Greenland’s public sector reform is taking shape after worsening public finances exposed the need to reorganise the administration and prepare the welfare system for demographic change. A new commission will examine whether government structures can be simplified, services shared and some responsibilities transferred to private operators.
The Reform Commission (Reformkommissionen) was established by the Greenlandic government (Naalakkersuisut) to propose concrete changes to the way public services are organised and delivered.
Its work comes after Greenland recorded a deficit of almost DKK 400 million, around €54 million, in the operating and construction balance of the Treasury in 2025. Public revenue was lower than expected, while government liquidity fell to a level described by Danmarks Nationalbank as critically low.
Minister for Finance (Naalakkersuisoq for Finanser) Aqqaluaq B. Egede, from Inuit Ataqatigiit, said current projections show that public expenditure will rise faster than revenue unless the present trajectory changes.
“We know that Greenland will face a significant economic challenge in the coming decades,” Egede said when the commission was announced.
Greenland’s public sector reform will examine government structures
The commission will assess whether Greenland’s central administration has become too fragmented and whether some departments or functions could be combined.
Greenland currently has 10 ministers and 11 government departments. Commission chair Johnny í Grótinum, who also heads the Faroese Economic Council (Búskaparráðið), said this appeared to be a high number from an external perspective.
However, he stressed that it was too early to determine whether the commission would recommend reducing the number of departments.
The review will also consider the division of responsibilities between the Greenlandic government and the municipalities. One possible area for reform is the creation of a shared unit responsible for paying benefits on behalf of both levels of government.
Other questions include whether private companies could take over some public tasks and how common services could reduce duplication between institutions.
The government has said that vacant administrative positions in areas that are not considered essential should no longer be filled automatically. The measure is intended to reduce the overall size of the administration without weakening critical public services.
Demographic change is increasing pressure on welfare services
The reform is intended to address a longer-term structural problem, rather than only the recent budget deficit.
Danmarks Nationalbank expects Greenland’s population to fall by around 20 percent by 2050. At the same time, the proportion of older residents is projected to increase, while the number of people of working age declines.
This combination is expected to reduce tax revenue and increase demand for healthcare, social care and other public services.
Greenland also faces persistent labour shortages. The problem is partly connected to the number of young Greenlanders who leave for education, particularly in Denmark, but do not return after completing their studies.
Í Grótinum said the Faroe Islands face a similar form of brain drain.
“It is a strength that a large proportion of our young people go to Denmark to study. The challenge is that too few return,” he said.
The Greenlandic government’s 2026 economic report also identified a need for less bureaucracy, stronger professional skills, greater digitalisation and more cooperation across public institutions. It called for an end to administrative silos and for greater use of shared services where appropriate.
Artificial intelligence could support public administration
The commission will examine whether artificial intelligence and digital tools could help the administration perform tasks more efficiently.
Potential uses could include automating routine processes, improving coordination between authorities and reducing the amount of duplicated administrative work.
The commission will nevertheless have to consider Greenland’s particular conditions. Public services must be delivered across a vast territory with a small and dispersed population, including settlements with limited transport and digital connections.
Efficiency measures will therefore need to preserve access to essential services outside Nuuk and the larger towns.
The Faroe Islands provide a possible comparison
The Faroe Islands have already begun examining similar reforms in response to an ageing population and a shrinking workforce.
A Faroese reform committee previously recommended reducing the number of government ministries from nine to six. The government followed part of that advice, although an additional ministry was later created after the parliamentary election in March.
The comparison may help Greenland evaluate possible administrative changes, but the commission is expected to develop proposals suited to Greenland’s institutional and geographic conditions.
Its members include representatives from Greenland’s municipalities, financial sector, publicly owned companies and private businesses, as well as experts from the Faroe Islands and Norway.
The group will meet physically for the first time in Nuuk in early September. Members will visit public institutions before preparing an interim report at the beginning of next year.
That report will focus on measures that can be implemented in the short term. Further recommendations are expected to address the long-term sustainability of Greenland’s welfare system.
The reform will require the government to balance lower administrative costs with the need to maintain accessible services. Its conclusions could determine how Greenland responds to weaker public finances, demographic decline and growing pressure on a limited workforce.
