kangas kvist umea nordic welfare state manus

7/27/2019 Kangas Kvist Umea Nordic Welfare State Manus

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Utopiaordystopia?WellbeingintheNordicwelfarestates

OlliKangas1&JonKvist2

TheNordiccountriesareworldknownfortheircomprehensivewelfarestatesandtheirlowlevelsofinequality.Somepeoplethinkthatsuchawelfarestateisadystopiatobeavoidedatallcosts.OthersbelievetheNordicwelfarestateisaparadiseonearth.BothcriticsandsupporteragreethattheNordiccountriesshareanumberoffeaturesthatinacatchtermcanbesaidtobetheNordicwelfaremodelwithadistinctsetofgoals,policiesandoutcomes.

Thegoalofequality,mostnotablybetweenrichandpoorandbetweenmenandwomen,constitutealighttowerforegalitarianthinkinginmanycountries.Atthesametimeotherobserversseethesamephenomena,equality,asatoddswith

efficiency;Thebigtradeoffbetweenequalityandefficiency,asaptlylabelledbyneoclassicaleconomistArthurOkun(1975)nearly40yearsago.Okunsideaisthatprovidinggenerousbenefitstopeoplewillresultineconomicinefficienciesascomparedtoasituationwithoutsuchbenefits.Theotherperspectiveisthatbenefitsnurturetheeconomy,mostnotablythroughsocialinvestments,bymitigatingthedetrimentaleffectsofeconomicdownturnsandbystimulatingproductivebutriskbasedeconomicbehaviour(Myrdal,1960;Kuusi,1964).

Theultimategoalofsocialpolicyistopreventpoverty.Themainstreamofpovertyresearchhasdefinedpovertycontextually,alwaysinrelationtothestandardsinthatsocietywheretheindividualisliving(Townsend,1979;Gordon

&Townsend2000).OrasSteinRingen(1987a,152)succinctlyputsit:Tobepooristobedeprivedinwayoflife.Peopleneedacertainstandardintheirlifeinordertoavoidexclusion,andinordertobeabletoparticipateinandbeacceptedintonormalactivitiesinonessociety.Necessitiesaredeterminedbysocialrequirements.Thus,povertyequalslackofresourcesandthatlackleadstoaninabilitytoparticipateinthenormalwayoflifeofthesurroundingsociety.

AlthoughtheveryideaoflinkinghumanwelfareandthecommandoverresourceswaspresentedbyaBritonRichardTitmussinthe1950s(seeTitmuss1974),itgotitsstrongestfootingsinScandinaviaandbecameinspirationfortheNordicleveloflivingsurveys(seee.g.Allardt1976and1993;Ringen1987;

Erikson1993;Erikson&Uusitalo1987;Erikson&berg1987).Thecrucialissuewasthattheapproachwasnotonlylimitedtoeconomicscarcitybutitcontinuedtoemphasizethattherearealsootherimportantaspectsthatmustbetakenintoconsiderationwhenanalyzingwellbeingandthelackofwellbeing.TheapproachwascrystallizedbyStenJohansson(1970;1979).AccordingtoJohanssonhumanwellbeingcanbemeasuredandevaluatedonninecomponents:health,employment,economicresources,knowledgeandeducation,socialintegration,housingandneighborhood,securityoflifeandproperty,recreationandculture,andpoliticalresources.Johanssonsconceptualmaplaid

1VisitingH.C.AndersenProfessor,CenterforWelfareStateResearch,UniversityofSouthernDenmark,Odense.ChairoftheResearchDepartment,SocialInsuracneInsitutionofFinland.2Professor,CenterforWelfareStateResearch,UniversityofSouthernDenmark,Odense.


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thebasisforthesuccessiveSwedishleveloflivingsurveysthathavebeenreplicatedlaterinsomeformsandwithsomemodificationsinalltheNordiccountries,e.g.inhiscomparativeFinnishprojectErikAllardshiftedfocusfromresourcestothelevelofneedsatisfactiondescribedbythecatchwordshaving,lovingandbeing(Allard1976and1993).

DespitedifferencesinemphasistheunderpinningthemeintheNordicapproachistheverywideconceptofwelfarethatalwaysincludesthequalityoflifeaspect.TheapproachhassomeconceptuallinkagestotheSenianinterpretationofindividualscapabilitiestofulfiltheirownpotential(e.g.Sen1992and1993).Accordingtothisbrandofsocialphilosophy,whendebatingonpovertywehavemuchmorethantheeliminationofthemonetaryhardshipatstake.Nonpovertydoesnotonlymeanthatwehavemoneyenoughtomakeourendsmetbutnonpovertyalsomeansthatwehaveabilitytofunction,i.e.weknowhowtomakeconsciouslifechoicesthatwearecapableofrealizing.Since poverty is seen asrelative and equality is set as the main object, the domain of social policy necessarily

becomes large. The concept of relative poverty keeps social policy evolving andeliminating poverty is a constant shooting on a moving target. It is necessary to

consider over and over again where the limits of public measures are and where the

limits of responsibility have to be drawn.

Inthischapterwefocusontheprinciples,policiesandoutcomesintheNordicwelfarestate.InthenextsectionweintroducethegoalsoftheNordicmodelintermsofkeyprincipleslikeuniversalityandinequalityanddescribehowtheseprincipleswerefirstinstigatedinpoliciesandwhatchallengestheyaresaidtoconfrontinthe2010s.Inthefollowingsectionweanalysepolicyoutcomesinanumberofcentralareasinacomparativeperspective.Intheconcludingsection

weassessthesepolicydevelopmentsandwelfareoutcomesinviewofcurrentchallengesinadiscussionofthefuturefortheNordicwelfaremodelintheNordiccountriesandinothercountries.

TheNordicwelfaremodelkeyconcepts:Inequalityandmobility

throughuniversal,generousandhighqualitybenefits

Inthissection,wepresentthegoalsoftheNordicwelfaremodelandthepoliciesusedtotrytoachievethesegoals.Wefocusonkeyconceptsofinequalityandmobilityonthesideofgoalsandoutcomesandwefocusonconceptslikeuniversalismandgenerositywhensettingoutthepolicyside.Webrieflylookintotherootsanddevelopmentoftheseconcepts.

TheNordicwelfaremodelisknownundermanynames.TheSocialDemocraticwelfareregimepertainstotheallegedpoliticalforcesbehindthemodel(EspingAndersen,1990).Theinstitutionalmodelpertainstothecharacteristicsofthemodelthatisseenashavinginstitutionalisedalotoftasksinthesocialspherevisvisthemarketandthefamily.Theinstitutionalmodelstandsincontrasttotheresidualmodelwherethestateistheproviderofwelfareofthelastresort(Titmuss,1974;Alber,1981).Encompassingmodel(KorpiandPalme,2008)refersuniversalcharacterofbenefitsthatcombinebasicsecurityandincome

relatedness.


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IfweplacetheNordiccountriesinawiderinternationalperspectivetheylookverymuchthesame:longcommonhistory,sharedculturalvalues,blurredboundariesbetweenthestateandcivilsociety,strongstatebureaucracythatiscapabletoimplementvarioussocialpolicymeasuresandeffectivelycollecttaxes,heavybiasonpublicsocialservicesandtransferswithhighcoverageamongthe

populace,andconsequentlysmallincomedifferencesandlowpovertyrates(KangasandPalme,2005).

However,ifwecomparetheNordiccountrieswitheachothertheylookratherdifferentandtheverdictofintraNordiccomparisonsiscondensedinthetellingadagebyChristiansenetal.(2005):Onemodelwithfivevariations.AlthoughtheNordiccountriesarenotidenticaltheydoshareahighdegreeoffamilyresemblancewhencomparedtothesituationinothercountries.ForthisreasonwefinditjustifiedtospeakofaNordicwelfaremodelasanadequatelabelfortheNordicwelfarestates.

PoorlawsandmunicipalpoorhelpwerethefirstformsofofficialsocialpolicyalsoinScandinavia.Municipalitiesbecamegraduallyresponsibleforexpandingwelfareobligationsandevennow,socialservicesaredeliveredbylocalauthoritiesthathavetheirownpoliticaldecisionmakingarenasandrighttocollecttaxestofinanceservicestheyareproviding.Withincertainlimitsthemunicipalitiescandecideontheirownwelfareactivitiesandmunicipaltaxratestofinancethoseactivities(KangasandPalme,2005).ThiscombinationofcentralizedstatenessandlocaldemocraticdecisionmakinghadimportantramificationforthesubsequentdevelopmentoftheNordicsocieties.Thedistancebetweenthestate/publicsectorandcivilsocietycametobecloseandblurred,andoftenitishardsaywherethecivilsocietyendsandthepublicsectorbegins.InScandinavia,stateisoftenusedsynonymouslywithsociety(Allardt,1986;AlestaloandKuhnle,1987).TheNordiccountriesdifferinthetimingoftheirfirstsocialpolicyprograms.UsuallyDenmarkandSwedenpavedthewayandNorwayandFinlandtrotalongadecadeorsobehind.Forexample,Denmarkwasoneofthefirstcountriesintheworldtoimplementapensionlaw(1891)followedbySweden(1913),whereasNorway(1936)andFinland(1937)werelatecomers.Insomecases,e.g.inworkaccidentinsurancetheorderwasreversed:Norwayintroducedthefirstschemein1894,followedbyFinlandayearlater,whiletheDenmarkand

Swedenimplementedthelawin1916.WhereasSwedenwasfirsttocomplementnationalpensionsbyincomerelatedpensions(in1959),Finlandwassecond(1962)andNorwayonthethirdplace(1966),inDenmarktheynevermanagedtolegislatedonincomerelatedpensionsbuttheneedforincomelosscompensationsbifurcatedintoprivateindividualandlabourmarketpensions.InchildandfamilypolicyandinsocialservicesitwastypicallySwedenthatledtheway,althoughthetraditionallaggardFinlandwasthefirsttointroducecareallowancesasanalternativetoinstitutionalisedcare.However,ifoneinspectsthedevelopmentinthesecountriesdiachronically,therearelotsofsimilarities.Thecountriesfollowasimilarpathbutthechronologicaltimingisdifferentintheirmoves.Today,theyareallmoderncomprehensivewelfarestatesand

changesintheirsocialpoliciestakeplacemoreorlesssimultaneously.


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GoalsandpolicesintheNordicwelfaremodelThegoalsofthemodernNordicwelfaremodelreachfurtherthanthegoalofalleviatingpovertyforthedeservingneedyasdominantintheAngloSaxonModelandthegoalofsecuringincomemaintenanceforinsidersonthelabour

marketintheContinentalEuropeanmodel.TheNordiccountriesdotrytotacklepovertyandinsuranceagainstincomeloss,butalsotoaddressawiderrangeofsocialinequalities.Thegoalisnotonlytoprovidepeoplewithanamountofmoneytheycanliveoffbutalsoprovidepeoplewithskillsandabilitiesthatenablethemtobecomefullmembersinthesocietytheyarelivinginthroughtheirownefforts,primarilyinthelabourmarket.Thevisionistohelppeoplemaximizetheirhumanpotentialinabeliefthatthisisgoodforbothindividualsandthesocietyatlarge.Forexamplewomenshouldthereforehavethesamepossibilitiestoparticipateinthelabourmarketasmenandchildrenfromlesspriviledgedbackgroundsshouldbeenabledtotakeeducationonparwithchildrenfrompriviledgedbackground.TheservesuchgoalstheNordicwelfare

modelischaracterizedbyanencompassingbenefitsincashandkind.Theincomemaintenancesystemcombinesbasicsecuritywithearningsrelatedbenefitstopreventpovertyandsafeguardtheachievedstandardofliving.Social,educationandhealthservicesaimtogiveindividualspossibilitiestoconductadecentlifeindependentoftheirsocioeconomicbackgroundandcapacitytopay.

ThecentralpolicyfeaturesoftheNordicmodelusuallyrefertogenerousanduniversalsocialpolicythatiseffectiveincombatingpoverty,reducinginequalityandpromotingsocialmobility.Universalismisaboutcoverageofthenationalrelevantpopulation.Generositydealswiththeadequacyofcashbenefitsandthequalityofsocial,educationandhealthservices.Inequalityandpovertyrefertothosefactorsinsocietythatpreventpersonsfromrealisingtheirhumanpotentialandinparticulartoraisethelevelsforlessprivilegedgroups.

OneofthemostimportanttrademarksoftheNordicwelfarestateisitsuniversalism.Inprinciple,socialbenefitsareforall,neitheraretheytargetedafterneedforsomespecificvulnerablegroupsnoraretheyexclusivebenefitsforprivilegedoccupationalgroups.Thus,intheidealNordicmodel,allpopulationcategoriesarecoveredbythesameprogramswhichisseentobeasolidguaranteeforhighpopularsupportforthewelfarestate.Ideally,sinceeverybodycontributesandeverybodybenefitsthereisnowedgebetweenthewelloff

payersandtheworseoffbeneficiaries;thereisnoroomforwelfarebacklasch(Korpi,1980;Svallfors,1989).Ithasalsobeenshownthatgoodincomerelatedbenefitshaveguaranteedratherahighlevelofbasicsecurityasinbasicpensions,socialassistanceetc.(Nelson,2002).

Figure1.Generosityanduniversalismofsocialinsurancein18OECDcountries1950,1970,1990and2010.


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TheScandinavianinclinationtowardsuniversalismisevidentintheconstructionofthepostWWIIwelfarestate,seeFigure13.Inthe1950sand1960snationalpensionreformsguaranteedbasicpensiontoeveryoneandthecoverageoftheotherformsofsocialinsuranceexpanded.Theintroductionofemploymentrelatedpensionsandotherincomemaintenanceschemes,fortheirpart,improvedtheincomelosspart.TheNordicwelfarestatesarenotalwaysthemostgenerous,especiallybenefitsinCentralandSouthernEuropemaybehigher(seee.g.Ferrera,2010).TheScandinavianmodelisuniquebycombining

3Indicatorsusedinthefigurepertaintomeanvaluesofoldagepensions,sickness,workaccident,andunemploymentinsuranceprograms.Universalityisameanforcoverageofthoseschemes(insured/totalpopulationinpensions(%),andinsurance/totallabourforceforotherinsuranceprogrammes(%)).Pensionsweight2,workaccident0,5andsicknessandunemploymentinsurance1each.Generosityismeanreplacementlevelforthefourschemesexpressesasaratiobetweennetbenefitandnetwageattheaverageincomelevel.Thesenumbersareweightedasexplainedabove.Theinterpretationoftheindicesisstraightforward:inuniversality0%indicatesthatnobodyisinsuredunderanyprogramand100%tellsthatthetotalpopulationinriskincovered.Consequently,0%ingenerosityreferstoasituationwheretherearenobenefitsatallavailableinanyofthefourschemes,whilethemaximumvalueof100%pertainstofullcompensationsinalltheschemes(netbenefit=netincome).Dataforthe

indicatorsarederivedfromtheSCIPdatabasedhousedattheSwedishInstituteforSocialResearch,UniversityofStockholm(seee.g.KorpiandPalme,1998).Datafor2010isveryprovisional.


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generositywithuniversality.InCentralEuropebenefitsmightbemoregenerousbutnotthatuniversalandintheliberalorAngloAmericanmodeltheyneitherareuniversalnorgenerous(Kvist,2007).

AscanbeseeninFigure1theNordicmodelhaditsheydayinthelate1980sand

early1990s.Sweden,Norway,DenmarkandFinlandformedagroupwithhighdegreeofuniversalismandgenerousbenefits.ReformssincethenmadetheNordiccountriesremainthemostuniversalbuttheylostsomeoftheirdistinctivenessingenerosity.WiththeexceptionofNorway,benefitlevelsinsocialinsuranceschemesarecutandgenerosityismovingtowardstheOECDmean.

Socialassistancehasalsobeenreduced.BecauseoftheotheraspectsoftheNordicwelfaremodelsocialassistanceisexpectedtoprovidehighbenefitforasmallgroupofclaimants.Indeed,thelevelofsocialassistanceintheNorthusedtobehighincomparisontothoseinothercountries.However,duringthepast

decadethereplacementlevelshavebeencutbyabout10percentagepoints.Thecutsaremirroredintheefficacyofsocialassistance,andconsequently,povertyratesamongthesocialassistancerecipientshaveincreasedmarkedlyfrom30%intheearly1990sto40%inthelate2000s(KuivalainenandNelson,2012).Theinteractionofincreasingunemploymentandthedecreasingadequacyofsocialassistancemayresultinincreasingpovertyrates.Ifthistrajectorymaterializes,theNordicmodelprizedforitslowpovertyishistory:biggerandbiggergroupislivingonlowerandlowerbenefits.

IncreasingconditionsisanewtrendthathasalreadytransformedtheNordicwelfaremodel.Sofarwehaveexamineduniversalismandgenerosity.However,

thisistoonarrowapicture.InScandinavia,aselsewhere,entitlementstobenefitsaremoreandmoretargetedbyvariousformsofconditions.TakingthisconditionalityintoaccountweexpandfromatwotoathreedimensionalperspectiveasillustratedbyunemploymentinsuranceinFigure2.First,wecanseethatthereplacementlevels(generosity)arehigherinGermanyandFrancethaninanyothercountrybutthecoverageamongthelabourforce(universalism)isthehighestintheNordichemisphere.WiththeexceptionofNorway,theNordiccountriesarenotsignificantlylessconditionalthanFrance,GermanyortheU.K.

Figure2.Generosity,universalismandconditionalityinunemployment

insuranceinsomecountries,2010.


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AmongtheOECDcountriesthereisatrendofincreasingconditionality.Inthecaseofunemploymentthecrucialconditionisthecontributionperiod,i.e.thetimetheunemployedmusthavebeenemployed/amemberoftheunemploymentinsurancesystembeforegettingrighttobenefit.Whileuptoearly1990sthereferenceperiodintheNordiccountrieswasonaverage19weeks,thenumberisnow30weeks.ThesimilartrendisvisiblealsointheContinentalEuropewherethereferenceperiodhasbeenlengthenedfrom37to42weeks.InthisprocesstheNordicclusterhasbecomemoresimilar,whilethereisgrowingdiversificationamongtheContinentalcluster.TodaytheNordicwelfaremodelcanthusbecharacterizedaslessuniversal,lessgenerousandmoreconditionalthanonetotwodecadesago.

Inequality, Poverty & Deprivation

Internationalcomparisons(Fritzell,BckmanandRitakallio,2012)showthattherearenomajordifferencesinfactorincomeinequalitiesbetweendevelopedcountries,whereastherearesubstantialdifferencesininequalitiesofdisposableincome.TheGiniindexforfactorincomeintheNordiccountriesisaboutthesameasintheU.S.(WangandCaminada,2011:13).However,duetotheequalizingeffectsoftaxesandincometransfersthecountriesareplacedintheoppositeendsofthecontinuumofdisposableincomeinequalities.

Thesamepatternisvisibleinpovertylevels.ThepovertyalleviationeffectintheNordiccountriesis75%,i.e.socialtransferslift75%ofthepretransferpooroutofpoverty.ThenumbersfortheCentralEuropeanstatesareaboutthesame,whilethecorrespondingpercentagefortheU.S.islessthan30%(Smeeding,2005,table4).Thestoryismuchthesamewhenitcomestochildpoverty(seeGornickandJntti,2009).

Socialpolicymodelsthusdifferintheircapacitytodecreaseincomeinequalitiesandalleviatepoverty.AlthoughtheNordicwelfaremodelhasdonewell,therise


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ofpovertyratesandinequalityarefasterintheNordiccountriesthatincountrieswithotherwelfaremodels(OECD2008).However,thepovertygap,i.e.thedistancefromaverageincomeofthepoortothenationalmean,isstillnarrowestintheNetherlandsandNordiccountries(OECD,2011a:52).

Monetarypovertyisonemeasuretoevaluateifpeoplehaveinsufficientmeanstoparticipateinsociety.Themeasureislinkedtoincomedistribution:thosecountrieswithlowincomedisparitiesdisplaylowpovertyfigures.Forexample,HungaryhasthesamelowrelativepovertylevelsastheNordiccountriesbutthepovertythresholdinScandinavia(about11,000)istwicethatasinHungary(about5,000).ThismeansthatthestandardoflivingofthepoorinScandinaviaismorethantwicehigherthaninHungary,ortheotherpostsocialistcountriesshowinglowrelativepovertylevels.

Toovercomethisproblemincludedinrelativeincomebasedpovertymeasures,amoreabsolutekinddeprivationindicatorshavebeentakenintouse.Material

deprivationisoneofthem.Thismeasureexpressesindividualsinabilitytoaffordbasicnecessitiesforadequatelife.Thepicturegivenbythedeprivationindexisquitedifferentastheincomepovertypicture.Therelationship(correlationcoefficientr=.34)betweenthetwopovertymeasuresisgiveninFigure3.

Figure3.Monetarypoverty(povertythreshold=60%ofmedian)andmaterialdeprivationinEuropearound2010.

Thetwowayscatterplotshowshowsomeofthepostsocialistcountrieshavelowincomepovertybuthighlevelsofmaterialdeprivation.TheNordiccountries,togetherwiththeNetherlandsandAustriaformagroupwithlowlevelsofbothmonetaryanddeprivationpoverty.


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IntheAngloAmericanpoliticaldiscoursetheworkingpoorphenomenonhasbeenonthefore.Duetoholesinthesafetynetworkmanypeopledonothaveadequatesocialsecurity.Evenworse,insomecasesgettingemploymentdoesnothelptoescapepoverty.EuropeanlevelcomparisonsshowthatinworkpovertyislowestintheNordiccountries(lessthan5%)closelyfollowedbythe

CentralEuropeanandLiberalcountries,whereasmorethan10%oftheworkingpopulationisabovethepovertythresholdinSouthernEurope(Hussain,KangasandKvist,2012:130).Poverty,ormorebroadlysocialexclusionisamultidimensionalphenomenon:socialproblemsandlacksinwellbeingarelinkedtoeachotherandthelackofessentialwelfareresourcestendstoaccumulateinvariousvulnerablegroupsasindicatedinappendixtable1(FridbergandKangas2008a).Butascanbeseeninthetable,despitethecutsintheirincomemaintenancesystemstheNordicwelfarestatesstillperformratherwellincomparisontotheotherregimes.Multilevelanalyses(notshownhere)indicatedthatindividuallevelcharacteristics(age,gender,educationalattainment,employmentstatus,familystructure,income,immigrantornot)explainedatbestsome15%ofthevarianceinwelfareproblems,whereasinclusionofthewelfareregimeintothemodelincreasedthevarianceexplainedto5060%.Theresultsemphasizestheimportanceofcontextualvariablesincreatingandeliminatingwelfareproblems.Toconclude,despitegrowinginequality,theNordiccountriesstillareequalsocietiesbutperhapslesssothantwodecadesago.

Incomemobility

Inadditiontotheincidenceofpovertyitisimportantalsotoconsiderpersistenceofpoverty,ormorebroadly,incomemobility.AccordingtoJohnRawls'(1971and1996)influentialconceptofjusticeevenahighlevelofinequalityisacceptableifitisbasedonopennessofsociety.Thushighdegreeofcrosssectionalinequalityandpovertycouldbeforgivenifthereishighdegreeofincomemobilityandhighexitratesoutofpoverty.Longtermpovertyisaderivateofincomemobilityandpovertyexitrates.ThelongitudinalECHPdataprovesthattheannualexitrateis60%forDenmark(therearenodatafortheotherNordiccountries),48%fortheCentralEuropeanclusterofnations(Belgium,Germany,France,LuxembourgandtheNetherlands),

45%fortheliberalregime(UK,Ireland,theU.S.andCanada),and42%fortheSouthernEuropeanregime(Greece,Italy,PortugalandSpain)(OECD2011b).Duetothesemarkeddifferencesinpovertyexitrates,therealsoaredifferencesbetweenwelfareregimesintheincidenceoflongtermpoverty.Countrieswithlowcrosssectionalpovertyalsodisplaylowlevelsoflongtermpoverty.Analternativestrategytolookatincomemobilityandpovertyrisksistostudyvarioustransitionsthattakeplaceinthelabourmarkets.Hereweusepensionsasanexampleofpovertyrisks(povertythresholdof60%ofthenationalequivalentincome)relatedtotransitionsfromthelabourmarketsandasaexampleoftransitionalandlongtermpovertylinkedtosocialinsurance.Asindicatedinappendixtable2(basedonEUSILCdatafor2004to2008)crosssectionalpovertyamongpensionstendstobelowerinanumberofCentral


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EuropeancountriesthatintheNordichemisphere.Austria,FranceandtheNetherlandsinparticularoutperformalltheNordiccountriesandinDenmarkandFinlandoldagepovertyishigherthaninanyCentralEuropeancountrybutalsoinSwedenpovertyisinrapidincrease(9.1%in2005to18.9%in2008).

Intable1wedepictpovertyratesforpersonsindifferentlabourmarketandpensionstatuses.Asindicatedabove,povertyamongthoseinworkisthelowestintheNordiccountries.InthatrespecttheNordicclusterisratherdistinct.Whenitcomestothetransitionfromemploymenttopension,NorwayandSweden(andtosomeextentDenmark,too)aredoingcomparativelyspeakingwell,whereasFinlandislackingbehindBelgium,France,theNetherlandsandIreland.PovertyriskintransitionfromemploymenttopensionsisthehighestinSouthernEurope.TheSouthernEuropeancountriesandtheUKdisplaythehighest(persistent)povertyratesamongthosewhointwoconsecutiveyearshavebeenonpension.TheboundariesbetweentheCentralEuropeanandtheNordicclustersarenowblurredtheNetherlandsoutperformingalltheothercountries.Table1.Poverty(%)andtransitions(t+t1)fromemploymenttopensions20042008.-----------------------------------------------

| Transition from year t to t+1.| NP=NonPensioner(working),| P=Pensioner(Retired)

ctr | NP->NP NP->P P->P Total---------------+-------------------------------

1_Denmark | 3.8 4.1 19.2 8.22_Finland | 3.8 6.8 18.6 8.53_Norway | 3.3 2.9 14.8 5.94_Sweden | 4.3 3.1 12.0 6.55_Austria | 7.2 8.0 13.1 9.46_Belgium | 4.5 4.6 16.5 8.67_France | 6.5 5.4 13.4 9.08_Germany | 6.6 12.9 15.8 10.4

9_Netherlands | 6.0 4.1 6.2 6.010_Ireland | 5.7 5.0 15.8 7.5

11_U.K. | 5.7 16.7 29.2 13.112_Greece | 14.1 15.8 25.4 17.813_Italy | 10.3 9.0 15.9 12.1

14_Portugal | 12.3 17.1 21.6 15.3

15_Spain | 10.8 12.3 21.3 13.3Total | 7.7 10.2 17.8 11.0-----------------------------------------------(calculatedfromtheEUSILC20042008)AnadditionalpictureontheadequacyofpensionprotectionisgiveninFigure4wherewefollowthesameindividualsthatwereonpensionin2005.Thedevelopmentoftheirpovertystatusislongitudinallyfollowed2005to2008.Asisevidentinthegraph,threecountries(Finland,IrelandandSweden)displayanincreasingtrendinpovertyrates,insomeothercountries(Austria,UK,Belgium,

theNetherlands)thereisnocleartrend,whilein(Norway)France,Greece,


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PortugalandSpainthepovertyrateshavedeclinedfromtheinitiallevel.Thetrendsarelinkedtoeconomiccyclesandtheindexationofpensionrights.Figure4.Developmentofpovertyrates(%)amongthosewhowereonpensionin2005(datafor2005to2008).

Duetoimprovedavailabilityofintergenerationaldatawecaninspectintergenerationaltransmissionofwelfare.Fromthesocialjusticeperspectivethisopensnewpossibilitiestodiscussofjustice:oneimportantindicatoroftheRawlsianopennessisthecorrelationofincomesbetweenchildrenandtheirparents.Thelowertheassociationthemoreopenthesocietyis.TheNordiccountriesarenotasopensocietiesastheyperhapswouldliketobe.Buttheymaybelessclosedthatsomeothercountries.TheintergenerationalincomecorrelationishighestintheU.K.(.50)andintheU.S.(.47),whileitislowestinDenmark(.15),Norway(.17),Finland(.18),andCanada(.19).Swedenis

somewhatlaggingbehindherNordicneighbours(r=.27)butdisplayingclearlylowercoefficientsthanthecontinentalFrance(.41)andGermany(.32).(Jntti&.al.2006;Corak,2006)Theeducationalsystemiscrucialwhenexplaininghowstronglytheparentalbackgroundisinherited(EspingAndersen,2009).AccordingtotheeducationalachievementsresultsfromPISA,thefamilybackgroundexplains11%ofthepupils'achievementsintheNordiccountries,16%inCentralEurope,14%inLiberalcluster,and14%intheSouthernandpostsocialistcountries,butthemeansconcealasubstantialintraregimevariation,e.g.thenumbersarelowforFinlandandNorway(78%)butcomparativelyspeakinghighforDenmarkandSweden(1314%).Maintaining educational equality is a challenging task given theimportant role of private schools in Denmark and the expansion of private elite


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education in Sweden. The private school system plays minor role in Finland and

Norway. Inallcountrieswecandetacheffectsofintra-generational transmission ofeducational attainment and in that sense no country fulfils the Rawlsian principle of

open society but some countries are less closed than some others

http://www.oecd.org/pages/0,3417,en_32252351_46584327_1_1_1_1_1,00.h

tml.Tocombatthedetrimentaleffectsofpoorchildhoodconditionsitisimportanttoinvestinchildrenearly(EspingAndersen,2009;OECD,2001band2006).Kindergardens,preschoolsandprimaryeducationareinvestmentsinfuture.Theideaisnotnew.Alreadyinthe1930aSwedishsocialdemocraticpoliticianAlvaMyrdaldemandedthatchildcarewasarrangedcollectively(Hirdman,1989).Collective,publicdaycarewasseentofulfilobjectivesofequality:childrenwithdifferentbackgroundsweregivenequalchances.Childcareprovisionaccessibletoeverybodyshouldprovideameansofcompensationforchildrenwithscarceresourcesathome.OntheUNICEFchildwelfareindexthefourNordiccountries,theNetherlandsandSwitzerlandarethesixbestperformers(UNICEF,2007).

TheinspectionofpovertyandincomemobilitybetheyshortorlongtermgivesarelativelyspeakingagoodtestimonyoftheNordiccountries.Infact,theNordicwelfarestatehasbeenwellsuitedtomeetthe'oldsocialrisks'butitisperhapsnotthatdistinctivelygoodtocombat'newrisks'ofsingleparenthood,onepersonhouseholds,youthpovertyetc.(Fritzell,BckmanandRitakallio,2012).Therealsoareproblemsinintegratingimmigrantsintothelabormarketsandinthatrespecttheliberalcountriesaredoingbetter(EspingAndersen,2009:129).Therearealsosignsthateducationalattainmentsandeducational

skillsamongimmigrantchildrenaresubstantiallylaggingbehindofthoseofnatives.Thus,intheyearstocome,theNordiccountriesmayneedtoinvestmoreon the integration of certain groups of immigrant children in kinder gardens,

preschools and schools if emerging inequalities are not to expand.

Social services and employmentUniversal, tax-financed social services are from many points of view a corner stone in

the Nordic model. First, high quality child-care and school services provide equal

possibilities for all children. Second, universal access to health care is essential for

population health and well-being. Third, home service helps the elderly to live longer

in their own homes and, if needed, institutional care is given in service homes. Fourth,

public services are important from the employment and gender equality perspectives.Child-care gives possibilities for both genders to equally participate in paid labour

and parenthood. In the Nordic countries the universal child care is most important

facilitator for this goal.

However, when it comes to the utilization of public day-care, the Nordic counties

display different trajectories (Meager and Szebehely, 2012). Whereas child care take-

up rate among small children is about 90% in Denmark, Norway and Sweden, it is

45% in Finland. The explanation is home care allowance that is paid to those parents

who either take themselves care of their children or use private providers. Most

families choose the home care option and, consequently, the labour force participation

of Finnish mothers with small children is as low as the Southern European levels at

around 50%. In the other Nordic countries the maternal labour force participation


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rates are close to those of fathers. The Nordic picture becomes more homogenous if

we look at mothers who have school-aged or older children. Now the Finnish female

labour force participation rates are the highest in the OECD hemisphere (81%). Thus,

the overall employment activity is high in all Nordic countries (including Finland):

73% for women and 78% for men. The corresponding numbers for Central Europe are

62% and 74%; for the Liberal regimes 63% and 78% and for the Southern Europeancountries 56% and 77% (Hussain, Kangas and Kvist, 2012: 125).

The example of home care allowance indicates that policies can make a huge

behavioural difference: home care allowance may be good from some points of view

but there are clear class- and culture-related patterns in the utilization of care

allowance. Working-class and immigrant mothers are more prone to use the

possibility, which in turn, may jeopardize the equalizing efforts the educational

system has as its overarching goal (see Meagher and Szebehely, 2012).

In all the Nordic countries there is a trend towards marketization and privatization of

public services. With the motivation of choice, quality and efficiency private kinder-gardens and schools, private hospitals and elderly care institutions are gaining ground

(Kautto, 2010; Kvist & Greve 2011). The development may nullify the Nordic ethos

of equal treatment regardless of the thickness of the wallet. For-profit providers may

offer good products for the good customers who can pay. The question is about

the delicate balance between economic profit and good care. There are some warning

examples how firms maximizing profits to their investment capital owners on

Cayman Islands may neglect the principle of good care in Stockholm.

Subjective welfare

FrancisFukuyama(1995,7)arguesthatanationswellbeing,aswellasitsabilitytocompete,isconditionedbyasingle,pervasiveculturalcharacteristic:theleveloftrustinherentinsociety.Thismeansthattheleveloftrusthasconsequencesforeconomicperformanceaswellasforindividualwellbeing.TheNordiccountriesarehightrustsocietiesanddespitetheirstrongwelfarestatesandheavytaxburdensoftensaidtobepoisontocompetitivenesstheyaredoingwellineconomicterms:theyareprosperous,havelaboriouspopulations,balancedbudgets,lowpublicdebtsandaccordingtotheglobalcompetitivenessindices(http://gcr.weforum.org/gcr2011)theyoccupytoppositionsinthelistofcompetitivecountries(in2011Swedenoccupiesthethirdposition,Finlandisnumber4,Denmark8andNorway16).

Intheinternationaldebateonwelfarethereisashiftfrommoneybasedmeasurestowardsmoresubjectiveindicatorsofwellbeing,andconsequently,e.g.EUSILCandEuropeanSocialSurveyofferlotsofmaterialonsubjectivewellbeing.Forspaceconsiderationswediscussonlyonedimensionofthem:generallifesatisfactionthatisoftenregardedasthemostimportantwelfareindicator.AccordingtotheEuropeanSocialSurvey,themeanfortheNordicclusteris8,0whichthehighestregimemean(thescalegoes0=extremelydissatisfiedto10=extremelysatisfied).Furthermore,thewithinregimevariationisthesmallestone(=1.6).Thecorrespondinglifesatisfactionscoresfortheotherwelfareclustersare7.1(=2.1)fortheLiberal,7.2fortheContinentalEuropean(=

2.1),6.9(=2.2)fortheSouthernEuropean,andaslowas5.8(=2.5)fortheEastEuropeancluster.(FridbergandKangas,2008).Notonlyisthegenerallife


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satisfactionhighamongpeoplefromtheNordiccountries,butalsowhenitcomestothevariousaspectsoftrustthestoryisverymuchthesame.TheNordiccountriesdisplayhighdegreesoftrustinalldimensions(trustintheirnationalinstitutionsandintheircountrywo/men).ThereseemstobeagoodcirclebetweentheNordicwelfaremodel,socialtrustandvarioussubjectivemeasures

ofwelfare.4

Erodingsocialdemocracy?TheNordicwelfarestatehasoftenbeenlabelledastheSocialDemocraticwelfarestate.Historicallyspeakingtheremaybesometruthinthislabel.TheSocialDemocraticpartieshavebeenhistoricallyverystronginScandinavia.Uptotheearly1970sSocialdemocratscollected40%50%ofthevotesinnationalelections.TheFinnishSDPhasbeenweakerthanitsWesternsisterparties(getting25%35%ofthevotes)buttogetherwiththeCommunistpartytheyhaveoccasionallyhadabsolutesocialistmajorityattheFinnishparliament.

Thosedaysaregoneandthesocialdemocraticappealseemstobefadingout:inthelatestelectionssocialdemocratsshareofthevoteswere31%inSweden,35%inNorway,25%inDenmarkandaslowas19%inFinlandandneitherdothelatestopinionpollspromiseanyrosypictureinthefuture.ThequestioniswhethertheNordicsocialdemocracyhasbeentoosuccessfulinbuildingtheirwelfarestate,themissioniscompletedandforthetimebeingtherearenosignsofanewandappealingmission.

Figure5.TheshareofSocialdemocraticpartiesintheNordicparliaments19502010.

NotonlyistheoldpoliticalbackboneoftheNordicmodellosingitsimportancebuttherearesubstantialchangesinthelabourmarketrelationships.Duringtheformativeperiodofthewelfarestatethesocialpartnersparticipatedinthemakingofsocialpolicy,notleastpensions(seee.gKangas,LundbergandPloug,2010).Inthepaceofglobalizationtheemployershaveacquiredupperhandvisavisemployeesandtheyarewillingtoreplacepreviouscentrallevelnegotiations

4HealthisonewelfarecomponentwheretheNordicmodelisnotdoingthatwell.

0

10

20

30

40

50

60

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

SWE

NOR

DEN

FIN

Linjr(SWE)Linjr(NOR)


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bylocalagreements,whichdecreasespossibilitiesforsuchsolidaristicwageandsocialpoliciesthatwasaNordictrademarkduringtheheydayofwelfaresocialdemocracy.ItremainstobeseenhowtheseshiftsinthepowerbalancebetweenpoliticalpartiesandsocialpartnerswillbemirroredintheconstructionandbasicprinciplesoftheNordicwelfarestate.Geographicallyspeaking,the

NordicmodelwillalwaysbeNordicbutinthefutureitdefinitivelywillbelesssocialdemocratic.Growthtothelimits?InhisresearchprojectGrowthtothelimitsPeterFlora(198486)anticipatedthatthewelfarestategrowthisover.Whereasinmanycountriesthewelfarestateisexpanding(socialservices,inparticular,aredevelopinginSouthernandCentralEurope)theNordiccountriessincethe1980sdisplayadownwardtrendinspending(http://stats.oecd.org/Index.aspx?datasetcode=SOCX_AGG).ThesamegoesforgrosstaxratesthatusedtobeveryhighinScandinavia.The

overalltaxratesreachedtheirculmination(about50%inDenmarkandSweden;47%inFinlandand45%inNorway;cf.theOECDaverage36%)by2000andsincethentherateshavegonedownbyca.fivepercentagepoints.However,giventhegreyingpopulationandincreasingagebasedexpendituretherearepressurestoincreasetaxes.Theproblemisthattheglobaltaxcompetitionmaycircumventpossibilitiestoincreasetaxes.Alsotheshiftsinpoliticalpowerlimitstaxincreases,andiftaxesareusedtofinanceresponsestothegrowingneeds,mostprobablytheretheincidenceoftaxeswillbeshifted.Whilethesocialistpartiestraditionallyhavesupportedprogressivetaxation,thebourgeoispartieshavefavouredflatrateandconsumptiontaxes.Thenonsocialisttaxpoliciesmayresultinincreasesofconsumptiontaxescombinedwithhigheruserfeesonvarioussocialservices.Thisdevelopmentwouldeatupredistributiveeffectsoftaxationandtherebyincreaseincomeinequalities.Whenitcomestoincometransfersthegenerositymaybetargetofausteritymeasures,pensionsarethemostobvioustargetforrestructuration.Inalltransferschemeswewillseeincreasedconditionalitywhichislinkedtothegrowingeffortstostreamlineincometransferschemestomakethemmoreemploymentfriendlywhichagain,ismorefromthenonsocialistpoliticaldictionarythanfromthetraditionalsocialdemocraticvocabulary.

Concludingremarks

BywayofconclusionwediscussifchallengesmaketheNordicwelfaremodelunsustainableorobsolete.ThepremiseisthatiftheNordiccountriescannotmaintaintheirpreviouswelfaremodel,itseemsunlikelythatthemodelissustainableelsewhereeither.Indeed,thedaysoftheNordicwelfaremodelhasbeennumberedeversinceitwasfirsttalkedoff.However,thediagnosisofthemalaisehaschanged(EspingAndersen,1996,JgerandKvist,2003).Forthe2010sthelistofchallengesincludesnotleastdemographicchangeanditsspillovereffectsoneconomicsustainabilityandpoliticaldynamics.

DemographicchangesareperhapsthebiggestchallengetotheNordicwelfare

model.BecausetheNordicwelfaremodelisheavyonservicesandhasawiderangeofuniversalcashbenefitstheneedforeverybodyinworkispertinent.


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Withageingpopulationstheneedincreasesformoresocialandhealthservicesatthesametimeastherearefewerpersonsintheirworkingactiveagewhocanstaffandfinancethoseservices.Alreadynowmunicipalitieswhoarelargelyresponsibleforthesocialserviceswitnesstheirelderlycareworkersretireandtheirtaxbasediminishduetonotonlyeconomiccrisisbutalsorelativefewer

workingaged.Ethnicityissuesmakeupanothersetofdemographicchallenges,i.e.integrationofpersonsfromothercountries,migrationflowsandlevelsofsolidarityinnationalpopulations.Becauseofgenerallylowerlabourmarketparticipationratesamongpersonsfromthirdcountries,especiallywomen,muchoftheactivelabourmarketpoliciesinrecentyearshavebeenonintegrationsuchgroupsintothelabourmarket.TherehavealsobeennationaldebatesintheNordiccountriesofwhethertheuniversal,generousbenefitswouldattractpeoplefromothercountriesinterestedinsuchbenefitsatthesametimeasmakinginsidersintheNordiclabourmarketmoveabroadtoavoidhigh(er)taxestofinancethesocialbenefits.PrimarilyDenmarkhasledsuchfearsresultinlowerminimumincomebenefits(althoughthesewereraisedagainafterachangeofgovernmentin2011).Isthesupportforuniversalwelfareonlypossibleinsmallandhomogenouspopulationswherebenefitsareforus?Doesculturalandethnicheterogeneityhollowoutuniversalism?WhileempiricalresultsshowthatAmericansinparticulararesensitivetoingroupusandoutgroupthemdistinction,theNordicattitudesarenotthatmuchaffectedbythedyadicdivision,therefore,theincreasingethnicdiversitydoesnotdirectlyconstituteathreattotheNordic

welfarestate(Finseraas,2012:39).However,theimpactmaybeindirect.Giventhehighlevelofunemploymentamongimmigrantstheingroupandoutgroupdistinctionmaybegintoplayitsrole(AlbrektLarsen,2012).Infact,populistpartiesusingantiimmigrationbanderolstakeasubstantialshareofvotesintheNordiccountries:about20%inDenmark,FinlandandNorwayandabout5%inSweden.

IsthespecialNordicpassionforequality(Graubard,1987)onthewane?Recentresearch(Jaeger,2012)showsthattheloveoftheNordicpeopletotheirwelfarestateisaspassionateoraslukewarmaselsewhere.GeneralsupportforsocialpolicyinScandinaviaishighbutnotnecessarilystrongerthaninContinental

EuropeancountriesbutstrongerthanintheLiberalcountries.

OurresultsindicatethatitstillispossibletotalkaboutawelfaremodelconsistingoftheNordiccountries.TheNordicwelfaremodeltodayislessuniversal,lessgenerousandmoreconditionalthanitswastwentyyearsago.However,theNordicwelfaremodelisstilldistinctandfareswellincomparisonwithotherwelfarestatemodelsonmostdimensionsofwelfare.Povertyandinequalityratesarelow,incomemobilitybeitshorttermorintergenerationalishigh,allthiscombinedwithhighlevelofsubjectivewelfare.ThisisverymuchinlinewiththebasicNordicideashowthestateshouldwork:itshouldprovideindividualswithresourcestomastertheirownlives.Whetherthe

Nordicwelfaremodelcancontinuetodososeemstobeasmuchaquestionofpoliticaldecisionsthanharsheconomicorsocialrealities.


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Appendix Tables

AppendixTable1.Theprevalence(%)ofwelfareproblemsinvulnerablegroupsindifferentwelfarere(ESS).

Suffering from loneliness

Regime Sick Low educ Immigrant Unemployed Poor Aged Unsafe No, friends Single

Nordic 10.3*** 10.6*** 9.6* 9.6** 11.1*** 14.2*** 10.1*** - 9.3

Continental 11.7*** 12.6*** 9.7*** 10.9*** 13.8*** 14.8*** 10.2*** - 9.1

Anglo-S 12.1*** 10.2*** 7.6 11.7*** 13.3*** 15.4*** 9.4** - 20.8**

Southern 18.1*** 13.5*** 10.2 13.4* 12.7*** 17.4** 12.5** - 17.8**

Eastern 16.4*** 13.4*** 11.6 14.3*** 14.7*** 18.7*** 12.2** - 19.5**

Suffering from poverty

Regime Sick Low educ Immigrant Unemployed Poor Aged Unsafe No friends Single

Nordic 15.0*** 10.1 15.8*** 25.4*** - 8.7 19.3*** 15.1*** 24.0**

Continental 23.3*** 24.3*** 22.8*** 42.1*** - 16.4 28.8*** 28.5*** 28.0**

Anglo-S 20.6*** 17.2*** 17.4* 42.2*** - 10.4* 23.3*** 39.9*** 26.6**

Southern 51.1*** 43.5*** 42.4*** 53.4*** - 45.6*** 35.1*** 40.6*** 46.7**

Eastern 50.1*** 50.4*** 28.8* 61.8*** - 41.7*** 34.8*** 51.2*** 51.3**

Suffering from sickness



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Nordic - 35.0*** 24.0 53.4*** 41.1*** 45.0*** 38.4*** 38.8*** 35.2**

Continental - 26.8*** 18.6* 47.8*** 31.6*** 41.0*** 31.7*** 32.8*** 22.6

Anglo-S - 22.8*** 17.6 47.1*** 27.7*** 38.5*** 25.8*** 28.5** 21.4

Southern - 23.0*** 11.6* 18.6 25.0*** 42.8*** 21.2*** 28.6** 28.4**

Eastern - 37.2*** 43.5*** 42.5*** 42.3*** 63.5*** 38.6*** 47.8** 44.1**

Suffering from insecurity


Nordic 19.1*** 18.2*** 17.5** 10.8 19.3*** 21.4*** - 18.7*** 14.4

Continental 29.2*** 24.8*** 20.4 24.7** 28.8*** 29.2*** - 26.5*** 20.5

Anglo-S 45.5*** 37.4 34.4 44.4*** 39.9*** 41.5*** - 38.8* 42.4**

Southern 35.1*** 30.0*** 24.5 31.9 35.1*** 34.0*** - 32.6** 34.1**

Eastern 33.7*** 28.2*** 28.4 29.0 34.8*** 34.3*** - 31.0** 33.3**

Summary of sufferings

Regime Sick Low educ Immigrant Unemployed Poor Aged Unsafe No friends Single p

Nordic 14.8 18.5 16.7 24.8 23.8 22.3 22.6 24.2 20.7

Continental 21.4 22.0 17.9 31.4 24.7 25.4 23.4 29.3 20.1

Anglo-S 26.1 21.9 19.3 36.4 27.0 26.5 19.5 25.7 27.8

Southern 34.7 27.5 22.2 29.3 24.3 35.0 22.9 33.9 31.8

Eastern 33.4 32.3 28.1 36.9 30.6 40.0 28.5 43.3 37.1

kangas kvist umea nordic welfare state manus

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