And all this has been achieved under a highly centralised system of wagebargaining and while maintaining an extraordinarily generous welfaresystem.Denmark went through a very painful period of adjustment. In 1970, thecountry had full employment. But a marginal growth in net jobs over thedecade was insufficient to absorb inflows to the labour force andunemployment surged to 7% by 1980.When the last recession finished in mid-1993, it marked the end of sevenyears of slow growth and unemployment had hit 350,000 – 12.4% of theworkforce.The US economist’s remedy would be to cut taxes, take on the labour unions,introduce flexibility to bargaining over wages and conditions, and removethe disincentives to hire.Most of this advice was followed, but only slowly and through negotiation.Even now, wages are largely set nationally, through contract negotiationsbetween the Confederation of Trade Unions and its affiliated nationalbodies on one side and the Danish Employers’ Confederation on the other. One day, perhaps in 2002 when euro notes and coins start to appear andunder the cover of a British application, the Danish authorities hope theycan sneak in. This simple fact seems to make the Danish economy invisible when plauditssuch as ‘Celtic tiger’ and ‘Dutch miracle’ are being handed out.The Netherlands is repeatedly acclaimed for achieving that ‘unique’combination of creating employment while flattening inflation and cuttingstate spending.Yet just north of Germany lies a country where the budget is in surplus,the ratio of public debt to national income is just over 60% and falling,inflation is under 2% and unemployment is heading below 5% of theworkforce, as measured by the EU. These set the pattern for the whole labour market, even though thecontracts apply directly to only one third of union members.Over the past few years, these deals have kept wage rises down in returnfor non-wage benefits.Over the lifetime of the Rasmussen government a series of reforms to thetax and labour market, supported in key areas by Conservatives andLiberals, has fed through into jobs growth.Between 1994 and 1998, the government cut the 70% tax rate on anyadditional income gained by top-earners to 60% while, for average earners,this marginal tax rate was reduced from 50% to 42%. These changes were madeas part of a fiscal reform package which saw ‘green’ taxes introduced oncarbon dioxide emissions, petrol and water use. Denmark remains,nevertheless, along with Belgium, one of the EU’s top taxers.The Danish success story is intensely frustrating for those working in theCopenhagen political establishment. They have done everything they can toqualify for EMU, but they simply cannot sell it – yet – to the Danishpeople.At least for the first few years, Denmark will have to make do withestablishing a currency peg whereby the krone will shadow the euro to suchan extent that the country might as well join.