The Nordic welfare model
- lasting interest, differing research perspectives
Mikko Kautto
Paper for the REASSESS Mid-term Conference “Reassessing the Nordic welfare model:
taking stock of the work so far”, 18-20 May 2009, Oslo
Draft, work in progress, comments welcome.
Foreword/reading instruction
This paper seeks to cover a long period of research practice concerning the Nordic
welfare model. It aims to offer a review (with max 7000 words!) on how Nordic welfare
model has been discussed and presented over the years, mainly in historically and
sociologically based research. The ultimate goal of the paper is to provide an
independent chapter in a forthcoming “Handbook of comparative welfare research”,
where it will appear in a section containing an introduction to typologies and separate
chapters on the nordic, liberal, continental, southern and asian welfare models.
Constructive comments - given this purpose - are appreciated.
Abstract
In the most general sense and in a global comparison, the Nordic welfare model can still
be understood in terms of a broad, tax financed public responsibility that stems from
legislated collective and universalistic welfare policy solutions. Over the years the
model has been put to test and criticised in every Nordic country. Earlier, part of the
interest to Northern periphery could be explained by treating Nordic solutions as an
alternative between capitalism and socialism. The lasting global interest to the Nordic
model may best be explained by Scandinavian countries’ long and continuing record of
good economic and social performance. It could be argued that the model respects
economic and employment interests at the same time it seeks to ensure welfare and
equity goals.
While this kind of a general understanding may have lasted in people’s minds and as
useful caricature or illustration over the years, this paper attempts to argue that the
long-lived concept “Nordic model” can be and has been understood in different ways.
Historical studies have pointed to similarities that may explain the emergence of
peculiar welfare state institutions, but also underlined differences between the
countries. Sociologically oriented comparative research in turn has stressed unity, at
least in the 1970s and 1980s, when Nordic exceptionalism was constructed with
similarities found in welfare state spending and design of social rights. The role of
social-democratic politics and left power was seen important in the construction
process. In regime theorising, the scope of similarity was further enlargened, but this
time in relation to other regimes. The contents of the Nordic model were extended to
encapsulate causal factors, welfare state institutions and their interplay with other
social institutions, but also their outcomes.
The regime typology initiated a boom of comparative research, but also led to more
narrowly defined research interests. After the boom, the Nordic model has often served
as an ideal-type, as yardstick for measuring change. Most recent comparative efforts
and national studies have slowly called into question the uniformity between Nordic
countries and their path-dependence, as well as brought new fields in the analysing
practice.
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The Nordic model
Mikko Kautto
Introduction
The Nordic welfare model has been well known, even famous, both in research and policy circles for a long time, much before discussions about welfare regimes. Scandinavian
scholars played an important role when comparative welfare state research in the 1970s
and 1980s shifted from structural and functionalist approaches to 'politics matter' and
'institutions matter' approaches that both stressed qualitative differences and divergent
development among welfare states. Much due to their comparative interest, the distinct
nature of Scandinavian social policies became common knowledge. Later their
historical and comparative work formed important cornerstones for establishing the
regime typology. Today, the Nordic model still serves an important reference category
for comparative work and a yardstick for reflecting welfare state change in the Nordic
countries.
Most often, the concept refers to an extensive role of the State and to a broad public responsibility within the realm of a market economy. After WWII and with the gradual
division of Europe, Sweden came to epitomise the Scandinavian model. It represented
an alternative to two rival camps, market liberalism and state-socialism. Still today, the
ability to perform well both economically and socially due to, or despite of, interventionist state policy is probably the best reason to be interested in Nordic policy design
(Kangas & Palme 2005, Lundberg et al. 2008, Carroll and Palme 2006).
This ability to perform well easily leads to normative tunes, and the Nordic countries
have often been treated as examples to follow. On the other hand, their societal development has not been just rosy: Denmark (in the 70s), Norway (in the 1980s), Finland
and Sweden (early-1990s) and latest Iceland in 2008 have all experienced severe macroeconomic, employment and fiscal crises. Thus, the model has also been put to test and
subject of severe criticism. The criticism has mostly focused on the scope of public responsibility. High level of public expenditure, high costs of social protection and above
all, resultant high tax rates have been deemed unsustainable and incompatible with
growth (e.g. Lindbeck 1980, Sjöberg 1999, Andersen et al. 2008).
So, the founding fathers and everyday practitioners haven’t had a magical recipe for
running a superior welfare state. What later emerged as hallmarks of the Scandinavian
model have a long history and are the result of wide-ranging bargaining, step-by-step
reforms and their imperfect implementation. It is only since the 1990s that the existence
of a Scandinavian, Nordic, social-democratic or woman-friendly, welfare model - in
which terms one may prefer to label it – is taken as granted. The previous survey by
Arts and Gelissen [ref to Handbook chapter] is telling in this respect: they do not bring
forward any suggestions from the literature to doubt the cluster specificity or accurateness of its constituents.
In this article we want to point out the premises behind this rather unitary view but also
make some cautionary remarks concerning welfare state development in the Nordic
countries. While it appears from comparative research that the Nordic model has been a
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closed club, welfare state development in the 1990s and 2000s have posed questions
concerning the continuity and consistency of the model. Only selected parts of vast literature can be included in this review. We start by reminding of its origins, and then lay
out some important characteristics that have been detected in early comparative studies. Thereafter, with the help of international statistics and literature highlighting intraNordic diversity, the persistence of the Nordic welfare model will be addressed.
The Scandinavian route
As elsewhere, welfare state development in Scandinavia was related to industrialisation, and to unravelling social, economic and demographic changes, to the birth of
working class, and to the strengthening of nation-states and political democracy (Pierson 1991). In many respects, Scandinavia met these drivers of change from a differing
platform compared to the rest of Europe. There is a history of Scandinavian exceptionalism already before the Poor Laws at the end of the 19th Century that is often neglected.
There are clear differences in geography, religion, language, climate and governance
that have marked the Scandinavian specificity. Existing comparative historical accounts
paint a specific Scandinavian route to welfare state (e.g. Baldwin 1993, Alestalo and
Kuhnle 1987, Esping-Andersen & Korpi 1987, see also the special issue in Scandinavian
Journal of History 2001 vol 26 nr 3).
Firstly, the role of religion or more specifically the division of power between the
Church and the State needs to be highlighted. Scandinavian social policy has its roots in
kin support, altruism and voluntary help as elsewhere, but after the Reformation from
Catholic to Lutheran belief, responsibility for poor relief was shifted from the Church to
the State. As State power was weak, local civil authorities (municipalities) were delegated the task of taking care of those who could not support themselves. This started
the development of state rule, and laid the foundations for local public authorities’ role
in policy management but also for their close cooperation with the central authority.
The powers of these earthly rulers were consolidated with ensuing financing mechanisms that slowly but surely came to be based on taxation.
Also importantly, the Scandinavian region had a different landholding practice than in
most other parts of Europe, implying a relatively strong and autonomous position for
the peasant population. Family-run small farms were the basic production units. Due to
late industrialisation, farmers were an important part of the population and a big social
class of their own, unlike in Britain where peasantry slowly became unimportant in the
process of industrialisation and unlike in some parts of Europe where feudal arrangements prevailed. (Alestalo and Kuhnle 1987.) Independent farmers became one cornerstone of the Scandinavian tri-polar class structure, together with the working class and
upper class (ibid.). This differing class structure and party basis underlines the importance of building coalitions for governments but may also hint at why ideas of citizenship and equal rights landed in fertile ground and were embraced by both farmers and
workers, enabling cooperation and consensus. Social policy was not just an “arbeiterfrage”, but included concern for the rural population and this way underlined the importance of universalistic solutions.
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Thirdly, the role of (leftist) politics was stressed in research of the 1970s and 1980s, and
is underlined in Esping-Andersen’s regime theory. The period between WWI and WWII
saw the social-democratic efforts to build a “people’s home” (folkhemmet) in Sweden,
an ideological and practical development that was in stark contrast with Bismarckian
social insurance thinking that prevailed in Continental Europe. The exceptional majority rule of the social democrats in Sweden and their unique reformist politics that distanced itself also from the poverty alleviation tradition is undoubtedly the grounds for
laying so much importance on the role of politics in Scandinavia (Sternø’ 2004). Also in
Denmark and later in Norway, social democratic parties consolidated their importance
in democratic decision-making and opted for a reformist strategy to change society.
Korpi and Palme (2003) argue partisan politics still remains significant also for understanding present-day policy development and retrenchment.
Fourthly, the important role of women should be highlighted separately. Right from the
very beginning, their labour power was necessary, both in the farm and in the factory.
Women were also active reformers, initiating many arrangements for child care, elderly
care and other care arrangements, that later formed the backbones of the Scandinavian
service state. They also fought for education and were active in taking a stance on proposed social policy solutions, depending on how they treated women. Later, from the
1960s, the Scandinavian welfare state was strongly developed towards enabling and
continuing women’s paid labour. Individual taxation made economic sense for women
to take part in paid employment. Emancipatory thinking, right for abortion and methods to control fertility gave more say to women and underlined their own choices.
Child day care arrangements and development of other care services were important
for self-determination and gender equality. These services also formed an expanding
sector of paid labour and paved way for the growth of female employment. Legal responsibilities to take care of one’s elderly relatives were removed as rights and access to
non-stigmatising services were pronounced.
The relative role for such explanations, timing of changes, powers and cleavages in the
society and the form new responses took was of course different in the Nordic countries. While historical similarities and shared practices can afterwards be lifted up, it is
probably only after WWII that the Scandinavian countries - in favourable economic and
demographic conditions - started to emerge as a group with relatively similar social
policy designs, although here one should point to differences between old and new
Scandinavia, i.e. between Denmark and Sweden as opposed to Norway and Finland,
which had emerged as independent nation-states only in the 20th Century. Especially
Finland was a welfare laggard (Kangas 1990, Kosonen 1990).
In summary, reasonably similar structural conditions, parallels in political mobilisation
and class-based politics, importance of public responsibility in the form of decisionmaking and administrative structures underlining both central and local authorities’
role and later involving a say for the social partners, constitute structural factors that
stand out in global examination. Both women’s position in the society and their activity
in its development, and partisan politics have greatly contributed to social policy design. Further, similarities between countries favoured close contacts, diffusion of ideas,
and learning from each other. Contacts between politicians and civil servants were
tight, and joint forums and the Nordic Council served as clearing houses for ideas and
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best practices. As a result, the Nordic countries bear some “family resemblance” when it
comes to crucial ingredients for welfare state development, especially in a broader
comparison (Castles 1993; Therborn 2000).
Characteristics of the Scandinavian model
Differences in historical development and causal factors legitimise treating all cases as
unique (e.g. Baldwin 1996). With a similar critical tone towards typologies and regime
analysis, Kasza (2002) argues that for various reasons - the cumulative nature of welfare
policies, the diverse histories of policies in different welfare fields, the involvement of
different sets of policy actors, variations in the policymaking process, and the influence
of foreign models - national welfare systems fail to show internal consistency appropriate for the regime concept. Historical research has an eye for differences, and thus it is
perhaps not surprising that the most recent historical reappraisal assessed the Nordic
model by looking at its “five exceptions” (Christiansen et al. 2006). Also earlier, it has
been suggested that rather than a single uniform Nordic model, we have several Nordic
models (Mjøset et al. 1986), or different routes, e.g. to pension schemes (Salminen 1987).
Whereas historical studies and many intra-Nordic comparisons point to differences,
social policy research has shown similarities in institutional designs in broader comparisons. Already by mid-1980s research had accumulated considerable evidence that
the Nordic welfare states had developed a 'distinctive welfare state model' (see Erikson
et al. 1987; Esping-Andersen and Korpi 1987; Esping-Andersen 1990; Kolberg 1991;
Hansen et al. 1993). We have already referred to the role of the State as crucial ingredient of the Nordic model, but here we lift up also the design of social insurance schemes,
the role of services, the relation with labour market, and the interplay between different
characteristics in contributing to outcomes.
The extensive role of the State and scope of public policies became common knowledge
in the 1950s and 1960s in spending-based comparisons. Sweden had a greater share of
public expenditure and a higher share of social expenditure in relation to GDP than
most other countries, accompanied by higher taxation. These characteristics later started
to unite the Nordic countries. Yet, as Esping-Andersen and other Nordic scholars have
pointed out, redistribution strategy is formed by the content of social rights rather than
with expenditure levels.
Focus of research changed to how the welfare state operates, but the scope and role of
public policies was in fact further underlined in the 1970s and 1980s when the “politics
matter” school showed how left power was related to the expansion of legislated social
rights. The nature of social rights was investigated especially with social security benefits. It was shown how in addition to basic security, most social insurance schemes had
an earnings-related component applied universally to all workers, making their systems
“encompassing” in contrast to other countries where only flat rate basic security or
earnings-related occupational schemes dominated and where coverage criteria and social security patterns were different (e.g. Korpi 1980, Palme 1990, Kangas 1992). Palme
(2000) has synopsed that by establishing a universal model of social protection, where
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benefits and services based on residence were combined with earnings-related social
insurance programmes, the Nordic countries followed a distinctive path.
The social rights –perspective has pointed out that the Nordic countries’ policies are
based on universalist membership criteria. Membership was often based on citizenship,
later on residence. Institutional solutions were favoured, residual thinking a caveat.
One of the aims in developing public solutions was to normalise social security recipiency and get away from stigmas associated with receiving public support. In research,
collected data on institutional features were also used to explain outcomes in people’s
welfare. Resultant cross-national comparisons of institutional features aimed at explaining why the Nordic welfare states achieved lower income inequality, lower poverty
rates, smaller differences in levels of living and more pronounced gender equality (e.g.
Fritzell 2001).
Cumulative evidence about the diversity in schemes and their impact on outcomes was
the grounds for underlining the interplay between different welfare state
characteristics. The most known product showing the effects of social rights design is
the article by Korpi and Palme (1998) on the paradox of redistribution, where they show
how social policies targeted at the poor are poor in abolishing poverty. Instead, so their
analysis shows, encompassing welfare states achieve more equal income distribution
and lower rates of poverty. Consequently, e.g. Palme (2006) has argued the key for
understanding the effect of the welfare state lies in the institutional design—in the level
and distribution of social rights. Korpi and Palme (2004) have argued the Nordic
strategy of redistribution contains both generosity and broad coverage in transfers, as
well as a service bias, which necessitated higher social expenditure but also led to more
even income inequality. Also Abrahamson (1999) has underlined the interplay of
characteristics: the difference is not just with how cash benefits have been designed, it is
the whole welfare provision (including services) that is distinct.
Both in Esping-Andersen’s regime typology (see Chapter x) and in the work of the
Stockholm school the emphasis was in social insurance and cash benefits, in their coverage, financing shares and compensation rates. Such a focus partly triggered feministinspired social policy research that highlighted diversity between countries from a gender perspective (e.g. Lewis 1992, Orloff 1996, Sainsbury 1990). Assessing welfare state
development in Scandinavia from women’s perspective, Birte Siim (1994), Arnlaug
Leira (1987) and Helga Hernes (1987) have pictured the Scandinavian welfare state as
woman-friendly, giving them autonomy and allowing them the possibility to act independently in politics, in the labour market and as working mothers. While today in
many countries the role of services is highlighted as beneficial for gender equality,
woman-friendlyness is not just a result of service policy. It also stems from choices that
define the rights to participation, social insurance and services. Citizenship as one of
core entitlement principle, and individual rights and personal need assessment in the
granting practice also reduced the dependency of women from their spouses. The
Scandinavian welfare states have been dual-earner societies, in contrast to Continental
and Southern European countries where the male-breadwinner ideology defined relations between man and woman and directed the way social insurance was developed
and how the role of family was understood.
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While the role of services has been highlighted from the feminist perspective, it was
Kohl (1981) who first pointed out public provision of services as a distinguishing characteristic in expenditure-based comparisons. In the 1990s, our understanding of diversity has slowly been supplemented and challenged by adding comparisons of services
in the field of comparative welfare research (Alber 1995, Anttonen & Sipilä 1995, Sipilä
et al. 1997, Lehto 1999, Rostgaard 2001, Daly 2000, Kautto 2002). The most
distinguishing feature of the Nordic welfare states to emerge is the local, publicly
funded and produced health and social service provision, aimed to cater for all needs
and the whole population. The extraordinary powers of Nordic local authorities are
underlined in comparative research, especially local taxation rights, wide tasks and
legislated autonomy emerge distinctive. Among service provision, the extent and
nature of social care services, such as public child care services and elderly care have
varied greatly across countries. Comparative health services research however, shows
an uneasy fit with the regime typology, and leaves room for debating Nordic unity
(Bambra 2005).
We must finally stress the relation between social policy and employment. Importantly,
the Nordic countries have always had high employment rates, both for men and
women, and also among older workers. Nordic social policies were never designed as
safety nets that would allow a comfortable life in hammocks, but as trampolines that
would favour risk taking and job change in dynamic labour markets. Investments in
social policy were seen worth their price to the extent they led to a higher level of and
more even welfare, and contributed to the maintenance of full employment and
economic growth. Generous social policy in the Nordic fashion is possible only when a
maximum of the population is mobilised in the labour market and taking up of benefits
is short-lived. This is one explanation why publicly financed activation measures,
understood as investments in people’s skills and capacities in terms of vocational
training, supported jobs etc. have been pronounced. Their roots are in Sweden and
more parts of macroeconomic adjustment and steering than social policy (Regnér 2000).
There are other important facets of welfare regimes - for example administrative practices, political processes and decision-making structures, cultural differences, extent of
private welfare solutions, or the role of voluntary organisations – that could be taken
up. However, as comparative data is scarce and harder to collect, possibly with no
points of comparison, it is not straightforward what kind of conclusions should be
drawn.1
With the extension of research to include more domains and deeper analysis, and given
the sometimes contradicting evidence on similarities and differences, it probably isn’t
possible to provide one single accurate characterisation of the Nordic model. With the
increase of comparative research, the contours of the concept Nordic model have been
broadened.
Incorporating the role of ideas is an obvious candidate for further enlargening the content of the Nordic model. Recently a book edited by Kildal and Kuhnle (2006) has posed
On the other hand, some features that are relevant for understanding Nordic policy designs have been
addressed in different research genres, such as in growth literature, economy and labour market research,
legal studies, or in the study of industrial relations.
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the question whether it is the institutions or the moral commitments behind them that
matter. They argue welfare programs are essentially expressions of moral conceptions
and values. Their book seeks to analyse the normative foundation of the 'Nordic welfare
state model' with the help of a number of Nordic authors who examine the main normative principles in the model, their origins and relationships. It is argued crucial Nordic principles include 'universalism', 'public responsibility for welfare', and 'work for
all'. More broadly, different value studies based on World Value Surveys and European
surveys also contribute to understanding the difference of the Nordic region (e.g. Ervasti et al. 2008) and to relating changes in the environment, policy practice and people’s expectations with policy adaptation.
One of the conclusions of this treatment of Nordic characteristics is that to speak of
Scandinavian distinctiveness could not be regarded as revolutionary at the time when
Esping-Andersen’s Three Worlds of Welfare Capitalism was published in 1990. Firstly, a
Scandinavian route had been presented. Secondly, many of the features EspingAndersen was referring to had been found in earlier research, albeit perhaps with different notions, data and method. Thirdly, the interplay between different features had
been discussed, as well as the relationship between public and private arrangements.
Interest had been shifting to including outcomes in comparative studies. Even the notion “regime” was already in use.2 So, the regime theory can be read as a combination of
insights from earlier studies.
In a way Esping-Andersen gave a concrete form to Titmuss' abstract typology by
providing it with empirical evidence, also for non-Nordic countries. (see EspingAndersen 1990:20, 1996 and 1999:74; see also Titmuss 1958 and 1974; Wilensky and
Lebaux 1958). While characteristics of the Scandinavian model were to large extent
known, it was the identification of three different regimes and concomitant theoretical
insights that struck the research community and explain continuing interest to EspingAndersen’s work. As often is the case, establishing meaningful differences necessitates
the existence of other categories that are brought about by comparison. The corporatistconservative and liberal regimes provide “others”, useful references for establishing
difference to the Scandinavian policy package.
A Nordic model forever?
One of the backgrounds for stressing social rights over expenditure was similarities in
social spending levels. Many Continental welfare states also had high expenditure
budgets, but the policy design, coverage of schemes and benefit rules were very
different to the ones in Nordic countries. Welfare regime analysis is based on the fact
that it is the content of policies that matter more for outcomes than spending per se.
High welfare expenditures haven’t been a goal but arise from the chosen redistribution
strategy. On the other hand, one could argue the kind of content designed for social
Sweden was often taken as an example to highlight differences in the roles played by State and markets,
between public and private arrangements (Esping-Andersen 1985, Kolberg 1999, Lee & Rainwater 1992).
In fact, in this literature the word “regime” was used to describe the pattern formed by the division of
labour and interplay with public and private.
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policy in Nordic countries probably cannot be achieved with low expenditure.
Simultaneous ambitions in cash benefits and accessible professional high class services
that effectively combat poverty and even out differences in living conditions come with
a price.
Table 1 summarizes parts of the above discussion and highlights diversity in key indicators with OECD data for 1990, when Three Worlds of Welfare Capitalism was published
and before Finland and Sweden experienced their macroeconomic crises. As research
literature on social rights testifies, there is no shortcut to show how social rights across
welfare state schemes differ across countries and over time. On the other hand, we have
international data on expenditures with long time series and constant efforts at achieving comparability. Here we intend to make use of that data and have chosen indicators
that have endured and attracted most references and citations as Nordic characteristics
in the long run and, given the above discussion, should be regarded as aggregate indicators.
Levels of taxation, social policy spending, and public expenditure on services are best
available proxies for the scope of the public sector. These spending figures are put to
perspective with the help of GDP. Surely they should not be taken as substitutes for the
policy mix, nor as testimony to the allocation of resources, not to speak of efficacy.
Comparative gini figures on income inequality serve here as a relatively uncontested
outcome indicator. The data is selected from two main OECD sources (OECD factbooks
and OECD.stat). The countries have been arranged according to typology literature into
different groups of countries. The Nordic countries are put at the top of the table to
highlight their affinity with the selected indicators. Country rankings intend to help the
reader to judge each country’s position in the OECD group, its proximity to other countries, and to assess intergroup similarity.
- Insert Table 1 about here As can be seen from table 1, in 1990 there was reasonably clear Nordic similarity. For
sure, Sweden as the flagship of Nordic family scored highest and Denmark was her
nearest company. In taxation Finland and Norway came very close, but for social
spending these two countries could as well feature in the company of Continental welfare states. Spending figures for public services distinguish the Nordic group very
clearly from other groups, although France and Canada have high service efforts as
well. Distracting in-kind expenditure from total social expenditure gives us spending
for cash benefits. Although hiding programme differences, as an aggregate figure this
spending item does not reveal substantial differences. The clearest similarity is shown
with the gini coefficient that ranked these four countries as having most even income
distribution in the OECD group. The table also shows reasons for treating Iceland with
special care.
When we examine these groups of developed countries with means and standard deviations, we can state the Nordic countries did stand out as a distinct group on all of
these dimensions. Their average tax rate was 42,9%, social spending 24,3%, service
spending 11,3% and gini 21,7. Also, if we relax on our criteria and do not think it neces-
10
sary to score high on all dimensions but to score high on most dimensions, inter-group
similarity and affinity to a Nordic ideal-type was rather clear.
The closest group can be found from the conservative Continental welfare states, where
the treatment of Switzerland or Italy could be debated but where an alternative positioning would not greatly affect the grand picture. In the light of these figures, the UK
and Ireland could as well be grouped with other English-speaking countries. As can
also be seen from table 1, other OECD countries were a world apart, as were former
CEE-countries at the time of their newly gained sovereignty.
There is obviously no one year that could mark a turning point in welfare state clustering or trajectories. If there was one, 1990 could be a feasible suspect as concern about
the fate of the Nordic model started to raise. At that time the bi-polar world order that
had reigned since the end of WWII collapsed, Soviet Union ceased to exist and CEE
countries gained a new independence and embraced market economy. The alternative
character of the Nordic model in system competition was wiped out. Early 1990s marks
also a period of economic, employment and fiscal crisis for Sweden and Finland, which
resulted in serious re-assessment in these countries concerning the role of public policy.
In Finland and Sweden, benefit cuts were introduced as saving measures to balance
debts and deficits ensuing from high unemployment. Norway and Denmark faced a
very differing context. Thirdly, early 1990s also marks a geopolitical watershed as
Finland and Sweden abandoned EFTA and started their integration to the EC, unlike
Norway and Iceland that wanted to stay out. In the integration process, Finland later
adopted Euro as its currency while Denmark and Sweden sticked with their kronas,
which further differentiated the mix of Nordic solutions. Moreover, at least since 1990s,
global competition was increasing, European Single Market underlined barrier-free
competition in the EU, and deregulated capital sought lucrative investment
opportunities, often guided by cheaper labour costs, putting pressures on governments
how to treat capital and affecting social partners’ relations. Inter-Nordic reactions to
such challenges were dissimilar. Uneasy feelings arose in the Nordic family, and beliefs
that differing economic development and diverse policy adjustment would result in
different outcomes in terms of people’s well-being and to cracks in the Nordic model
were widespread.
In this context, a large joint Nordic research endeavour aimed to study the evolution of
the Nordic model since the more even 1980s (Kautto et al. 1999, 2001). A key conclusion
of the several studies was that the Nordic countries still formed a distinct group of nations in terms of welfare policies in the mid-1990s. Only limited convergence with the
rest of the OECD countries could be observed with the available comparative data. The
obvious potential for restructuring coming from macroeconomic as well as demographic and political pressures had not been manifested in the form of fundamental
changes in benefit or service provisions. Most forms of cash benefits had been reduced,
especially in Sweden and Finland, but not to a dramatically bad level in comparative
terms. The existing safety net still offered universal coverage in the mid-1990s. When it
came to services all the known Nordic hallmarks were still present: universalism, high
quality, tax funding and public provision. Other studies have confirmed this lack of
evidence for a major welfare backlash ‘retrenchment’ or ‘dismantling’ in the 1990s
(Kuhnle 2000, Nordlund 2003, Castles 2002).
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These results were also contrasted in a larger European comparison as gradual and
small changes starting in the 1990s and combined with growing burdens of dependency
and changed economic and political conditions nevertheless had created potential for
welfare reform (see Kautto et al. 2001; Kautto & Kvist 2000). The Nordic countries situation was now compared to other Western European welfare states with different dimensions. As to results, a less firm stance concerning clustering of countries was
adopted. A general conclusion from the larger comparison was that it was not possible
to give a simple and straightforward 'yes' or 'no' answer to the question of Nordic distinctiveness. In a number of aspects one could find an empirical equivalent to the idealtypical Nordic model, and in others not, while in some aspects only a few of the countries seemed to resemble or approach the ideal-typical trait.
Still, the Nordic countries as a group still tended to be different from other groups of
Western European countries in key dimensions of policy and welfare. Taken together,
there was more evidence for similarity than dissimilarity. Although convergence did
seem to be occurring in some areas of the welfare state, overall developments tended to
be characterized more by parallel trends. Sometimes even outright divergence was apparent as the empirical studies also demonstrated that a variety of policy responses to
'common pressures' exists. (Kautto et al. 2001; Kautto & Kvist 2000.)
Thus also Nordic welfare states change, but in larger comparison this change may not
be big enough for abandoning main crust of regime thesis. This is also the message from
Kangas (2004) who addressed sickness insurance benefits in 18 OECD countries asking
about the specificity of Nordic welfare states. He shows how up until 1985 the Nordic
programmes guaranteed better benefits than corporatist schemes, but also how the
situation has changed. More recently, the Nordic countries do not any longer provide
higher compensations. In this respect, these two groups of countries have clearly converged and simultaneously their distance from the countries with basic security or targeted schemes has increased. However, for coverage, the Scandinavian schemes have to
a great extent preserved their universality, whereas the other groups of countries have
lost a bit in their coverage.
Abrahamson (2003) set out to evaluate whether recent major changes in welfare provision were merely modifying the model or whether the Scandinavian welfare states were
converging towards some kind of European social model. Abrahamson argued there
were many first order changes (such as reducing benefits) but also a number of second
and third order changes that had occurred; i.e. the institutional setting and the objective
of the welfare states had changed during the 1990s. His conclusion was that the Scandinavian welfare states were undergoing a process of Europeanisation but were still distinct, although less so than a decade or two ago.
In sum, on the dimensions examined and looking at the results together, comparative
analysis after turbulence since the 1990s suggests some sort of Nordic similarity still
prevailed, although arguably to a slightly lesser degree and in a slightly altered version
than earlier. Research has provided us with more detailed information on how, when,
and where clustering has occurred, but also shown in which dimensions no Nordic
specificity can be detected. Welfare states have changed, and there are signs of conver-
12
gence in several instances, although not to the extent to abolish diversity. These convergence processes have meant that the distinctiveness of the Nordic countries has become
less evident than earlier.
- Insert Table 2 about here Part of this ongoing change may be captured by having a look at the same aggregate
indicators we presented earlier but this time for 2005/6 (Table 2). Firstly, we do not detect radical changes in countries’ relative positions. Even after a decade and a half, past
budgets continue to be good predictors for this year’s expenditure. Secondly, in the
light of also these figures, inter-Nordic dispersion in mid-2000 was somewhat more pronounced than in 1990, at least in their social spending. Thirdly, the Nordic countries
also appear less exceptional than in 1990. The redistributive budgets in the Nordic
countries show striking continuity (Nordic average of 24,2% for social expenditure and
11,3% for services) while OECD averages have risen by 3 and 2 percentage units. On
average the Nordic countries had a heavier tax rate in 2006, but less unique performance in income distribution.
With some indicators, one could even argue we rather have a big Northern European
cluster of countries rather than distinct Nordic and Continental (or Southern) clusters of
countries. The role of the State in France, Belgium and Austria appear as elevated as in
the Nordic countries. Nordic similarity remains reasonably apparent in taxing their citizens, yet also here we have other countries in the same company. Moreover, while laying weight to services is common in Scandinavia, it is no Nordic monopoly. The income
inequality indicator reveals convergence. In fact, OECD data on income inequality
shows inequality has grown fastest in Finland and Sweden over the past ten years, although from a low starting level. Overall, means and standard deviations now give a
much more mixed picture of country differences. OECD averages have risen while
Nordic averages have rather remained stable.
Farewell to Nordic unity?
Clearly, two tables with crude indicators are not enough for bold generalisations concerning the fate of a regime. However, in the lack of one systematic study covering all
crucial elements, this data together with the review provided should give the reader a
picture of changing welfare states. In addition to comparative data and research, one
should be sensitive to national studies. In fact, even if comparative studies often tend to
see changes as moderate, national studies in various Nordic countries point to bigger
transformations.
Palme et al. (2002, 2003) carried out a massive welfare commission analysis on welfare
trends in Sweden in the 1990s. Their analysis was a stock-taking overall assessment on
changes in different welfare policies (social security, employment, health, social and
education services) and with extensive data on well-being for different groups in Sweden. Their analysis pointed to a number of changes in the system and to unwelcome
developments in welfare, including a rise in disadvantage, income inequality, poverty
risk and increasing differences in levels of living. In the 1990s single mothers, people
born elsewhere than in Sweden, child families and the young experienced more hard-
13
ships than other groups and differences in incomes and living conditions had grown.
Decentralisation and privatisation of services, with market-oriented administrative
practices were also new to the Swedish reality. Their conclusion was that Sweden was
at crossroads at the beginning of the 21st century.
Many of the social policy researchers who have analysed the development of the Finnish welfare state in the 1990s have found not only changes in the system characteristics
but also detected an ideological shift that can be seen in the revision of goals and
changes in policy content. According to Kosonen (1998, 2002) and Julkunen (2001)
Finland has grown away from the Nordic normative tradition, and forgotten to emphasise social rights, equity and state responsibility. Kantola (2002) has underlined that a
real ideological shift took place among policy-makers in the early-1990s. Summing up
their multi-year study of the recession period, Lehtonen et al. (2001) concluded that
Finland had taken a step towards a more liberalistic policy. Anttonen and Sipilä (2000),
in turn, have argued some of the changes point towards a conservative model. Kautto et
al. (2004) have shown increasing differences in people’s living conditions.
Assesments do not look as groomy for Denmark. Greve (2004) has asked whether or not
Denmark is still a universal welfare state. This was done by first offering a comparativebased analysis of the Nordic countries on central welfare state parameters. Second, the
article utilized a case-based analysis in core areas of the Danish welfare state—pensions,
unemployment and early retirement benefit—to assess the distinctiveness of the Danish
model. Greve concluded that, notwithstanding the Danish model is more mixed today
than it used to be, it continues to be distinct in areas such as equality, full employment,
a high level of spending on social security and an active labour market policy. Kvist
(2003) in turn has underlined how Danish development in the 1990s was favourable in
contrast with poorer performance in the 1970s and 1980s. Activation, obligations and
targeting of benefits were part and parcel of reforms, and local authorities were given
even more say in activation measures and organising services. Employment and the
economy developed favourably, and close to the turn of the Century, Denmark had encompassing welfare policies, progress in most aspects, with low unemployment and
without significant increases in inequality.
Also in Norway welfare state development seems more mixed. In Norway, welfare
state development has contained an emphasis on the responsibility to work. Obligations
to work and qualifying conditions for unemployment security have been amended. On
the other hand, the welfare state has been strengthened in other areas, especially in
pensions and family policy. In the health and social care sector a focus on efficiency and
market solutions has challenged the primacy of public sector provision, and Norwegians have seen an increase in inequity between municipalities. According to Botten el
al. (2003) welfare state in Norway “seem to be largely intact”, although reform processes are complex and ambiguous. Some social rights have been strengthened, while
others tied to personal responsibility. (Botten et al. 2003.)
As these national studies show, Nordic welfare states do change, and they change differently. There is no ground to believe that the once launched idea of a Nordic model is
a systematic whole cast in concrete that will never change. New policy lines have been
adopted while some of the old ones have been abandoned or transformed. Also core
14
ideas of policies are on the move and debated; Nordic universalism is being reconsidered (Anttonen 2009) and notions and practices of citizenship have been assessed as
social duties feature stronger in policy rhetorics and agendas (Hvinden & Johansson
2007). On the other hand, comparative studies have spoken for path dependency; once
institutions have been established, they are slow to change (Pierson 2001). A different
thing is, though, that even if the changes themselves were slow, the introduction of new
mechanisms may have far-reaching consequences and the underlying goals may have
undergone a more radical transformation. For instance the pension reforms that have
been carried out will have far-reaching consequences in the future. The verdict is still
out there, and it is this ongoing change that has led the Nordic Council to finance a
comparative reassessment of the Nordic model (www.reassess.no). It remains to be seen
whether conclusions from forthcoming new studies still see a distinct Nordic welfare
model warranted.
Conclusion
In the most general sense, the Nordic model can be understood in terms of broad, tax
financed public responsibility and legislated, collective and universalistic solutions that
respect employment interests yet aim at welfare and equity goals. The global interest to
the Nordic model is best explained by Scandinavian countries’ long record of good economic and social performance.
While this kind of a general understanding may have lasted in people’s minds and as
useful illustration over the years, this chapter has argued that the long-lived concept
“Nordic model” can be and has been understood in different ways. Historical studies
have pointed to similarities that may explain the emergence of welfare state institutions,
but also to inter-Nordic diversity. Besides structural factors, the role of socialdemocratic or leftist politics and concern for women’s position was important in the
construction process. In the 1970s and 1980s, Nordic unity was constructed with similarities found in the design of welfare state institutions and social rights. In regime
theorising, the contents were extended to encapsulate causal factors, welfare state institutions and their interplay with other social institutions, but also their outcomes. Difference to other regimes highlighted reasons to be interested in Nordic policies. The model
may have looked most robust in the early-1990s, despite new winds of change already
blowing at that time.
Since welfare regime analysis, the remit of dimensions that theoretically should be
taken in analysis have grown tremendously. Empirical studies often cannot study many
issues at the same time. One of the solutions has been that the Nordic model has often
been conceived as an ideal-type, serving as yardstick for measuring change, or simply a
useful reference for grounding an empirical analysis. No major theoretical revisions
have emerged. Most recent comparative efforts and national studies have slowly called
into question the uniformity between Nordic countries and their path-dependence, as
well as brought new fields in the analysing practice.
As recent comparative studies show, welfare state adjustment in the 1990s and 2000s
along the dimensions examined seems to have diluted, if not abolished the kind of
Nordic distinctiveness that has featured these countries in earlier cross-national com-
15
parisons. So far, critical assessments have been based on individual country studies,
especially for Finland and Sweden if not so much for Denmark and Norway, and for
some dimensions of the welfare state, most notably concerning duties and obligations of
the welfare recipient and developments in the provision of services. Seen from afar,
welfare states in the Nordic cluster still may all look the same, as testified e.g. by their
continuing good performance in international organisations’ indicator lists. From a
closer perspective, Nordic exceptionalism or unity is not as straightforward as it was
two decades ago.
References
To be added later.
16
Table 1: Key indicators on the role of the State in social policy in the OECD group, 1990
Total tax revenue as
% of GDP
1990
Rank
Public social
expenditure as % of
GDP
1990
Public expenditure on Distribution of house
in-kind benefits as % hold disposable inco
of GDP
me among individuals
Rank
1990
Rank
Mid-1980s
Rank
Sweden
52,7
1
30,5
1
12,5
1
19,9
1
Denmark
46,5
2
25,5
2
10,2
2
22,8
3
Finland
43,5
3
24,5
5
9,1
4
20,7
2
Norway
41,0
7
22,6
8
8,3
6
23,4
4
Iceland
30,9
17
14,0
21
8,3
6
..
France
42,0
5
25,3
3
8,8
5
27,6
9
Netherlands
42,9
4
24,4
6
6,7
10
23,4
5
Belgium
42,0
6
25,0
4
6,7
10
..
Austria
39,6
8
23,7
7
6,3
14
23,6
Germany
34,8
14
22,5
9
7,6
8
..
Luxembourg
35,7
13
21,9
10
5,8
17
24,7
Switzerland
26,0
22
13,5
23
4,8
23
Italy
37,8
9
19,9
13
6,5
12
30,6
13
Spain
32,5
16
20,0
12
5,6
18
36,7
18
16
6
7
Greece
22,8
25
18,6
14
4,5
25
33,6
Portugal
27,7
20
13,7
22
4,0
26
..
United Kingdom
36,3
11
17,2
16
7,3
9
28,6
11
Ireland
33,1
15
15,5
18
5,2
20
33,1
15
United States
27,3
21
13,4
24
5,3
19
33,8
17
Canada
35,9
12
18,4
15
9,8
3
28,7
12
Australia
28,5
21
14,1
20
6,0
15
31,2
14
New Zealand
37,4
10
21,8
11
6,0
15
27,0
8
Japan
29,1
18
11,2
25
5,0
22
27,8
10
Korea
18,9
25
3,0
28
1,7
29
..
Mexico
17,3
26
3,6
27
2,9
27
45,1
20
Turkey
20,0
24
7,6
26
2,3
28
43,5
19
5,1
21
..
Czech Republic
..
16,0
17
Hungary
..
..
..
Poland
..
15,1
19
33,9
17,9
OECD average
..
..
4,8
24
6,4
..
29,3
Sources
OECD.Stats: Social and welfare statistics, social expenditure - aggregated data
OECD Factbook 2008: Economic, Environmental and Social Statistics
Definitions from OECD
Total tax revenue as a percentage of GDP indicates the share of a country's output that is collected by the government
through taxes.
Public social expenditure comprises cash benefits, direct "in-kind" provision of goods and services, and tax breaks with
social purposes.
Public in-kind expenditure measures other than cash benefit expenditure, i.e. public consumption of goods and services
plus capital investment in care infrastructure.
Distribution of household disposable income among individuals is measured by gini coefficients.
17
Table 2: Key indicators on the role of the State in social policy in the OECD group, 2005/6
Total tax revenue as
% of GDP
Sweden
Denmark
Finland
Norway
Iceland
2006
50,1
49,0
43,5
43,6
41,4
Rank
1
2
6
5
9
Public social
expenditure as % of
GDP
2005
29,4
26,9
26,1
21,6
16,9
Public in-kind
expenditure as % of
GDP
Rank
1
4
7
12
23
2005
13,6
11,6
9,9
10,1
11,1
Rank
1
2
7
6
3
Distribution of house
hold disposable inco
me among individuals
2000
24,3
22,5
26,1
26,1
..
Rank
2
1
6
7
..
France
Netherlands
Belgium
Austria
Germany
Luxembourg
Switzerland
44,5
39,5
44,8
41,9
35,7
36,3
30,1
4
10
3
8
17
16
24
29,2
20,9
26,4
27,2
26,7
23,2
20,3
2
16
6
3
5
9
18
10,8
8,5
9,1
8,2
9,9
8,8
7,8
4
14
10
17
7
11
18
27,3
25,1
..
25,2
27,7
26,1
26,7
10
3
..
4
11
7
9
Italy
Spain
Portugal
Greece
42,7
36,7
35,4
27,4
7
13
18
28
25,0
21,2
23,1
20,5
8
14
10
17
7,7
7,4
..
7,1
21
23
..
24
34,7
32,9
35,6
34,5
21
18
22
20
United Kingdom
Ireland
37,4
31,7
11
22
21,3
16,7
13
24
10,5
7,7
5
21
32,6
30,4
17
14
United States
Canada
Australia
New Zealand
28,2
33,4
30,9
36,5
26
20
23
15
15,9
16,5
17,1
18,5
27
26
22
21
7,8
9,4
8,7
8,4
18
9
12
15
35,7
30,1
30,5
33,7
23
13
15
19
Japan
Korea
Mexico
Turkey
27,4
26,8
20,6
32,5
27
29
30
21
18,6
6,9
7,0
13,7
20
30
29
28
8,1
3,8
4,9
5,6
17
29
27
26
31,4
..
48,0
43,9
16
..
26
25
Czech Republic
Hungary
Poland
Slovak Republic
36,7
37,1
34,3
29,6
13
12
19
25
19,5
22,5
21,0
16,6
19
11
15
25
7,8
8,7
4,9
6,1
19
12
27
25
26,0
29,3
36,7
..
5
12
24
..
OECD average
36,2
20,7
8,4
Sources
OECD.Stats: Social and welfare statistics, social expenditure - aggregated data
OECD Factbook 2008: Economic, Environmental and Social Statistics
Definitions from OECD
31
Total tax revenue as a percentage of GDP indicates the share of a country's output that is collected by the government
through taxes.
Public social expenditure comprises cash benefits, direct "in-kind" provision of goods and services, and tax breaks with
social purposes.
Public in-kind expenditure measures other than cash benefit expenditure, i.e. public consumption of goods and services
plus capital investment in care infrastructure.
Distribution of household disposable income among individuals is measured by gini coefficients.
Notes
Tax figures for Australia, Iceland, Japan and Poland are from 2005. OECD average is from 2005.
Social expenditure for Portugal is from 2004.
Health expenditure for Australia, Hungary and Japan are from 2004. For the Netherlands, the figure is from 2002.
.. Not available
18