Prime Minister Poul Nyrup Rasmussens speech at the Conference ''States and Markets''. Monday the 8th March 1999

Dear participants, ladies and gentlemen, dear friends,

I had the pleasure of launching the idea of this conference during the ASEM Summit in London a year ago - the theme States and Markets - in a wide context:

First of all as a key issue in the co-operation between Asia and Europe. But also as an essential element in the follow up to the UN Social Summit in Copenhagen in 1995.

The Copenhagen Social Summit in 1995 firmly placed issues pertaining to states and markets on the international agenda. World leaders undertook a number of commitments and adopted a wide ranging programme of action. Let me quote just a few lines from the Copenhagen Action Programme: 'Progress will not be realised simply through the free interaction of market forces. Public policies are necessary to correct market failures, to complement market mechanisms, to maintain social stability and to create a national and international economic environment that promotes sustainable growth on a global scale. Such growth should promote equity and social justice, tolerance, responsibility and involvement.'

I feel that this set of issues is dealt with in various international fora. I do, however, consider ASEM to be a forum particularly well suited to produce deeper insight and common understanding of the critical relationships between public authorities and private actors.

The processes of change are increasing in scope and speed. We are wittnessing overwhelming developments in agriculture, industry, science and technology, particularly information technology. Interdependence between countries and regions is growing, we all know that. In the spheres of economic transactions, environment and security. The daily lives of millions people are changing more dramatically than ever before in history.

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These developments constitute major and growing challenges for the political leadership at all levels, be it national, regional or global. Political leadership is becoming more, not less, essential, and at the same time more complex in nature. Political leaders must take upon them the responsibility for giving guidance and directions. We must create an enabling environment for economic and social progress. We must promote common values, with the aim of furthering the well being of all. The alternative is the jungle: Chaos and disintegration of societies.

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There is in my mind a clear need for innovation and determination in politics. I think that this will flourish only if there is a sound basis of public participation and democracy.

Democracy is where it all starts. Democracy takes time and it thrives on contemplation, thorough debate, exchange of views, sharing of experience - what this conference is all about.

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Together we should seek the most fruitful models for development and progress. But let us avoid the illusion of the existence of one model that will be the answer to all our problems. Let us resist the temptation of forcing our own models on others, while trying to persuade each other of the strong points of our respective systems.

Personally my point of departure in debates of this kind is a belief in what I call and what I think is known as the Nordic social security model or the Nordic welfare model. However, the social security model - like other types of societies - is in constant need of adjustment and change. Even here we are discussing on a nearly daily basis how to adjust - how to modernise - how to make ourselves more competitive on economic issues, without damaging our social security.

I think that proper competitiveness based on human resources is conceived as most acceptable and mobile if we insist that it should based on social security. My experience throughout the years has been that social security, permanent lifelong education and international competitiveness are not contradictions. Instead they are mutually reinforcing preconditions for people to function and work - at least in this part of the world.

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I would like to say a few words on my vision of ASEM. But before going to the substance let me remind the audience that today, 8 March, is the International Women’s Day. That should be kept in mind in the deliberations during this conference. There is certainly still a long way to go - this is documented it - before we reach the goal of societies with equal rights and opportunities for women and men. And we know - all of us - that in some parts of the world social differences are closely related to this issue. There is still so much to do.

My government attaches great importance to ASEM. We are increasingly giving priority to our relations with Asia. Denmark has offered to host the ASEM Summit in the year 2002.

In the modern interdependent world there is clearly room and need for closer ties between Asia and Europe. These ties are still weak compared to the ties between Europe and America and between Asia and America. We are lacking behind. ASEM is the first ambitious attempt at bringing Asia-Europe relations at par with transatlantic and transpacific relations.

By its nature ASEM is well suited to serve that purpose. ASEM is flexible, comprehensive and broadbased. It deals with a wide range of political, economic and cultural issues and it assigns a central role for political leadership, including Heads of State and Government.

Asia and Europe both have a great potential for further progress. Both regions are engaged in deepening and expanding their regional co-operation. The levels of co-operation are - for historic reasons - quite different. The European Union has taken regional integration very far. Our integration is based on political will and the constant setting of ambitious goals.

Allow me to inspire you by saying that internal production in the 15 EU member countries heavily outweighs the importance of trade with third countries. That gives us a real potential for combatting unemployment and increasing growth rates. In other words - if you take the 15 countries of the European Union individually, you will see that exports and imports averages one third of total production. But if you take the single market as a whole, the result is quite different: Interaction with the outer world is reduced to about 10 percent. That gives us an advantage, more freedom to coordinate fiscal and monetary policies, investment in new jobs and environment, within the single market - as a sort of 'New deal' between the 15 member countries.

Presently we are discussing exactly that within the European Union: How can we maintain a stable economic environment and avoid negative reverberations stemming from the international financial crisis. I think we have good possibilities to do so - it is first of all a question of political will and vision.

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This takes me to theme no. 1 of this conference, which includes the highly relevant question of the role for regional organisations in setting rules for economic and financial transactions.

The Action Programme of the Copenhagen Summit addresses the issue of the international financial system. The programme calls for a system which is more conducive to growth and development through a higher degree of stability in financial markets and a reduction of the risk for financial crisis. Events - as we all know - since the summer of 1997 have proven the relevance of this objective. But the events also remind us that the objective has not yet been achieved. I hope that discussions during this conference will bring us steps forward.

My basic point is that we have to formulate claims to the market. Without damaging the efficiency of the market. That is our intellectual and political challenge.

The issues covered under theme number one are extremely complicated, and I presume that participants in the discussion will present quite different ideas for solving the problems. I would like to contribute with one overriding consideration, namely the paramount importance of transparency.

The game will only be fair, if transparency prevails. All concerned actors have the right to know the rules of the game. And let us not forget that transparency is the strongest weapon against corruption, nor that corruption undermines economic and social progress. Therefore I would like to underline this major issue; do not underestimate transparency and think about it in a consequent and detailed way. If we succeed in making progress concerning transparency in all countries, I am sure that this in itself would be a step forward.

Let me add one more issue, namely the future role of Europe. I believe that Europe will increase its efforts - for instance when negotiating in the World Trade Organisation - to promote human and social values.

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Theme no. 2 is in my view the key issue. Employment and job creation were amply highlighted during the Social Summit and should also be so during this conference.

Let me remind you that we are often discussing two ways to go in our different countries - we call it working poor or working rich. It is so easy for me to say that I prefer to work the rich way. I know that. But on the other hand - we should not forget that for all countries, save one there will always be a spot on earth with lower wages. And therefore I feel that education and training are some of the key issues also in the future for the Asian people to compete globally and to create new jobs.

Denmark has a lot of experience with an economy based on education, training and small and medium sized enterprises. I am convinced that there is a basis for a fruitful exchange of views at this conference, considering similar experiences in Asia, and the Asian tradition for entrepreneurship.

We are up against a trend towards concentration of economic power within relatively few countries and powerful international corporations. Expansion of employment in small and medium enterprises, or in the informal sector, can be an important instrument in counterbalancing this trend.

Labour market organisations - both employers and trade unions - should play an active role. They should take the lead in ensuring appropriate training and education in the labour market. What we need is lifelong learning for all people of our societies.

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And once again, my message is the following fundamental one:

The challenge for the public authorities at different levels is to frame policies that empower people to maximise their capacities and resources, thereby allowing them to function during permanent changes. Competition is equal to changes and people’s capability to cope with changes. Social security and lifelong learning are some of the most important keys to entrust and make people capable to function during permanent changes. We cannot stop the global changes, but we can increase people’s capability to cope with the changes and create new jobs.

The whole issue here is about empowering people to cope with the changes of a globalized world.

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This brings me to theme no. 3 and the overriding question of combatting poverty.

Market economies have a double face - they have a tendency to increase inequalities if the corrective measures are not sufficient. And at the same time market economies do make the basis for economic growth in our society.

Poverty and increasing inequality are threats to the cohesion of any society. Polarisation between an affluent elite and an alienated majority is a frightening prospect - and a totally unacceptable scenario.

The problems of poverty and inequality make themselves felt in Europe as well as in Asia. Governments in both regions are struggling to rise to the challenges of securing employment, income and social security for everybody, and of ensuring a better distribution of wealth. We approach the problems from different starting points and based on our different values.

In this country we have been quite successful in the fight against poverty by means of the welfare state. Our tools have been social security, training, education and a deeply felt common responsibility. The state has assumed the responsibility of taking care of those that cannot take care of themselves. Now we have reached so far in our fight against unemployment that we are ready to take new extra inspiring steps.

We are now creating jobs for people who are not 100 pct. fit for fight. We build our active labour market policy and a proper activation policy on simple principles like rights and duties. I believe that every person in this country can play a role based upon one simple fact: Everyone has a talent - you have a talent. It is society’s role to formulate the framework into which your talent - which is different from your neighbour’s talent - can be realised and function.

I feel that we have come a long way - but there is still a long way to go. However, it is encouraging that we have not met experiences that tell us that we are on the wrong track. A high degree of flexibility as well as mobility is complemented by social security on the labour market and society ́s care for its individuals.

When we formulate the claims and make the individual contracts on labour markets, we ensure social security with a relatively high unemployment benefit. In other words, we don ́t have inflexible, long dismissal schemes - on the contrary. You will see that firms - employers - can dismiss their workers with relatively short notice - but you will also see that society steps in to accomodate the consequences for people losing their job. I’m not trying to tell you that this is the only solution. I’m only saying that the combination of a relatively high unemployment benefit and a social security system and the high flexibility on the labour market are two sides of the same coin.

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Asia has traditionally relied strongly on family solidarity. May I say, that we respect that very highly. We feel in some sense that we have lost something during our economic development. Perhaps we will find it again. But we also feel that we should create, broaden the very concept of social solidarity, as I have indicated.

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Let me end by expressing my hopes for this conference. I wish you all a couple of fruitful days, full of lively discussion and frank exchange of views. I am sure that you will all be very busy, but I hope that you will be able to find a few hours to visit Copenhagen and get a feel of life in Denmark.

Welcome - and thank you!