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ECONOMY

Why a haircut could cost more when Denmark’s salons reopen

The cost of going to the hairdresser in Denmark could be set for a hike in some areas when businesses reopen after lockdown.

Published: 22 March 2021 16:42 CET
Why a haircut could cost more when Denmark’s salons reopen
Illustration file photo. Photo: Liselotte Sabroe/Ritzau Scanpix

A number of hair salons in various parts of the country plan to put their prices up when restrictions are eased and they can once again offer services, according to a report by broadcaster DR, which spoke to a number of business owners in the profession.

The hairdressers told DR they planned to raise prices to make up for income lost during Denmark’s lockdown. Service sector businesses including hairdressers, gyms, massage parlours and cosmetic clinics have been forced to close by coronavirus restrictions since December and were also impacted during the original Spring 2020 lockdown.

“We will do it because we need to. It’s a long lockdown and it costs me a lot of money every month. My staff will have to work twice as fast when we start up again to make up for some of what we’ve lost,” one of the hairdressers, Marie Quist of House of Fashion in Aabenraa and Haderslev, said according to DR.

Although the government has cautiously begun lifting restrictions since the beginning of this month, the rules that have been eased are primarily those impacting schools and youth education, as well as limits for gathering in public.

An announcement regarding longer term plans for further reopening is expected to be made this week.

Wage compensation schemes aimed at supporting businesses cover some, but not all of the costs incurred by salon staff unable to work, meaning a price increase of 10-20 kroner is likely for many services once they are able to reopen.

“We will have to raise prices to get through this and to get some liquidity into the accounts as soon as possible,” Quist told DR.

A spokesperson for an interest organisation for independent hairdressing and cosmetics businesses backed the decision to raise prices.

“It’s natural because they have lost and are losing an extremely high amount of money at the moment because they are forced to close. But also because the restrictions there will be might also mean they cannot allow as many customers into their salon,” Connie Mikkelsen told DR.

Although a number of salons have chosen to raise prices, there is not a general trend indicating prices will go up across the board, she also noted.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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