Danish Prime Minister Anker Jorgensen has imposed an emergency freeze on wages, prices and profits until the end of the year in economically troubled Denmark.
While the freeze is in effect, Jorgensen will try to negotiate with labor unions and industry a long-term wage and price control agreement to try to reduce Denmark's double-digit inflation.
Rising labor, energy and other costs have made many Danish products too expensive for world markets in recent years, hurting its economy of relatively small, privately owned businesses and farms that depend on export sales.
There also has not been enough national income to cover the full cost of the country's extensive welfare state, creating huge government budget deficits that have plunged Denmark dangerously deep into international debt.
To reduce the budget deficit, Jorgensen said today in a speech unveiling his program to Parliament, he will cut government spending by about $5 billion next year. He did not specify where the cuts would be made.
As a result, knowledgeable Danish sources have said, Jorgensen will not be able to increase Denmark's defense spending by anywhere near the 3 percent requested of NATO countries and previously promised by Jorgensen.
The defense outlay may not increase at all, they said.
Jorgensen said today he also would try to increase the tax burden of the wealthier, and raise corporate taxes. These moves were demanded by Denmark's labor unions, the power base of Jorgensen's Social Democrats, in return for their agreement to impose a ceiling on wages.
Jorgensen also promised today to try to push through parliament the unions' controversial proposal to force all industries to share their profits with employes so that the employes can buy into the companies. He said this would be the beginning in Denmark of "economic democracy" -- coownership of business by employes and their unions.
This a step beyond the placing of employe representatives on company boards, already widespread in Denmark and Western Europe, and particularly far-advanced in West Germany. It is also Denmark's most politically divisive issue at the moment, and Jorgensen's party, which does not have a majority on its own in parliament, may not succeed in enacting it into law.