Greenland is characterised by its geographical expanse, corresponding to the distance from the Shetland Islands to North Africa, combined with an Arctic climate and a population of just over 56,000. With just 0.03 inhabitants per km2, Greenland is thus the most sparsely populated country in the world, while covering a geographical area larger than Central Europe where more than 300 million people live. Accordingly, Greenland society and its business structure differ in a number of areas from the countries with which Greenland is often compared, such as the Scandinavian countries and Iceland.
A challenging transport infrastructure
Besides the ice sheet, which covers eight-tenths of the country, Greenland is also challenged by sea ice where the multiyear ice along the east coast prevents boats from reaching Tasiilaq and the district’s towns and settlements from November to mid-May. Ittoqqortoormiit usually receives only two annual supply ships. Similarly, the multiyear ice can periodically complicate – or even make impossible – sailing in South Greenland. In North Greenland, the districts of Uummannaq and Upernavik can today only be reached by boat from May to December, Qaanaaq receives only two annual supply ships, and in winter sea ice causes delays or ship cancellations in Qeqertarsuup Tunua (Disko Bay). To this should be added the challenges related to cold, hurricanes, large temperature fluctuations, precipitation and drought.
Due to climate, permafrost as well as the wide and deep fjords, and because several towns and settlements are located on islands, establishing long road connections is complicated and extremely expensive. These are challenges, which also exist in other desolate areas such as Alaska, Arctic Canada, Iceland and Siberia, where a coherent road network has been established to some extent. However, for Greenland, the challenges, combined with the very small population, have meant that no inhabited places are connected by road to other places, apart from some sheep farms in South Greenland.
Therefore, transport between Greenland’s 17 towns and 54 settlements takes place by boat or aircraft, and in winter combined with snowmobiling and in North and East Greenland also by dog sled. In some places the sea ice is used in winter to drive between towns and settlements by car and truck. The transport structure means that it might take one or more days to get from one town to another, and then you still have to factor in weather delays and cancellations. So travel time can be long, even between the towns and settlements that lie the closest to each other.
Greenland functions as a community of 71 islands
The transportation challenges mean that residents are dependent on the facilities and services available in the individual place and that all facilities and services must basically be established and operated as a so-called insular community that has no connections to other towns and settlements. For instance, all towns and settlements have their own electricity and water supply without any backup from other parts of the country, with the exception of Qaqortoq and Narsaq, which have a joint hydropower plant.
At the same time, the insular community and transport infrastructure mean that there is nowhere where it is possible to commute to work elsewhere on a daily basis. This limits the labour market for each citizen to the individual settlement – town or settlement – and, in terms of fishing, the profitable radius of action is the individual fisherman’s vessel.
The market economy mechanisms are challenged
All towns and settlements are small. Even the capital of Nuuk, with more than 19,000 residents, is, in an international context, a very small town, and the country’s smallest settlement has less than 20 residents. Accordingly, the average size of Greenland towns and settlements are more comparable with those in, for example, parts of Alaska, Arctic Canada and Sápmi (Sameland).
The size of the towns and settlements and the complex and costly transport infrastructure challenge the market mechanism in a number of vital areas because in many towns and settlements, no customer base exists for competing providers of a given product group or service. This creates natural monopolies that can challenge price formation unless regulated by the government.
Moreover, several towns and settlements are so small that there is no customer base for a single provider, even within such vital areas as retail. This issue can either lead to vital services not being offered or that the government will have to take over tasks that in a market economy would be provided by private operators. The alternative is for the government to pay a private company in whole or in part in subsidies to provide the service, as is the case for example in the Self-Government service contracts with private operators.
A large public sector
Consequently, in trying to maintain Greenland as a welfare state, the government owns a number of companies that carry out societal tasks in those places and/or commercial areas where the customer base and geographical and climatic conditions do not allow the tasks to be solved on market terms. In the large towns, some of these tasks are provided on market-like terms. However, the wish for and political priority to maintain a dispersed settlement community with access to welfare services (albeit at different levels) would not be possible without the government-owned companies and, for example, the same prices on energy, water and telecommunications services.
In general, the insular community entails a large number of challenges, for instance that each town and settlement must have its own school, health centre, electricity and water supply, shop, etc. This means that several of the government-owned companies have many ‘branches’ for a small customer base to ensure that, for example, all settlements have someone who maintains the power plant and water works. It also means that the public administration will inevitably be much larger than in countries where, for example, children can ride by bus to school in the nearest major town.
Settlement pattern
The settlement pattern is rooted in history, but it is also prerequisite for exploiting local natural resources due to the size of the country and the large distances.
Fish and shellfish account for about 95 % of the value of total goods exports. Fisheries can be roughly divided into the trawler-based offshore fishery, where it is less important where the trawler has its home port, and inshore fishery which contributes with over 40 % of the total catch value (2018). For large parts of the inshore fisheries, the distance to the fishing grounds is crucial, for instance when it comes to longline fishing for Greenland halibut from the sea ice in North Greenland. It is therefore necessary to maintain a number of small trading places and thus towns and settlements.
The settlement pattern has been a source of debate since the Danish modernisation after World War II, and although the settlement pattern is dynamic and constantly evolving, it is a framework condition for Greenland where distances are substantial. For example, it is about 1,200 km from Qaanaaq to Ilulissat and about 1,500 km from Qaanaaq to Nuuk. Accordingly, the size of the population and the insular community set the framework for the structure of the society.
Further reading
- Education
- Health and care
- Housing
- Hunting and subsistence economy
- Industry and labour market
- Infrastructure
- Plans in Greenland
- Population and demographics
- Self-Government
- The Unity of the Realm and the Danish State
- Towns and settlements
Read more about Society and business in Greenland