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The Nordic model marries growth and equality
Insight

The Nordic model marries growth and equality

| Text and photo: Björn Lindahl

For five years now the Nordic model has been the subject of a study which aims to establish whether the model can manage to modernise. A conference in Oslo at the end of August marked the end of REASSESS, where 80 reports and five books were presented over two intensive days.

Researchers have tried to find an answer to one key question: can there be synergy between economic efficiency and social equality? Four parallel sessions saw up to five research papers presented in each session. The material was vast, with papers on everything from the distribution of parental leave between the sexes to healthcare for the elderly. Many of the researchers have looked at how welfare services have become commercialised and at the increasing need to get unemployed back into education or work. 

Kåre HagenWhen the Nordic Council of Ministers and it’s research outfit Nordforsk decided back in 2007 to commission a Nordic centre of excellence at Norwegian Nova, the economic crisis had not yet hit. 

“But there were still good reasons to believe the Nordic model would end up in stormy weather,” said Kåre Hagen, managing director at Nova - one of the largest social science research institutions in Norway. It specialises on welfare research.

Multiple threats to the model

Some of the threats on the horizon were:

  • Can you maintain a welfare state when national borders are opening up and there is free movement of labour and capital?
  • Can the Nordic welfare states withstand the pressures of an ageing population?
  • How will immigration affect the trust which is so important for the system to work?

Bjørn Hvinden was asked to lead REASSESS. Researchers started out working on two main hypothesis: Most people presumed there was a ‘quiet before the storm’ for the Nordic models. A minority felt there were already mechanisms in place which would contribute to reforming the models. 

The storm came with the finance crisis, not least for Iceland, which was forced to accept emergency aid from its Nordic neighbours and the International Monetary Fund. 

“The fact that the Nordic model was so robust became a bit of a challenge for the researchers,” said Kåre Hagen, who pointed out that politicians too were taking an interest in what REASSESS published:

“We often see our research referred to by politicians, yet most often the research is being used as an argument to maintain current policies rather than to change anything.” 

"Cash for childcare"

The conference gathered nearly 200 researchers, many of them from Asia - which shows there is major interest outside of the Nordic region too.

Mary DalyProfessor Mary Daly from Queen’s University in Dublin opened the conference. She had been invited to provide an outsider’s view on the Nordic model. For those who follow the debate her views were not so different from what Nordic researchers usually highlight, possibly with the exception of her focus on ‘cash for childcare’.

It is perhaps not surprising that someone from an Irish Catholic background with the strong family focus this brings would find the cash support for childcare somewhat paradoxical. To be paid to look after your own children can appear to be contradicting other aspects of the Nordic model, which is usually associated with common social solutions like nurseries. 

Mary Daly felt cash for childcare provided an example of why the Nordic model must be adapted to fit a desire for greater individual choice.

A Chinese perspective on Sweden’s welfare state

Seen with Chinese eyes her views didn't come across as particularly exceptional:

“I miss the perspective of the outsider. To me you sound just like the Nordic researchers,” said Jihaua Zhang, a research student from Nanjing University in China. His presentation at the conference focused on the increased attention the Nordic model has been attracting in China. Between 1980 and 2011 Chinese scientific publications have published 234 articles on the Nordic welfare states. There’s not been the same interest shown in all the countries - 102 articles have been about Sweden while 0 to 19 articles have been written about the other Nordic countries. 89 of the articles were about the Nordic region or Scandinavia.

Chinese2010 saw the first joint presentation of the Nordic welfare model in the shape of a book. Jihaua Zhang said Chinese interest in the Nordic model mainly focuses on how it represents a way to reduce the differences between rich and poor, which has become a major problem in China. The Swedish expression ‘folkhemmet‘ - or the ‘the people's home‘ - is called Hexie Shehui in China - or ‘society in harmony’. According to one of China’s top experts on the model, professor Ka Lin, who is deputy director of western European studies at Zhejiang University in Hangzhou, a new Chinese expression has been introduced in order to comment on the Nordic model - minimal universalism.

It is an expression which is used to show how China strives to achieve universal welfare reforms with pensions, health insurance and so on, in the same way as the Nordic countries have. At the same time there are still not enough resources to introduce the same welfare standards and rights across the whole of China. And rural workers have less access to welfare compared to people working in cities.

Disneyland - food for thought

But inspiration does not purely flow from the Nordic model to Asian countries - it can go the opposite way too. Professor Sven Steinmo works at the European University Institute in Florence, Italy. Sven SteinmoHe told the conference what he had noticed when he worked for a few days in Tokyo near an underground stop which took people out to Disneyland.

“It was always crammed full with Japanese families on their way there. I said to my Japanese friends it was so nice to see all three generations being able to have fun together in that way. The answer I got was that only grandparents could afford to visit Disneyland,” said Sven Steinmo.

This made him take a closer look at what he calls ‘My greedy generation’. For the first time ever younger generations can no longer expect to achieve a higher standard of living than the generation born after World War 2. Steinmo then asked whether the Nordic welfare models in the long term would be able to survive the fact that most of state welfare payments go to pensioners, while families with children struggle economically. 

“We of the older generation understand what is happening. We are worried about what will happen to our children and to their children, so we save up in order to help them out economically.”

More and more private wealth distribution

As a result more and more of wealth distribution is becoming private. If the state charged the older population higher taxes it would have more money to help support families with children. But when both capital and inheritance taxes have been abolished, as has happened in Sweden, it becomes increasingly difficult to redistribute money in that way.

“There will be no political pressure to tax the older generation as this group’s political power increases in line with the ageing population. And young people, who are dependent on the private distribution of wealth which is taking place, don’t want the older generation to be taxed more either,” argued Sven Steinmo.

The core of the Nordic model

Bjørn HvindenWhen Bjørn Hvinden tried to sum up what the five years of research on the Nordic model really had concluded, he said the model is not about specific reforms or state welfare programmes which are only found in the Nordic region. 

“The core of the Nordic model is the belief that it is possible and desirable to combine economic growth and efficiency with social equality and equal rights. Our ambition should be to try to create a positive and sustainable synergy between growth and equality,” said Bjørn Hvinden.

With this definition in mind, REASSESS’s task has been to ask the following questions:

  • have the Nordic welfare states succeeded in creating such a synergy?
  • or do we see signs that such a goal is becoming harder to achieve when the models are faced with international economic turbulence, an ageing population and increased immigration?

“What REASSESS is about to publish gives a conditional yes to both these questions,” said Bjørn Hvinden.

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