Danish job retraining

Most people don't know it, but the Wall Street Journal is actually a fairly center-left paper when it comes to actual news coverage (as opposed to the editorial section which is fiercely conservative). This was again in evidence in yesterday's edition that featured a fawning profile of Denmark's job retraining program:

The government allows liberal hiring and firing as in the U.S. And it has imposed limits on the duration of its high unemployment benefits. But it also invests more than any other country, as a percentage of its gross domestic product, in retraining the jobless -- a combination it calls "flexicurity." Its unusual mix of the free market and big government has helped Denmark cut its unemployment rate in half, from about 10% in the early 1990s to U.S.-style levels of under 5% now. The economy has been relatively robust, growing 3.4% last year. Meanwhile, France and Germany are at or above the Danish jobless rate of a decade ago.

Even though Danes are among the most easily laid-off workers in Europe, polls show the country's workers are the most secure about their future. The European Commission now holds up Denmark as a model for other countries to try to follow. Politicians from other EU countries have made numerous study trips to Copenhagen. France has cited Denmark as a model for its own more modest labor-law reforms, which in recent days have touched off mass public protests.

Meanwhile, Danes change jobs more frequently than any workers in the developed world except Americans and Australians, says the Organization for Economic Cooperation and Development. But fewer than 10% say they're concerned about job security, compared with nearly 40% in Germany and more than 60% in Spain. Most Danes believe they can always find work in their fluid labor market. In the interim, they get security from a dole that replaces up to nine-tenths of their last wage, the highest level in Europe.

This comes at a price, however. As the article also notes:

The system isn't cheap: Denmark spends about 4.4% of its GDP every year on supporting and retraining the jobless, the most expensive labor-market policy in the world. That and Denmark's other welfare generosity keep income taxes sky-high. Tax revenues take up half of gross domestic product, second only to Sweden.

Color me unimpressed. Denmark's unemployment rate is currently at 5 percent. The U.S.? 4.8 percent. Denmark's GDP growth of 3.4 percent last year is also slightly outclassed by the U.S. at 3.5 percent.

So Denmark spends a lot more money than the U.S. to achieve comparable results. Why is this something Europe seeks to emulate?