Denmark’s new welfare reform is drawing criticism from local governments, which warn it could result in a surge in homelessness as thousands of Denmark’s welfare recipients face drastic benefit cuts.
Growing Fears of Evictions Across Danish Cities
Municipalities across Denmark are warning that recent changes to the country’s welfare system could push many welfare recipients out of their homes. The reform, which went into effect on July 1, significantly reduces monthly cash assistance for thousands of individuals, leaving many unable to cover basic living expenses, including rent.
Local officials have reported receiving an increase in distress calls from affected residents. In Fredericia, for example, 74 residents have experienced a reduction of more than 3,000 Danish kroner (approximately $430) per month in public assistance. This sharp drop in income means some families now have reserve budgets as low as 500 to 700 kroner, leaving little to cover food, utilities, and essential needs.
On the island of Zealand, the municipality of Frederiksberg was forced to terminate agreements where they previously managed finances on behalf of vulnerable residents, as the reduced assistance levels can no longer cover fixed expenses.
Denmark’s Welfare Reform Details and Impact
Denmark’s welfare reform was passed with broad political consensus, aiming to improve work incentives by tightening eligibility and lowering benefits for some welfare recipients. The new structure includes three central benefit levels:
- Minimum rate: 6,789 DKK ($970) per month before taxes
- Base rate: 7,205 DKK ($1,030) per month before taxes
- Higher rate: 12,498 DKK ($1,770) per month before taxes
Approximately 4,000 individuals have been moved to the new minimum rate due to an updated employment eligibility rule targeting people who immigrated to Denmark after 1968. Meanwhile, a previous housing subsidy, utilized by around 11,000 recipients and averaging 1,300 DKK ($185) per month, has been scrapped entirely.
In Fredericia, one single mother of four reportedly saw her monthly income drop from 11,500 DKK to just 8,300 DKK. While she lives in an affordable public housing unit, after covering her rent and other bills, she’s left with roughly 20 DKK, or less than $3, for groceries each month.
Social Workers Sound the Alarm Over Denmark’s Welfare Cuts
The reform’s consequences are being felt by municipal welfare offices and housing support organizations across the country. In Odense, local officials are already projecting a rise in evictions. They say individuals and even families with children could soon find themselves without housing.
Welfare officials say that emergency shelters and transitional housing are available, but these are seen as a last resort. The concern is that many affected individuals suffer from physical or mental health conditions that make employment, and the transition off of welfare, especially difficult.
In Aalborg, efforts to reduce homelessness in prior years may now be upended. Officials there are concerned that the lack of extremely low-cost housing options makes it nearly impossible to relocate struggling residents.
Government Response and Disagreement
Employment Minister Kaare Dybvad Bek has rebutted criticism from municipalities, stating that local governments are not doing enough to allocate existing low-cost public housing to those in need. He emphasized that many municipalities are using fewer than half of the subsidized housing units available to them.
While the minister acknowledged that some regions may face challenges, he underscored the government’s belief that the reforms will encourage more people to take up work. The policy includes an earnings exemption allowing welfare recipients to earn up to 5,000 DKK ($710) per month without losing their benefits.
The government estimates that the reform, by improving incentives to work, will lead to about 750 more people entering full-time employment.
Looking Ahead
As of August 2025, 82,206 people in Denmark were receiving cash assistance under the new rules, with around 17,182 placed on the minimum rate. However, with rising housing costs and dwindling public subsidies, the forecast remains uncertain. Municipalities are bracing for what could soon be a marked increase in homelessness, especially during the winter months when survival without stable housing becomes even more challenging.
