex-job systems are to be reformed. There will be no incapacity benefits for those under 40 unless it is clearly obvious that they will not be able to do a job. Instead, younger people will go through courses to get them back on the labour market.

The flex-job system is to be changed so those with the lowest wages get most support, in order to make it more worthwhile to work longer. The first flex-job will only be a five year stint. The idea is to reduce the number of people on flex jobs.

The reforms are expected to send some 4,000 more people into full-time jobs in 2020 and are expected to provide DKK 2 billion.

Defence savings
The government is to cut the defence budget by DKK 2 billion each year from 2015 and use the funds instead on core welfare. The DKK 2 billion will be seom 10 per cent of the total defence budget in 2015.

Public expenditure
The government plans to introduce four-year budgets for local government, making it easier to keep an eye on spending.

Overall, public consumption will grow by 0.8 per cent per year in 2014-2020 or an annual DKK 4 billion.