Economic Development in Denmark Before and During the World War/Beginnings of Social Insurance

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Beginnings of Social Insurance

By the time the report of the commission was published a strong turn of the tide had taken place in the outside world and had contributed to bring about a corresponding change of attitude in Denmark. In Germany the short-lived free trade movement had given way to a protective policy. Political economists had freed themselves from the old idea of the social-economic harmony resulting from free competition and free initiative. 'Professorial socialism' (Catheder-socialisms), with its demand for the intervention of the state in behalf of the lower classes, was popular in the universities. The German government had entered into the struggle against the socialist movement with firm resolve, but with little success. In 1878 it passed a Socialist Act which led only to a closer consolidation of socialistic ranks. As a counterbalance to anything which might arouse dissatisfaction among the lower classes, on November 17, 1881, Bismarck issued the famous Imperial Message concerning workmen's insurance, which set forth basic principles for legislative measures, not only in Germany, but also in several other countries. In solemn form the message declared that the cure for social ills was not exclusively to be found in the suppression of social-democratic excesses, but in positive efforts to promote the well-being of the workmen; and it proposed, in the first place, a workmen's compensation law and a further provision for sick funds and old-age and invalid pensions. Results followed quickly. In 1883 a law on sick funds was passed introducing compulsory insurance, two-thirds of it to be paid by the workmen and one-third by the employer. In the following year came a workmen's compensation act which brought to light the great change of opinion that had taken place since 1871 as to the responsibility of employers in case of accidents, for it enjoined on employers organized in large mutual vocational societies (Berufsgenossenschaften) to pay compensations to men injured at work or to their surviving families in case of fatal accidents. Finally, in 1889, the complicated old-age and invalid insurance was introduced by the so-called Klebegesetz, which entitled wage-earners and office-workers with low salaries to insurance in case of invalidity or on the completion of their seventieth year. The payment was regulated by means of stamps affixed to receipt cards, one-half to be paid by the insured and one-half by his employer; moreover, the government was to add a contribution of fifty marks a year to each pension. In 1911 the whole system, which was somewhat extended and improved during the following years, underwent its last great change under the comprehensive Imperial Act, which brought about conformity between the regulations concerning workmen's insurance and the attempt to establish widows' funds. But no steps were taken toward the solution of the great and difficult problem of unemployment insurance.

In this way the road was opened for compulsory insurance in Germany, and it is not surprising that a similar movement was initiated in Denmark. The results gradually achieved in this country, however, proved to be of an essentially different character, and the fact is that we may boast of having introduced a system which is in many ways far simpler and yet very effective. If the country had not been so small, it would undoubtedly have been overrun by committees from all over the world appointed to study our system, which in certain points has indeed served as a basis for other countries to work on.