The Danish government has acknowledged problematic consequences of its welfare reform and allocated 15 million kroner to address homelessness risks. Culture Minister Jakob Engel-Schmidt confirmed the funding after government leaders recognized potential negative side effects of the new system.
"The government is throwing a lifeline to people in particularly vulnerable positions," he said in a statement.
The welfare reform took effect on July 1 this year. Thousands of single welfare recipients now receive reduced monthly payments, while families with children get increased benefits. Media reports indicate some recipients now have such small disposable incomes they risk becoming homeless.
This prompted Moderate Party leader Lars Løkke Rasmussen to demand quick solutions. Prime Minister Mette Frederiksen agreed on Friday. The government will allocate 15 million kroner in 2026 for caseworkers to help the most vulnerable welfare recipients.
When asked if the funding is sufficient, Engel-Schmidt responded, "That's our assessment. If it turns out not to be the case, we'll have to look at it again."
The government designed the new welfare system to ensure work pays better than receiving public benefits. But Engel-Schmidt acknowledged the balance must be correct.
"On one hand, we have a reform ensuring more people than ever are working. On the other hand, some people are experiencing extra pressure," he said.
He explained the government didn't anticipate these issues initially because economic conditions changed with rising rental and food prices making the situation particularly difficult.
The government "owes" it to people to respond, he added. "The dumbest thing would be to keep our eyes closed to the unintended consequences."
Political observers note the welfare reform has created more political tension than the government anticipated. The opposition has criticized the government for implementing a system that requires emergency funding just months after launch.
The government faces a delicate balancing act between encouraging employment and preventing social exclusion. This 15 million kroner allocation represents an admission that their initial calculations missed important real-world impacts on vulnerable citizens.