The one percent: How Denmark’s rich are getting much richer

The proportion of the country’s total wealth owned by the richest one percent of Danes has significantly increased since the 1990s.

The one percent: How Denmark’s rich are getting much richer
A 2010 file photo showing property owned by Danish billionaire Lars Seier Christensen. File photo: Erik Refner / Ritzau Scanpix

At the beginning of the 1990s, the one percent of the country’s population with the highest earnings represented around 7 percent of the country’s total wages.

That figure has now increased to 11 percent, according to an analysis by thinktank Kraka and consultancy firm Deloitte, as reported by Jyllands-Posten.

The change means that Denmark is now an outlier relative to the rest of Scandinavia. The richest one percent in both Norway and Sweden account for around 8 percent of total earnings.

Denmark’s value for the measure is closer to that seen in the United Kingdom, according to the analysis.

The trend is cause for concern, according to Kasper Lippert-Rasmussen, an Aarhus University professor who specializes in inequality.

“If you want to have equality in society, there is good reason to be alarmed,” Lippert-Rasmussen told Jyllands-Posten.

An acceleration in the trend has been observed in the years since the Global Financial Crisis, driven by higher top-end wages and increased income from personal fortunes, according to Kraka’s assessment.

Social Democrat acting political spokesperson Peter Hummelgaard also said the report was a concern.

“This is a trend which most people will, unfortunately, recognize. The issue here is not envy, but fairness and unity. An equal society is also a more stable society,” Hummelgaard told Jyllands-Posten.

The Social Democrats want to address the issue by limiting tax exemptions on wages over ten million kroner and increasing tax on large incomes from personal fortunes.

Minister of Finance Kristian Jensen, of the governing Liberal party, denied the analysis signalled a need for reform.

“There is of course a limit to how much inequality you can have in society. But I don’t think that’s where Denmark is. We should be fighting poverty, not wealth,” Jensen told Jyllands-Posten

READ ALSO: Denmark has OECD's lowest inequality

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Danish income figures show signs of falling inequality

People on lower salaries saw the highest relative increase in their income in 2018.

Danish income figures show signs of falling inequality
File photo: Liselotte Sabroe/Ritzau Scanpix

For the first time since 2012, incomes at the bottom end of the pay scale have seen higher percentage growth than those at the top, new figures from Statistics Denmark show.

The threshold for wage earners to be in the bottom ten percent of incomes increased by 2.4 percent between 2017 and 2018.

That compares to the threshold for being among the richest ten percent increasing by 1.7 percent over the past year.

The development is partly due to a fall in the number of young people aged 18-25-years earning lower incomes, including the state student grant (statens uddannelsesstøtte, SU).

A general increase in employment may also be a relevant factor, according to Statistics Denmark.

Meanwhile, fewer people are receiving the lowest social security benefits including unemployment support (kontanthjælp), education benefits and integration benefit (integrationsydelse).

Furthermore, the number of people who are considered to be living in poverty has decreased by 3,500, to 254,000.

Poverty is defined for this purpose in relation to the general standard of living in Denmark, and therefore does not take into account the global situation.

According to Statistics Denmark's definition, if you meet two criteria:

To meet the Statistics Denmark criteria, a person or family’s income must be less than half of the overall median income (excluding pension).

In 2018, that equated to an annual disposable income of 123,572 kroner or less.

The second criterion is that a person’s total savings or fortune (excluding pension) – must be less than half the median income.

Families with a student as the main income provider and young people who have moved away from home during the preceding year do not count towards the statistic.

The trends in income over the past year mean that inequality in Denmark has fallen slightly.

Inequality in a society is statistically calculated by the Gini coefficient: Denmark’s has fallen from 29.1 to 29.3.

However, the country has still seen an overall rise in inequality in recent years. In 2010, the Gini coefficient was at 27.5, while in 1990 it was 22.2.

READ ALSO: The one percent: How Denmark's rich are getting much richer