The Nordic Way

Transcription

The Nordic Way

EQUALIT Y, INDIVIDUALIT Y AND SOCIAL TRUST
The Nordic Way
What’s so Special about the Nordics?
In international comparisons of global competitiveness, the Nordic countries are
almost always found at or near the top. In one meta-index that is an aggregate of 16
different global indices (competitiveness, quality of life, equality, etc.) the four main
Nordic countries top the list.1
What are the reasons? Is there such a thing as a common “Model” particular to the
Nordic region and if so, will it last? Is it transferable to other parts of the world?
In this brief we provide bits and pieces of some plausible explanations for the relative
success of the Nordic societies. We hope these experiences can improve the understanding of our way of doing things and inspire debate and development in other
parts of the world. Shared values are also about sharing experiences with others.
The fact that Nordic countries show resilience during the recent financial crisis
largely seems to be the result of deep crises in the Nordic region in the 1980s and
90s. During these crises, the Nordic countries renewed and modernized their respective economies.
Klas Eklund (senior economist at SEB and adjunct professor of economics at Lund
University) consequently claims that what we ought to search for is not a crisis-free
“Nordic model” but rather a “Nordic experience,” efficient ways to handle deep crises. Social cohesion and political transparency seems to have played a role in making tough reforms possible.
The second article by Henrik Berggren (historian, former political editor of Dagens
Nyheter) and Lars Trägårdh (historian, professor at Ersta Sköndal University College) addresses precisely this issue. Many people see the Nordic countries as some
kind of compromise between socialism and capitalism. According to BerggrenTrägårdh, it is instead the combination of extreme individualism and a strong state
that has shaped the fertile ground for an efficient market economy.
Kristina Persson (Executive President of Global Utmaning and Chairman of the
Nordic Association) underlines the dimension of inclusion in the previous authors’
arguments. She takes a closer look at the Swedish welfare system and presents
policies that focus on productivity, social protection and inclusion. She sorts out the
importance of local self-governance and the role of taxes in Sweden and in other
Nordic countries.
Barbro Hedvall (journalist, special advisor and former editorial writer) describes a
region in which women do not have to choose between family and career, in which
women have essentially the same political posts as men, and in which they are
slowly getting a footing in the corporate power sphere. On paper women have long
had the same opportunities as men, and in recent years attitudes in Nordic societies
regarding gender roles have begun to genuinely change.
Economic performance also benefits from low transaction costs, generally delivered
by social trust, adherence to laws and low levels of corruption. According to several
well-known studies2 it is the most modern and individualistic countries, most notably the Nordic countries, that are characterized by such broad social trust.
We believe—like the five authors— that it is not enough to share values. Values
also have to be translated into institutions, rules and legislation. Cultural and social
values are not easily transferable across borders, but systems and policies that have
proved to work well might still serve as an inspiration for others.
Stockholm, February 1, 2012
Annika Rembe
Kristina Persson
Director-general, Swedish Institute
Director, Global Utmaning
and The Nordic Association
1 Tällberg Foundation, 2009
2 World Values Survey, Eurobarometer, European Social Survey, European Values Survey
Klas Eklund
Nordic Capitalism: Lessons Learned
D
uring the recent financial crisis, the four
main Nordic countries showed resilience.
They suffered during the downturn but
rebounded fairly quickly. None of them went
through any devastating banking crisis. Although
the Danish real estate market took a beating,
none of these countries is showing dangerous
budget deficits, and none of them has current account problems.
Their resilience has rekindled international interest in what is sometimes called “The Nordic
Model.” However, one should be very careful
about using such a term. It is difficult to find any
kind of common Nordic economic blueprint that
is transferable to other countries. Actually, in important respects, the Nordic countries follow different economic strategies. This is most visible in
their stance toward the euro. Finland is a member
of the European Union (EU) and has adopted the
euro. Denmark is an EU member, with an opt-out
from the currency union—but still keeps its cur-
4
rency tightly pegged to the euro. Sweden is also
an EU member with no opt-out—yet is nonetheless not a member of the euro zone and has
a floating currency. Norway, finally, is neither in
the EU nor in the euro zone. Four countries, four
different strategies.
Of course, there are economic similarities. All four
are small, open economies with high per capita
incomes. All have a rather large public sector with
high taxes, and all have inclusive welfare states.
But they have different histories and structures.
The richest Nordic country—Norway—largely
bases its accumulating wealth on oil and gas revenues. Denmark’s economy is based on transport
and agriculture. Sweden is successful in manufacturing, pulp and paper, telecom and design.
Finland’s industrial structure is similar to that
of Sweden but the manufacturing sector is not
as broad. Denmark and Sweden have the highest tax-to-GDP ratios in the world. Finland has
lower taxes.
NORDIC CAPITALISM: LESSONS LEARNED
5
Strong Nordic Competitiveness
Institutions
7
Innovation
Learning from Previous Crises
Infrastructure
6
5
Business sophistication
Macroeconomic
environment
4
3
2
Market size
Health and primary
education
1
Technological readiness
Financial market
development
Higher education
and training
Goods market efficiency
Labor market efficiency
Nordic (FI, DK, SE, NO)
United States
EU 27
When the World Economic Forum compiles its competitiveness index, this is based on a
weighting of twelve “pillars,” such as education, infrastructure, market efficiency, etc. In the
recent Report, the four main Nordic countries beat the EU in all different pillars. At the same time
the Nordics beat the US in nine out of twelve pillars, losing out only in market size (of course),
innovations and “labor market efficiency.” The latter definition, however, is debatable since the
“flexicurity” of the Nordic economies is another way of organizing the labor market than the
Anglo-Saxon way—different, but not necessarily less “efficient.”
Source: World Economic Forum Global Competitiveness Report 2010-2011
6
More importantly, the Nordic countries have not
been free from crises. On the contrary, I would
claim that one important reason for their relative
success today is the fact that they suffered deep
crises in the 1980s and 1990s—and were able to
learn from them. All of them used their crises
to modernize their economies, reforming rather
staid systems and making them more flexible.
In this sense the Nordic countries are turnaround
cases. Within a few decades they have gone from
poorly performing to strongly performing economies. But there is no clear common pattern in
their crisis strategies. The Danes started their
turnaround as far back as the late 1970s, the Norwegians had their crisis in the 1980s, while the
Swedes and Finns did not suffer theirs until the
1990s—then in a more brutal way.
Denmark used to have the most troubled
economy in the Nordic area, suffering from
both inflation and high unemployment. It
joined the European Union as early as 1973
(far ahead of Finland and Sweden) and decided early on that a fixed currency was necessary
to overcome inflation and lack of economic
policy credibility. In 1982 the Danish krone
was pegged to the D-Mark. A number of tough
austerity programs in the 1980s—notably the
“potato cure”—made stability possible and the
exchange rate credible, but at the same time
pushed up unemployment. As a response, la-
bor market policy became much more flexible.
Eventually, the result was low inflation and a
gradually improving labor market.
Norway suffered a prolonged financial and
real estate crisis in the late 1980s, after a mismanaged credit boom, which ended in a systemic crisis and the nationalization of major
banks. In the early 1990s, government, labor
and management made an agreement according to which tight fiscal policy should contribute to stabilizing production and employment
and wage policies should aim at competitiveness in the export sector, while monetary
policy was initially geared toward a stable exchange rate. During the European currency
crisis in 1992, monetary policy makers instead
adopted an inflation target and accepted a
floating currency.
In both Finland and Sweden, the 1980s were
years of high inflation and weak currencies.
Both nations had gone through several devaluation cycles, with ensuing high inflation.
Both—like Norway—had problems in controlling the aftermath of credit market deregulation, and both were hit by economic shocks in
the early 1990s. Finland suffered from the collapse of trade with the Soviet Union, and Sweden from high interest rates to protect a fixed
exchange rate. The result was banking crises,
followed by severe recessions with falling GDP
levels and rapidly rising unemployment. The
numbers were astounding. In Sweden, the
7
budget deficit peaked at 12 percent of GDP,
and the central bank’s key interest rate peaked
at 500 percent. Unemployment quadrupled. In
Finland, joblessness reached almost 20 percent. Not until hard currency policies were
abandoned in 1992 was it possible to lay the
foundations of a turnaround, but a period of
tight fiscal policies made the recovery painful.
tightening amounted to some 7-8 percent of GDP
in the mid-90s, mainly through expenditure cuts.
In Sweden, the national budget targets today are
much tougher than in the euro zone, requiring
the government to show a hefty surplus in good
years in order to obtain a small surplus over the
economic cycle as a whole, aiming to reduce government debt.
Nordic economic performance in the 1970s and
80s was not very successful, to put it mildly. Instead, all four countries suffered deep recessions.
In Norway, revenues from oil and gas now have
to be handled according to strict rules in order to
keep the government budget more or less balanced. The bulk of revenues is put into a sovereign wealth fund—the Government Pension
Fund Global—for future needs and investments.
Moreover, a“fiscal policy rule”limits the structural
non-oil budget deficit over a full economic cycle
to the 4 percent expected real return on the fund.
Since then, these countries have shaped up. The
reason, however, is not that taxes have been
hiked or benefits have become more generous or
any other such actions which many people may
associate with a “Nordic model.” On the contrary,
economic policy in all four countries, but to a different extent, has been modernized, not least by
market reforms.
Policy Makeover
The high inflation policy of previous decades has
been replaced by national inflation targets in both
Sweden and Norway, whose central banks have
been pioneers. Denmark and Finland, of course,
adhere to the ECB target. In this sense, they all
have inflation targets, albeit in the Danish case
via a fixed exchange rate. The sloppy budget practices of yesteryear have been replaced by strict
budget rules. In both Sweden and Finland, fiscal
8
In all four countries, several markets have been
deregulated. Taxes have been cut, as well as benefit levels. In Sweden, the tax ratio (total tax revenue as a share of GDP) has fallen from 56 percent
in the late 1980s to 47 percent this year. Expenditure has come down even faster, turning a budget
deficit into a structural surplus.
Both Finland and Sweden—mainly because of
the political trauma created by deep recessions—
were able to push through comprehensive reform
programs. In only a few years in the mid-90s, a
radically new macroeconomic framework was put
in place, with independent central banks, strict
budget rules, deregulation and lower benefit levels.
This framework has given both countries a stable
low-inflation environment. In Sweden, a new
partly-defined-contribution public pension system replaced the old defined-benefit system.
On top of that, Finland and Sweden were well
positioned to reap huge benefits from the “new
economy.” They have world class IT and telecom
companies, as well as a tradition of good international management. The result has been rapid
productivity growth. Denmark has benefited from
expanding global trade and increasing demand
for agricultural products. Norway, of course, has
gained from the ever-growing demand for commodities and energy.
It should be noted, though, that these four Nordic
countries have not been immune to the strains
suffered by other countries during the recent crisis. The Danish real estate market has taken a severe hit, due to its high pre-crisis valuation, and
private debt is still high. In Sweden, some banks
lent heavily to the Baltic countries, which suffered a terrible crash. Swedish real estate prices
have until recently been soaring—leading some
economists to fear that a new bubble is under
way. Still, as a group, the Nordics have fared better than most countries. And scarred from the
banking crises of the early 1990s, Nordic banks
did not venture into exotic and dangerous credit
derivatives.
In my mind, this relative Nordic success story
is largely due to the crisis management of the
1980s and 1990s. Here, of course, is a lesson to
be learned by continental European countries: a
swift and resolute reform strategy may yield better results than a wishy-washy, drawn-out one.
A Nordic Experience in
Crisis Management?
The policy lessons from the Nordic experience
show it is possible to regain stability, and for crisesridden economies to recover. We should, however,
be aware that in all countries it took deep crises to
trigger the necessary reform programs.
But this conclusion, of course, raises a more fundamental issue. What made it possible for the
Nordic countries to actually make good use of
their respective crises? President Obama’s former
Chief of Staff, Rahm Emanuel, famously quipped
“Never let a good crisis go to waste.” But many
countries do. How come the Nordic countries did
not waste theirs? Are there some common elements in the Nordic way of handling crises which
are beneficial and could be emulated in other
countries? Is there a certain “Nordic experience”
from which we might learn?
Once again, it is almost impossible to create blueprints for other countries, with different characteristics, in different times. And as seen above,
the four countries followed different strategies
as regards currency policy, income policy, etc.
Nonetheless, there are certain common traits in
9
Trustworthy Public Institutions in the Nordics
how these countries answered the challenges. All
four have a tradition of consensus-seeking policy
solutions—the obvious example here is the Norwegian deal between the government, labor and
management.
Global Competetiveness Index 2010–2011
7
Is there a certain
“Nordic experience”
from which we
might learn?
Also, their economies are
open and protectionism is out
of the question. Labor unions
are positive toward new technology. And they all—more or
less—adhere to the view that
sick leave and unemployment
insurance systems should be shaped in ways
which are both generous and growth-promoting.
This creates a certain social cohesion, which may
have beneficial effects on policy-making and
growth. The combination of liberal labor laws (it
is comparatively easy to hire and fire) with generous benefit levels and an active labor market
policy has been dubbed “flexicurity”, since it aims
to combine both flexibility and security.
6
DK
5
SE
FI
NO
4
3
2
1
1
2
3
4
5
6
This system, however, does not always function
as intended. It has not prevented unemployment
from rising over the long-term or during the recent crisis. And it has not been able to fully prevent
the creation of a large group of
structurally unemployed immigrants, who are now creating
rifts in previous homogeneous
countries. Nonetheless, it may
be an important part of the answer to the questions about the
Nordic experience.
However, this raises new questions and pushes
us to the next analytical level: How come the
Nordic countries have adopted this “flexicurity”
model, with its strong emphasis on labor and
work ethics? Here, the wretched economist must
leave the floor to the historians. Precisely this issue is analyzed in the next essay by Lars Trägårdh
and Henrik Berggren.
7
1st pillar: Institutions
One of the indices in the World Economic Forum Competitiveness report concerns the
transparency and efficiency of public institutions. In the recent report, four out of the six top
spots in this “pillar” were clinched by the main Nordic countries.
Source: World Economic Forum Global Competitiveness Report 2010-2011
10
11
Henrik Berggren / Lars Trägårdh
Social Trust and Radical Individualism
The Paradox at the Heart of Nordic Capitalism
I
n a broad global perspective, the Nordic region may seem of marginal significance. The
combined population of the Nordic countries
is only 25 million people, but in qualitative terms
there is an argument to be made for the viability
of the Nordic strand of capitalism.
As Klas Eklund shows in his article, the region
has emerged in good shape from the recent financial crisis, with budget surpluses and low levels of public debt. In a longer perspective the four
main Nordic countries are characterized by steady
growth, long-term political stability, transparent
institutions, technological adaptability, flexible labor markets, open economies and high levels of
education. All these factors tend to put the Nordic countries at the top of international ranking
lists both in terms of economic clout and quality
of life. It has also been argued that this makes
the Nordic countries better equipped to deal with
fundamental challenges concerning sustainability in general and global warming in particular.
12
How, then, can we explain the relative success
of Nordic capitalism in a globalized world? One
possibility is that Nordics by nature are unusually
cooperative, rational and less prone to succumb
to the lure of market egoism than other people.
If that is the case, there is not much to be learned
from the outside—other than that the world
might be a more reasonable but also possibly
duller place if it were inhabited solely by Swedes,
Danes, Norwegians and Finns.
However, if we assume that the citizens of the
Nordic countries are on the whole similar to other human beings in their passions, both good and
bad, other factors come into play: the social practices, the long-term institutions and historical experiences that underpin Nordic capitalism. This is
not to imply that there is a free-floating Nordic
model that can be applied to other countries. But
it does mean that some aspects of Nordic capitalism might be relevant in addressing the problems
of globalization, social fragmentation and the instability of modern finance capitalism.
SOCIAL TRUST AND RADICAL INDIVIDUALISM
13
Individual Autonomy and Social Trust
What then, are the most outstanding characteristics of Nordic society that are specifically relevant
to the efficiency of its economy? Traditionally,
outside observers have put a strong emphasis on
social solidarity—an ability to subordinate individual interest to collective
rationality. Often, this stress
on solidarity has been understood in opposition to the fundamental logic of the market:
certain collective goods have
been “decommodified” and effectively removed
from the cold logic of the market society. Indeed,
this was a perspective that Marquis Childs made
famous as early as the 1930s, when he wrote
Sweden: the Middle Way, suggesting that Sweden
had found a way to a healthy balance between
altruistic socialism and selfish capitalism, to use
the crude binary of that period.
ticularly strong leftist attitudes in terms of equality of classes versus individual freedom, equality
of pay versus merit-based differentials or state
versus private ownership of industries. As Ole
Listhaug has put it: “This could well demonstrate
a higher level of individualism and support for
market principles than is traditionally attributed
to the citizens of Scandinavia.”
Indeed, while recent studies underline the link between
relative equality and a wellfunctioning economy typical of
the Nordic societies, even more
significant may be data that show higher rates of
social mobility in the Nordic countries compared
to, for example, the United States.
A strong emphasis
on social solidarity
But this is, at best, a half-truth. This emphasis on
social solidarity hides the strong, not to say extreme, individualism that defines social relations
and political institutions in the Nordic countries.
Indeed, it is precisely the fundamental harmony
between the Nordic social contract and the basic principles of the market—that the basic unit
of society is the individual and a central purpose
of policy should be to maximize individual autonomy and social mobility—that we see as the
key to the vitality of Nordic capitalism. In a European perspective, the Nordics do not hold par-
14
Nordic Individualism
While much has been written about the institutionalized aspects of the Nordic welfare state,
few have paid much attention to its underlying
moral logic. Though the path hasn’t always been
straight, one can discern over the course of the
twentieth century an overarching ambition in the
Nordic countries not to socialize the economy but
to liberate the individual citizen from all forms of
subordination and dependency within the family and in civil society: the poor from charity, the
workers from their employers, wives from their
husbands, children from parents—and vice versa
when the parents become elderly.
In practice, the primacy of individual autonomy
has been institutionalized through a plethora of
laws and policies affecting Nordics in matters
minute and mundane as well as large and dramatic. Interdependency within the family has
been minimized through individual taxation of
spouses; family law reforms have revoked obligations to support elderly parents; more or less
universal day care makes it possible for women
to work; student loans without means test in relation to the incomes of parents or spouse give
young adults a large degree of autonomy; children
are given a more independent status through the
abolition of corporal punishment and a strong
emphasis on children’s rights.
All in all this legislation has made the Nordic
countries into the least family-dependent and
most individualized societies on the face of the
earth. To be sure, the family remains a central social institution in the Nordic countries, but it too
is infused with the same moral logic stressing autonomy and equality. The ideal family is made up
of adults who work and are not financially dependent on the other, and children who are encouraged to be independent as early as possible. Rather than undermining “family values” this could be
interpreted as a modernization of the family as
a social institution. While accepting the fact that
long-term spousal commitment is no longer the
norm, the “new Nordic family” takes parenthood
seriously, both in a demographic sense (the Nordic countries have higher birth rates than more
traditional family cultures in southern Europe)
15
Secular-Rational Values
Rational and Self-expression Values Dominate in the Nordic Region
2.0
Japan
1.5
1.0
Bulgaria
Russia
Estonia
Macedonia
0
ian
c
u
f
on
East Germany
France
Israel
South Asia
Bangladesh
-1.5
Uruguay
Chile
-1
Iceland
Canada
Australia
Ireland
Argentina
Dominican Republic
Peru
Pakistan South Africa
Brazil
-0.5
0
Latin America
Mexico
Venezuela
Colombia
0.5
Survival Values
Puerto Rico
1
1.5
2
Self-expression Values
Factor Score
Source: World Values Survey (WVS), fourth wave (1991-2001). See also, Ronald Inglehart and
Christian Welzel, Modernization, Cultural Change, and Democracy: The Human Development
Sequence. Cambridge: Cambridge University Press, 2005.
16
In quantitative terms, data from the World Values Survey (WVS) confirm this picture, indicating
that the Nordic countries stand out as a cluster of
societies in which people put a strong emphasis
on the importance of individual self-realization
and personal autonomy. In the language of WVS,
the Nordics are characterized by their embrace of
“emancipatory self-expression values” on the one
hand, and “secular-rational values,” on the other.
New Zeeland
U.S.A
El Salvador
-1.5
English
speaking
Portugal
Africa
-2.0
Great
Britain
Vietnam
Jordan
Ghana
Uganda
Nigeria
Zimbabwe
Algeria Egypt
Tanzania
Morocco
-2.0
Austria
N. Ireland
Turkey
Indonesia
Phillippines
Iran
Luxembourg
Italy
Spain
Poland
-1.0
Netherlands
Belgium
Croatia
Catholic
Europe
India
Denmark
Switzerland
Greece
Slovakia
Georgia
Azerbaijan
Armenia
Norway
Finland
Slovenia
unist
m
m
o
C
Ex- Bosnia
Sweden
West Germany
Hungary
Romania
Protestant
Europe
Czech
S. Korea
Montenegro Lithuania
Taiwan
Latvia
Serbia
Albania
Moldova
-0.5
C
China
Belarus
Ukraine
0.5
Traditional Values
and in terms of the time that parents, married or
not, spend with their children.
One effect of this radical individualism is that,
relatively speaking, people in the Nordic countries are more willing to accept the market economy both as consumers and producers. Less tied
down by legal and moral obligations within the
family, yet still protected from extreme risk by a
universal safety net, they become more flexible on
the labor market, while as individual consumers
they have developed far-reaching needs of products and services that previously were satisfied
within the traditional family. This market orientation is enforced in a number of ways in the Nordic
countries, not least by a social insurance system
based on the recipient’s level of earned income
on the open labor market, thereby creating an
incentive to work while at the same time providing adequate coverage for illness, unemployment and parental leave. Currently, the most famous example is the Danish “flexicurity system.”
To this should be added the historical legacy emphasizing equal access to fundamental goods, not
just healthcare and pensions, but also education.
This has translated into a long history of investing
in individuals and providing access to resources
that allow them to maximize their value in the
market place. Historically the countries with the
highest rates of literacy, Nordic countries have for
a long time scored at the very top when it comes
to basic education and investment in research.
For this reason, rather than speaking of a“welfare
state,” which many English speakers associate
with social assistance and long term dependency
on the state, some scholars now prefer the term
“social investment state.”
The Institutional Foundations
of Social Trust
The image of a strongly individualized market
society filled with solitary consumers might seem
bleak and materialistic. But although this may be
true in some sense, the significant social phenomenon is that Nordic individualism has not
led to the anomie, alienation and breakdown of
general trust that traditional social theory has associated with the shift from warm Gemeinschaft to
cold Gesellschaft.
The underlying assumption of these theories is
that trust arises in small, closely-knit communities where there is large degree of interdependence. More recent research has shown, however,
that it is the most modern and individualistic
17
Generalized Trust: An International Comparison
co-varies with a high degree of trust or confidence in common institutions, such as the system
of justice, public administration, the institutions
of the state, etc.
DENMARK
SWEDEN
NETHERLANDS
FINLAND
UNITED KINGDOM
SPAIN
IRELAND
GERMANY
EU15
ESTONIA
AUSTRIA
LUXEMBOURG
EU25
BELGIUM
TOTAL
HUNGARY
SLOVENIA
PORTUGAL
MALTA
ITALY
FRANCE
BULGARIA
CYPRUS (SOUTH)
GREECE
ROMANIA
CZECH REPUBLIC
SLOVAKIA
NMS10
LATVIA
LITHUANIA
POLAND
From an economic point of view, social trust and
adherence to the rule of law translate into a great
systemic advantage, which we fundamentally
can describe in economic terms as “low transaction costs.” Here, it should be added, we include
not only sheer or direct economic transaction
costs related to a lower need to resort to written
contracts, legal protections, law-suits, and huge
amounts of bureaucratic paperwork, but also social and political transaction costs that constitute
indirect burdens and inefficiencies that ultimately
translate into added financial costs.
0
10
20
30
40
50
Source: the EuroBarometer 62.2 (2004). Data weighted.
countries, most notably the Nordic countries, that
are characterized by a broad social trust extended
beyond the intimate sphere of family and friends
to include other members of society.
Again we find that the Nordic countries (and the
Netherlands) stand out in studies such as World
18
60
70
80
% of respondents
Values Survey, European Social Survey, European
Values Survey and Eurobarometer. In addition
to putting a strong emphasis on individual selfrealization these countries are characterized by a
high degree of social trust: well over 50 percent
of respondents claim to trust other people, including strangers. This social trust furthermore
One clear example of how a combination of social trust and respect for the rule of law results
in lower transaction costs is the Land Survey of
Sweden (Lantmäteriet) which has been registering
the ownership of property since the 17th century.
Because of the exact recording of property boundaries and the general trust in the impartiality of
this state agency, the amount of litigation over
property rights has been negligible, which both
lessens the economic costs for the individual and
pre-empts many possibilities of social conflict.
Another example is labor market relations in
the Nordic countries, which, though not always
peaceful, have been characterized by a mutual
respect for negotiated contracts among both
19
Power Relations in Modern Welfare States
State
Sweden
Germany
Family
Individual
United States
Dynamics of power in modern welfare states. Graphically illustrated as a “triangle drama” by
contrasting the position of state, family and individual in the U.S., Germany, and Sweden.
Source: Henrik Berggren och Lars Trägårdh, “Pippi Longstocking: The Autonomous Child and
the Moral Logic of the Swedish Welfare State” in Helena Matsson and Sven-Olov Wallenstein
(eds.), Swedish Modernism: Architecture, Consumption and the Welfare State. London: Black
Dog Publishing, 2010.
employers and unions. It should be noted that
for most of the 20th century, political legislation
has played a much smaller role in regulating labor market relations than voluntary agreements
between strong unions and equally strong employer’s federations, often at the national level.
20
More recent examples include the radical reformation of the pension system, the handling of the
financial and banking crisis and the introduction
of a voucher system for preschools and primary
and secondary schools, as well as the freedom for
citizens and residents to choose among competing
private as well as public providers of primary
healthcare and elderly care, all dating back to the
early 1990s. What is remarkable is that these were
bold political decisions that carried political risk and
challenged many long-held positions in the different parties. Agreement was possible only because
of shared fundamental confidence in the political
institutions as such, as well as trust in the goodwill
of members of parties other than one’s own.
What Are the Historical Roots of
the Nordic Social Contract?
As we noted, social trust and trust in institutions
also co-vary with low levels
of corruption. Historically
the Nordic region also stands
out as a “community of law”;
indeed it was a community
of law before the individual
Nordic states were consolidated. Rule of law was central
to the social contract that underpinned the emerging state, and adherence to
the law by the King and his administration was
crucial to the legitimacy of the state.
of a democratic decision-making process and
grounded in common values, will determine how
well they work. The more accepted and internalized, the less prominent is the specter of corruption and lawlessness.
The central axis around which the Nordic social
contract is formed is the alliance between state
and individual, what we call “statist individualism.” Here an emphasis on individual autonomy
coincides with a positive view of the state as an
ally of not only weaker and more vulnerable citizens, but the citizenry at large. This is coupled
with a negative view of unequal power relations
between individuals in general and hierarchical institutions in particular, such as
the traditional patriarchal
family and demeaning charitable organizations in civil
society. In this regard, the
Nordic model differs from
both their Anglo-American
and continental European counterparts.
Has Sweden found
a way to a healthy
balance between
altruistic socialism and
selfish capitalism?
The trust in and reliability of institutions thus
depend on the acceptance of the rule of law, but
even more important is the extent to which the
values implicit in formal law are also internalized
and embedded as social norms. Or put differently, the extent to which laws, rules and institutions are viewed as legitimate, as the outcome
Above we try to capture these different dynamics
of power in modern welfare states graphically as
a “triangle drama” by contrasting the position of
state, family and individual in the U.S., Germany,
and Sweden. In the Nordic countries, as we have
indicated, the state and the individual form the
dominant alliance. In the U.S., individual (rights)
and family (values) trump the state (always seen
as threat to liberty). In Germany, finally, the
21
central axis is the one connecting state and family, with a much smaller role of either U.S.-style
individual rights or a Nordic emphasis on individual autonomy.
This came to the forefront after World War I, when
the Nordic countries undertook a joint effort to
modernize family legislation in each country that,
with some variances, resulted in the most genderequal marriage laws according to the general European standards of that era. These laws determined
that man and wife were equal in terms of the marriage contract, though still responsible for different
spheres within the domestic arrangement.
The egalitarianism of Nordic society is, of course,
an often noted feature of social and political life
in these societies. This is also true of the prominence of gender equality. It has been noted in
comparative research that both equality and gender equality are correlated with a number of other
social virtues and collective goods, including social trust, happiness, and economic development.
What is less noted, since equality in the academic
literature is often linked to social engineering and
collectivist politics, is that equality in the Nordic
context is inseparable from individualism and the
value of autonomy.
According to what we have called “a Swedish
theory of love,”authentic relationships of love and
friendship are only possible between individuals
who do not depend on each other or stand in unequal power relations. Thus autonomy, equality
22
and (statist) individualism are inextricably linked
to each other. Whatever political and cultural
drawbacks there might be to this commitment
to personal autonomy, a strong state and social
equality—the usual criticisms are conformity,
loneliness and an intrusive bureaucracy—one
should note the upside: citizens, who feel empowered, accept the demands of modernity and
are willing to make compromises to achieve economic efficiency and rational decision-making.
Is the Nordic Instantiation of
Capitalism Sustainable?
The imminent death of the Swedish or Nordic
model has been announced many times. It dates
back to the Cold War disenchantment with Childs
more celebratory account of a“middle way,”which
resonated better during the
era of the Depression and
the New Deal. And since
then it has been a recurring trope, especially in
the U.S. To some extent,
the failure of these predictions can be traced to
a misunderstanding that has been shared by enthusiasts and critics alike, namely that the Nordic
countries were built on a compromise between
socialism and capitalism. For critics that meant
that given enough time, the costly and unproductive “socialist” elements of the model were bound
to overwhelm the productive “capitalist” aspects
that had been allowed to remain. However, as we
have argued in this essay, these arguments rest
on flawed assumptions that tend to underplay
the fundamental coherence and vitality of Nordic
capitalism.
Of course, this is not to say that these countries
are any more immune to recessions and global
financial crises than other capitalist countries, or
that they have not been set back economically
from time by bad policy decisions at the national
level. However, on the whole Nordic capitalism
has proved remarkably sustainable, certainly according to the measures and data that we have
available today.
Still, questions can be raised about the future
sustainability and relevance of the model. Some
argue that the increased ethnic, racial, and religious diversity linked to the influx of refugees
constitutes a deep challenge to the social cohesion of Nordic society. The
political consequences are
already visible in the rise
of anti-immigrant parties
throughout the Nordic countries. Insofar as immigrants and minorities are perceived as both
burdens to the welfare system and as a threat to
national culture, questions are also raised as to
whether broad support of a tax-based system of
social services can be sustained.
On the whole Nordic
capitalism has proved
remarkably sustainable
Another pessimistic line of argument centers on
the impact of neoliberalism on the Nordic social
23
contract. Alarmists point to trends toward increased economic inequality and the introduction
of voucher systems and privatization in education,
healthcare, and pensions. Such developments, it
is argued, will over time undermine the universalism of the classic Nordic welfare state in favor
of a more pluralistic system characterized by private, market-based alternatives leading to segregation and a decline in social trust.
Against this gloomy account, currently focused on
the rise of anti-immigrant political parties in the
Nordic countries, it is nonetheless quite possible
to counter with a more optimistic scenario. The
central argument is at heart very simple and rests
on two ideas: (1) that the striving for individual
freedom and prosperity (life, liberty, the pursuit of
happiness) is a rather universal drive, and (2) that
this desire can only be realized in an enabling
social, legal and institutional context. From this
point of view, the Nordic institutional framework
is characterized precisely by its capacity to promote both social trust (confidence in institutions
and rule of law), and individual autonomy consistent with the logic of the market society.
In this more optimistic account, the combined
lure of individual freedom and social security is
more likely to “naturalize” immigrants over time
than seriously challenge the Nordic culture and
its institutional system. If we return to the data
on social trust cited above and look at the rate of
trust over time, it appears that during the recent
decades of increased immigration and diversity,
24
social trust has not declined—indeed it has risen slightly. Similarly, according to the recurrent
so-called “diversity barometer” Swedes are more
open to immigration than ever. However, we
need to take these data with a grain of salt. Other
studies focusing on trust at the local level indicate
higher levels of distrust in highly diverse communities, especially those which also experience socioeconomic inequality. And other data from the
diversity barometer suggest that acceptance of
immigrants depend on a willingness to integrate
and accept Swedish norms and values: evidence
for tolerance of “deep” difference is lacking.
And with respect to the neoliberal challenge—the
rhetoric of “free schools,”“free choice” of healthcare producers and the introduction of a private
component in the government pension plan
package—these systems still remain highly regulated within the confines of the moral logic of
equal access to fundamental public goods. Even
if these market elements within the public sector
raise questions concerning accountability, quality and fair distribution of health, education and
other services, they still operate within a system
that is very different from a society like the United
States where individual wealth as well as community finances often determine access to high quality schools, universities, hospitals, and elderly care.
Thus, the combination of cultural and moral
forces that underpin the Nordic social contract
and the firm institutional framework that promotes this seemingly paradoxical coexistence of
emancipatory individualism and social security
may well prove both a major systemic advantage
in a globalized market society and an attractive
arrangement from the individual’s point of view.
Whether it is strong enough to withstand the
polarizing impact of immigration and increased
diversity—combined with widening differences
in wealth, income and access to education and
work—is an empirical question to be continuously revisited.
Are There Lessons to Be Learned from
the Nordic Variety of Capitalism?
Obviously many of the salient features of Nordic capitalism are idiosyncratic. They have been
created by a combination of contingent factors,
ranging from geography and natural resources
to religious inclinations and political coincidences. But this is also true of the classical model of
market economy that is often been presented as
“universal.” Specific British and American experiences of modernization have been generalized
into historical truths that have been applied to
other cultures, sometimes with great success but
also with astounding failures. The point is not
that it is wrong in principal to try to emulate other
successful cultures (how else is mankind to learn
anything?), but rather that we should do so with
great deliberation and—most importantly—not
assume a priori that only one kind of capitalism is
relevant as a source of inspiration.
25
However, it is not an easy task to identify and
transfer such experience in a form that becomes
useful and accessible. To be sure, there are a number of important lessons implicit in the development of Nordic capitalism. The first one is that
vague references to “values” and “culture” would
not be helpful; what is needed is a down-to-earth
analysis of concrete institutions and policies.
However, even specific laws, policies and institutions are far from easily translated and transferred
to other environments with different traditions
and historical experiences. Still, we would like
to point to a cluster of institutions and policies
that do tend to instrumentalize a set of experiences in the
Nordic countries, which have
kept the socially destructive
aspects of capitalism at bay
while still retaining the dynamics of market economy,
with an eye to whether they
might be applicable in other parts of the world.
quishing the possibility of becoming mothers. In authoritarian and hierarchical societies
where the individual desire for autonomy is
given insufficient space, political tensions are
likely to arise while social trust and confidence
in institutions are likely to decrease.
In this perspective, promoting policies like gender-equal educational systems, individual taxation, universal day care and anti-patriarchal family laws seems to be a generally good idea, even
if obviously in conflict with longstanding traditional norms in some cultures. To suggest that
the European Union should
expand its mandate in relation to the member states’
national sovereignty may
seem controversial, but in a
longer perspective it might
be necessary to develop a
common and more individualized family policy if Europe is to remain
economically viable. The interest that Germany
has shown in the school, pre-school, and family
policy of the Nordic countries—against the backdrop of relatively low levels of female participation in the labor market—is one indication that
such thinking is beginning to take hold.
What is needed is
a down–to–earth
analysis of concrete
institutions and policies
1. Nordic capitalism shows that individualism
need not lead to social fragmentation, distrust and short-term maximization of material interests. Promoting individual autonomy
through policy can, on the contrary, lead to
greater social cohesion if it is done in an egalitarian way. Less dependence and weaker patriarchal structures mean that more people feel
empowered and satisfied with their lives. This
is especially relevant for women, who want to
participate in the labor market without relin-
26
2. Nordic capitalism also demonstrates the systemic advantage of having a positive view of
the state, not just as an ally of the weak but as
the promoter of ideals of equality and individual autonomy. Awareness of the importance
of social trust and confidence in the common
institutions of the state is, of course, not peculiar to the Nordic countries, nor is the awareness that a positive view of the state cannot be
upheld if social and economic divisions grow
too large. Indeed, the objectives of keeping
unemployment down and having welfare systems that are tied to employment and the work
ethic constitute central goals for most European welfare states. However, they are pursued
with varying degree of success. In the Nordic
countries social trust, confidence in state institutions and relative equality coincide.
The big question is, of course, how to promote
greater trust in countries that experience low
rates of social trust and confidence in common
institutions. Perhaps most crucial to the positive
feedback cycle that has managed to stabilize the
Nordic economies at a productive equilibrium—
allowing for individual social mobility, economic
efficiency and sustained relative equality—is the
degree and extent of inclusion of citizens and
civil society in the governance process. The Nordic experience suggests that the more this occurs,
the more trust and confidence-building will result, and the more likely it is that key values and
social facts will remain in harmony. In this vein
it is advisable to encourage the development of
deliberative processes of governance. Churches,
labor unions, charities and other associations in
civil society should be supported, consulted and
involved through commissions, round tables and
other forums of interaction between state and
27
society. In the Nordic countries such state/civil
society interaction has been institutionalized and
made routine in ways that may provide useful
inspiration.
3. A strong state and individual autonomy are
not a threat to civil society, but are instead its
prerequisites. Citizens who join together not
mainly to protect themselves from arbitrary
abuse by vested state or business interests but
rather to increase their potential for self-realization and personal independence are more
likely to make positive contributions to society
as a whole. This allows for a more constructive
engagement, at best, or too close an entanglement with the state (the corporatist dilemma),
at worst. One example is labor market relations in the Nordic countries, where the unions
have generally not had a narrow self-interest-
28
ed view of their role in society but rather have
assumed a macroeconomic responsibility. To
achieve this social responsibility, it is necessary
that these and other grassroots organizations
be supported both through legislation and
economic subsidies that encourage the formation of an effective and inclusive civil society
network.
In the face of reality, the above suggestions might
seem like the ultimate expression of a delusional
kind of Nordic naïveté. But even if there is very
little in the Nordic historical experience that is
transferable to other cultures, it does bring one
important point to the discussion: economic policies that cater both to our desire for individual autonomy and our need of community and security
can be remarkably successful.
29
Kristina Persson
A Closer Look at Inclusion and
the Swedish Welfare System
W
hat explains the relative success of the
Nordic model? The two previous articles have given two different answers.
Klas Eklund stresses the fact that the Nordic
countries, when struck by serious economic crises in the 1980s and 90s, mounted successful responses and practiced good crisis management.
The Berggren–Trägårdh article highlights individualism, supported by a strong state. Both articles
acknowledge widespread trust in society as an
important factor.
I would like to add a fourth factor: inclusion. The
Nordic welfare model is not primarily a policy to
benefit the poor but a whole array of policies focusing on employment, productivity, social protection and inclusion on the basis of citizenship
and solidarity.
Thandika Mkandawire, professor of African Development at the London School of Economics,
observes that the Nordic countries adopted social
30
policies at an early stage of industrialization and
at much lower levels of per capita income than
other countries. According to Mkandawire, the
Nordic model shows that social pacts and similar arrangements in a democratic order can produce the political stability required for economic
growth. Strong social cohesion and trust are underpinned by a number of policies for inclusion.
The Nordic Welfare Model: More than
Public-sector Service Provision
Welfare provision in the Nordic countries is universal and based on the core values of equal opportunities, social solidarity and security, health
services, education and culture for all.
There are, however, interesting differences between the Nordic countries in terms of how the
welfare policies are organized. Denmark has gone
further than the other countries in involving the
A CLOSER LOOK AT INCLUSION AND THE SWEDISH WELFARE SYSTEM
31
private sector in welfare services. The Danes are
also notable for their “flexicurity”model on the labor market, as well as for their emphasis on assimilation in immigration policy—as opposed to the
integration strategy that has characterized Sweden. In Finland, the voluntary sector has played
a significant role in providing care for the elderly. In Norway, public-sector
provision of welfare services
has been more dominant
than elsewhere.
All Swedish residents have access to medical services, education is tax-financed and retirement
includes a basic pension guaranteed by the state.
For those who lose their jobs, unemployment insurance is available and many continuing education and retraining programs are tax-financed.
On top of these basic benefits, many workers enjoy other advantages based
on their salary, sector or
workplace.
Local Self-government
To support these social services, all levels of government receive their share of
tax revenues: the municipality, the county council and
the national government. All taxes, including municipal, are collected by the Swedish Tax Agency
(Skatteverket). Sweden, however, has neither an
inheritance tax nor a wealth tax, and the real estate tax rate has been replaced by a lower municipal fee. Earned income taxes have been reduced
since 2007, as well as social insurance contributions for young people.
Sweden’s local and regional governments have a
great deal of freedom to organize their activities.
Their responsibilities are regulated partly in the
Local Government Act and partly in laws and ordinances covering specific areas. The scope of local and regional self-government is also affected
by decisions made by the European Union.
The Swedish
welfare system has
been reformed over
time due to new
economic conditions
In the following text, I have
chosen to explain how the
welfare model is built up
by using Swedish examples
rather than trying to provide a comprehensive
Nordic picture. The Swedish welfare system has
been reformed over time due to new economic
conditions. A number of structural reforms were
pursued in the 1990s as part of crisis management,
in particular a major reform of the pension system.
Taxes: The Basis for Universal Welfare
Sweden is among the countries of the world that
spend the highest percentage of gross domestic
product (GDP) on social services, according to
2007 statistics from the Organisation for Economic Co-operation and Development (OECD),
surpassed only by France. The money goes among
other things to entirely tax-financed education
and heavily tax-subsidized healthcare.
32
Tax burden as percentage of GDP in 2008:
Denmark:
48.2%
Sweden:
46.3%
Finland:
43.1%
Norway:
42.6%
OECD average:
34.8%
Swedish municipalities, county councils and regions are responsible for providing a significant
proportion of all public services. The right of local
self-government, including the right to levy taxes,
is stipulated in the Constitution. Taxes are levied
as a percentage of income, and the municipalities
and county councils set their own tax rates. The
average local tax rate is 30 percent.
In order to ensure fairness, a system has been introduced with the aim of redistributing the revenues of the municipalities and county councils
according to regional needs. This equalization
system is managed on state level. In addition
there are state grants which may be either general, i.e. per inhabitant, or targeted.
Privately run activities that are tax-financed must
offer services to inhabitants on the same conditions as those which apply to public services.
People pay the same for a service whether it is
provided by the public sector or a private company. In some fields, such as refuse collection,
public transport and dental care, it has long been
33
common for municipalities and county councils
to procure services externally. A 1992 reform allowed private companies to run tax-financed
schools, and recently the same system has been
extended to preschools and care facilities.
Children and Parenthood
In 1979, Sweden became the first country to criminalize beating or spanking children. To protect
the rights of children and look after their interests,
the Swedish Government has also appointed an
ombudsman for children, obliged to enforce the
1989 United Nations Convention on the Rights of
the Child in Swedish society.
Parents get to share a total of 480 days of paid leave
per child, which must be claimed before the child
turns eight. In reality, the bulk of parental leave
is taken by mothers. Fathers now claim about 20
percent of all parental leave, but the figure is increasing. Each parent has 60 days of leave reserved
specifically for him or her, which means that these
cannot be transferred to the other parent.
The Swedish Education Act states that all children and young people are to have equal access to education regardless of gender, place of
residence or socioeconomic factors. There are no
school fees and everyone has to attend school for
Children are offered a place in a preschool class
from the year they turn six until they start compulsory schooling at seven. Preschool is followed
by three years each of elementary school, middle
school and junior high school. They then have a
choice of staying on for senior high school (gymnasium), which is non-compulsory and also free
of charge. Virtually all students who finish compulsory school start senior high school.
The number of independent schools in Sweden is
growing. Independent schools must be approved
by the Schools Inspectorate and follow the national curricula and syllabuses. Nine percent of
compulsory school students and 20 percent of
senior high school students attend independent
schools in Sweden.
The largest proportion of municipal budgets,
45 percent, is spent on education.
About 70 percent of education, and of municipal operations as a whole, is financed by municipal taxes.
Education
34
at least nine years in Sweden. Sweden and Finland are the only countries in the world that serve
free school lunches to all students.
Municipalities also provide nursery schools for
children from age one until school starts. Parents
pay 8 percent of the cost. In the fall of 2008, 85
percent of all children between the ages of one
and five were registered in preschool or family day
35
care homes. The percentage has been increasing
for many years, especially among one-year-olds.
Higher education in Sweden is financed largely
by tax revenue. In 2011, however, tuition fees were
introduced for students from outside the EU/EEA
and Switzerland with the motivation that Swedish higher education should compete in terms of
quality, not just by providing free education. To
enable students who cannot pay the tuition fees
to study in Sweden, the Government has allocated resources for new scholarship programs.
The Government provides 80 percent of funding
for Sweden’s universities and university colleges.
A further 7 percent comes
from other public sources
and the remaining 12-13 percent from private sources and
financial revenue. All Swedish students who study at a
university or university college are entitled to financial
assistance, which consists of
a grant component and a loan. Repayment of the
loan is income-dependent, with the loan to be repaid by the student’s 60th birthday.
start a health center that is reimbursed with public funds. In 2005, the county councils and central government agreed to introduce a healthcare
guarantee. Anyone who needs care must be treated by a doctor within seven days. After referral,
specialist care is supposed to be provided within
90 days. If the time limit expires, patients are offered care elsewhere.
Patient fees for primary care vary between SEK
100 (USD 14) and 200 depending on the county
council. After a patient has paid a total of SEK
900 during one year, medical consultations within 12 months of the first consultation are free of
charge. There is a similar ceiling for prescription
medication, so nobody pays
more than SEK 1,800 over a
12-month period.
An important feature
was to give disabled
people the right to
personal assistance
free of charge
Healthcare
The Swedish healthcare system is tax-funded
and largely decentralized. All care providers that
meet county council requirements are entitled to
36
The general social insurance
system includes sickness
benefits. Employers are responsible for providing sick
pay for the first 14 days of an
employee’s illness. For longer illnesses, the social insurance system grants a maximum of 364
days of benefits at 80 percent of the employee’s
income. Longer benefit periods may be granted
for severe illnesses.
General social welfare programs in Sweden extend
to everyone, but there are also special programs to
address the needs of people with disabilities. The
Act concerning Support and Service for Persons
with Certain Functional Impairments (LSS) was
adopted in the 1990s by the Swedish Parliament.
An important feature of this wide-ranging reform
program was to give disabled people the right to
personal assistance free of charge.
In addition to general social benefits, municipalities are responsible for providing social assistance
in the form of financial support. This is intended
as a last-resort safety net for people with temporary financial problems, and it is disbursed after
an individual assessment. Social assistance includes income support based on a national standard and also covers other common expenses
needed to ensure a reasonable standard of living.
The Labor Market
Sweden’s long tradition of government labor
market policies has resulted in a wide variety of
employee benefits, including at least five weeks
of paid vacation, well over a year of parental leave
and employer pension contributions. Collective
bargaining has played a central role for achieving these benefits, along with a well-established
culture of cooperation between employers, employees and unions. Nearly 70 percent of Swedish
workers belong to a trade union. For their millions of members, trade unions provide special
insurance policies, coaching and representation
for contract negotiations as well as legal support.
37
Wages are regulated primarily in collective agreements. Trade unions and employer organizations
negotiate collective agreements which regulate working conditions such as wages, working
hours, sick pay, etc. There is no government intervention in the wage negotiations or in the enforcement of collective agreements, although in
the final phase of negotiations—if the two sides
reach an impasse—a public mediator may be
called in to help achieve an agreement.
Since 2006 the Government has taken measures
to enhance the incentives to work. Earned income
taxes have been reduced. Employers’ social insurance contributions have been lowered for young
people as well as for groups who are returning to
the labor market after a long absence. The unemployment benefit system has also been tightened.
All these reforms have been important factors in
Swedish crisis management during the recession
that began late in 2008.
The Elderly
Of Sweden’s 9.3 million inhabitants, 18 percent
have passed the retirement age of 65. This number is projected to rise to 23 percent by 2030.
Sweden has the largest proportion of people aged
80 or over among the EU member states, totaling 5.3 percent of the population. Since more and
more citizens in this age group are in good health,
their care requirements have declined since the
1980s. Most elderly care is funded by municipal
38
taxes and government grants. In 2008, the total
cost of elderly care in Sweden was SEK 91.8 billion. Only 4 percent of the financing came from
patient charges.
The bulk of all elderly care is provided by the
municipalities. Everybody is allowed to choose
whether they want their
home assistance or special
housing to be managed by
public or private operators.
Older people who continue
to live at home can obtain
various kinds of support to
make life easier. Disabled or
severely ill people can obtain
assistance around the clock, which means they
can remain at home throughout their lives. The
elderly and disabled also qualify for transportation services in taxis or specially adapted vehicles.
for the elderly provides a last safety net to ensure
a decent standard of living.
A total of 18.5 percent of your wages and other
taxable benefits goes into your public pension account each year. You can also choose when you
would like to retire, with some people retiring as
early as 55 years of age. But
the income-based pension
and premium pension can
only be drawn from the age
of 61. In 2009, the average effective age of retirement in
Sweden was 66 years of age
for men, compared to the
OECD average of 65, and 64
years of age for women, compared to the OECD
average of 63.
Regardless of when
you retire, however,
the total amount of
your pension remains
the same
Pension System
The Swedish pension system consists of three
parts—a national pension, an (employerfinanced) occupational pension and private pension savings. People contribute to their national
pension, which is income-based, for every year
they work. There is also a small portion of the
national pension called the guaranteed pension.
This is for people who have had very little or no
income at all in their life. Should the guaranteed
pension still not be enough, maintenance support
Regardless of when you retire, however, the total amount of your pension remains the same.
Hence, if you choose to go into early retirement,
your monthly payments will be reduced accordingly. It is also possible to keep working and
thereby increase your pension.
Gender equality—which Barbro Hedvall will take
a closer look at in the following section—is another important aspect of the Swedish welfare
system.
39
Barbro Hedvall
Nordic Gender Equality
I
n the Nordic region, we like to think of ourselves as world leaders in gender equality. It
is not difficult to make a case for this, given
that women have such a high employment rate,
educational level and political representation.
The equality is beneficial to society in a number
of ways, not least when it comes to the Nordic
standard of living.
Between 75 and 80 percent of women aged 20-64
are employed, which means they are not far behind men. And while average wage discrepancies
persist, they are on the decline. Women also make
the most of educational opportunities. Statistics
from Sweden’s higher education institutions
show that well over 60 percent of graduates are
women; men dominate only in the technical programs. In Nordic political assemblies, too, women are well represented. For almost two decades,
they have held 40 percent or more of the available
seats; women also hold top political posts. Nordic women do not have to choose between career
40
and family: in Iceland the fertility rate is 2.1 children per woman; in the other Nordic countries
that number varies between 1.8 and 1.9.
Those are the basic facts. It is in these key areas
that opinion-building efforts have been focused
in the past. They still are. But while the Nordic
countries may have progressed further than most,
women and men in the region are still not on the
same footing. Much remains to be done, not least
in respect of pay gaps, unequal career opportunities, and the under-representation of women in
executive posts. Ultimately, this is a question of
human rights—one that has a tremendous impact on a country’s social, democratic and economic situation.
Visible Patterns
Nordic gender equality is immediately apparent to
the visitor. It can be seen out on the streets, where
both women and men hurry to and from work and
NORDIC GENDER EQUALIT Y
41
go shopping. It can be seen in the many prams being wheeled around by men, not just women.
Family schedules at the weekend are like a jigsaw
puzzle where both parents are expected to contribute; whether shopping, cleaning or driving
their children to their various activities. A daughter who chooses to play soccer is not unusual in
any way, nor is a mother who takes her to the
game and cheers her on. Kids’ recreational activities are something that the parents share alike.
This shared existence of the sexes begins early in
life. Daycare centers and preschools are mixed as
a matter of course, and this is the case throughout the school years. As
early as preschool, teachers employ gender education techniques by actively
combating
stereotypes
and roles, by freeing children from the expectations
and demands that society
has traditionally imposed on boys and girls respectively. The aim is to ensure that children
have the same opportunities in life, regardless
of gender.
Young people today may not have much difficulty
understanding one another but they are definitely
more open and demand respect from one another;
the days when girls “accepted things” and boys
“helped themselves” are a thing of the past.
The advertising industry, too, reflects modern
Nordic lifestyles. Successful ad agencies like to
play around with outdated gender roles, turning them around or satirizing them in some way.
Anyone trying to sell a car with the aid of scantily clad ladies nowadays would quickly be out of
work. In general, people are sensitive to stereotyped gender or parental roles, due to a long-running critical debate that has frequently targeted
advertising and the media.
Today, journalism is
one of the professions
with the best gender
balance
At university, young women and men live and
study together. Nevertheless, issues relating to sexuality, unwanted approaches and abuse are identified as significant problems. This may be surprising, given the fact that the Nordic countries have
long been known for their emancipated lifestyles.
Women’s organizations have
counted both the number of
images of each gender and
of references to each group
in newspapers, in news bulletins and in radio and TV
broadcasts. This has not led to any kind of absolute statistical balance but it has enhanced sensitivity to the single-sex perspective. The aim is
to get out of the rut and deliberately highlight
women who have something to say about the
topic being discussed. Gender distribution in editorial offices is also under scrutiny. Today, journalism is one of the professions with the best gender
balance; women are as likely as men to be political reporters or to focus on hard news. As in
other companies, however, men predominate at
the top, although a few women hold or have held
prestigious executive posts.
Looking Back
Women hold a strong place in Nordic society.
In principle, men and women are on the same
footing both in family and professional life. This
Nordic model is based on the individual and on
individual opportunity. It is inclusive, it brings
women and men together and accords them the
same status; it does not separate them.
How did this situation come about? The Nordic
countries’ small populations have been a factor, in
that each individual’s work input has been needed. The popular movements that emerged in the
19th century also played their part; here, it was
natural for women and men to stand side by side.
The women’s movement was a part of this powerful Nordic grassroots tradition, which came to
be radicalized in the 1970s.
In Denmark, the Red Stockings3 were active, in
Sweden the gender role debate flared up, and
in Norway politically interested women put together lists of women candidates and seized local
council seats. At the heart of this new women’s
movement was the “baby boom” generation born
in the 1940s, the first to have full access to education. They were versed in theory and sought to
change people’s attitudes and lifestyles, quickly
influencing both media and political parties.
3 The Red Stockings were a radical
feminist organization with socialist links.
42
43
Today, their ideas concerning shared parenthood
and an equal work life are generally accepted.
The pressure brought to bear has led to policy
decisions, legislation and political governance. In
the Nordic countries, policymaking bodies from central
government to local councils now have gender equality plans and, ideally, funds
for their implementation.
The feminist debate has been
taken over by a younger generation. In recent times, moreover, the success stories of the
Nordic societies have attracted the attention of
those who regard gender equality as vital to progress and development.
generations; they often follow in their mother’s or
father’s footsteps, and—not least—are influenced
by the mood of the times, whether commercial or
ideological. As a result, working life remains segregated in some fields. Women are to be found in
the caring and teaching professions to a far greater extent
than men. And men tend to
target the manufacturing, financial or construction sectors. Some, however, make
unconventional career choices, and you can find women
construction engineers and
men preschool teachers.
Career choices
and professional
life are of crucial
importance to people
in our countries
Financial Aspects
The legal obstacles that previously excluded
women from certain professions (the police, military, priesthood and judiciary) have long since
been removed. Nor is there anything to prevent
young men from training in what used to be
female-oriented professions such as midwifery
and nursing. This gives individuals the freedom
to choose.
It is however true that no one is absolutely free,
except in theory. Women and men in the Nordic
countries are affected by the attitudes of previous
44
But even women with equivalent training and the
same work tasks as men do not enjoy the same
pay; at present the pay gap is less than 10 percent. If we consider the differing jobs of women
and men, the gap widens to around 15 percent; a
greater number of men choose professions that
enable them to earn more money than women
and to acquire greater status.
Career choices and professional life are of crucial
importance to people in our countries—to an extent that may surprise others. A person’s identity
is closely linked to his or her work. And this applies equally to women and men. Today, hardly
anyone would presume to introduce a woman
simply as someone’s “wife.”
45
This is in fact the principal feature of our Nordic model: each and every one of us, women and
men alike, are responsible for our own subsistence. Nordic legislation has reflected this perception since the 1970s. Taxation is individual,
i.e. neither the family nor the household is a tax
unit. Retirement pensions and sickness insurance are both linked to the individual. Couples
are required to provide for their children, not for
each other. At the root of this change is an explicit
idea of adult maturity and individual responsibility. There is also a freedom dimension. People are
to live together of their own free will and to be
linked together as free individuals by their feelings for each other, not by financial expedience or
dependence. There is a direct historical link here
to those who first claimed the right of girls to an
education and the right of women to pursue their
own careers.
Women’s work contributes a vast amount to the
national economy. The increase in living standards witnessed in the Nordic countries in the
late 20th century would have been impossible
without women in the labor market. Finland, and
a short while later, Sweden, were at the forefront.
In Finland’s case it was about rebuilding a country ravaged by war, while Sweden was keen to
take advantage of a prolonged economic boom.
The extensive development of the public sector
that distinguishes the Nordic countries is ultimately dependent on policy decisions, but is also
linked to women’s participation in working life.
46
The many working women in the region generate
tax revenue that finances public activities which
in turn provide jobs for women. At first, politicians
debated whether there was any point in women
leaving the home in order to perform similar
tasks to men in the labor market. That discussion
has long since been settled. The rules concerning
specialization and restructuring also apply in the
case of traditional women’s work. The demands
of gender equality are a further factor: work in the
home is to be shared between men and women.
As the level of education rises, it has become increasingly important to ensure that educational
capital—that of both women and men—is turned
to account. Once again, the demands of women
are consistent with economic benefit.
Family Life
The family is the other flashpoint in the gender
equality discourse. Here, too, legislation has been
adapted to the fundamental concept of free individuals. It is of no great consequence whether children are born in or out of wedlock. Parents have
the same responsibility. Public support to children
in the form of child allowances, free schooling,
study support and the like is linked to the child
and no one else—once again, the individual.
Where parenthood is concerned, Nordic society
has established clear principles: children are entitled to both of their parents. If the parents live
apart, they are to share responsibility for the child.
And in the vast majority of cases, they also manage to do so. As someone once said: “The person
with whom you become a parent is someone you
will have a lifelong relationship with, whatever
other loves you may have.”
Shared parenthood, then, is a reality, although
not always distinguished by full gender equality.
Women take parental leave to a much greater extent than men, both when the children are born
and when they fall ill. Women still put the children before their jobs. But for each passing year,
more fathers are taking leave to be with their
young children, and it is becoming increasingly
common for fathers to stay at home from work to
care for a sick child.
Where responsibility for the home is concerned,
the distribution of duties in many families is the
traditional one, i.e. the woman looks after the
home while the man looks after the house and
the car. On the other hand, we are now seeing
a growing number of men cooking meals and
women taking the car to the repair shop. Things
are moving in the right direction. In Sweden, for
instance, women’s unpaid daily work in the home
was reduced by 14 minutes between 2000 and
2010, while men’s increased by 11 minutes. Even
in homes with a decent level of gender equality,
certain tasks are perceived as less glamorous than
others. Washing clothes and cleaning belong to
the former category, house painting and barbecuing to the latter.
47
One major challenge is violence between the sexes. This is a focus of attention both in the media
and in political debate. In the great majority of
cases, the victims are women and the perpetrators men with whom they have or previously had
a relationship. Society has responded through
women’s emergency shelters and heightened
awareness and understanding among police,
care workers and social workers. Unfortunately, a
greater openness on the subject
of violent men and their victims has not led to any marked
improvement. Violence against
women is a stain on the Nordic
gender equality undertaking.
Gender-based violence naturally causes suffering
in Nordic society, but it also causes economic losses in the form of social and medical costs, legal fees
and reduced work capacity. To fight for a more
equal society and against violence directed at
women (and men) is to fight for both social and
economic gains.
ance is more or less even. The same applies to local, elected assemblies. The proportion of women
at the highest level is even more striking. Since
the mid-1980s, successive Norwegian governments have comprised as many women as men.
The same is true of Swedish governments since
the mid-1990s. In the other Nordic countries, governments are approaching gender balance. This
high level of women’s representation has been
achieved without the use of
formal quotas, through external
pressure, internally-established
objectives, and initiatives on
the part of individual politicians. Gro Harlem Brundtland,
three times the Prime Minister of Norway, was
the pioneer. Once a head of government has appointed a gender-balanced cabinet, her or his successor will not want to appear less progressive.
Women are strongly
represented in the
political arena
Centers of Power
The distribution of power in everyday life is one
aspect of what power is like at the top, in both
the economic and political spheres. Here, too, the
Nordic countries have made greater progress than
most—although full gender equality is still far off.
Women are strongly represented in the political
arena. In the Nordic parliaments, the gender bal-
48
In politics, women have climbed to the very top
in all countries with the exception of Sweden.
Women either are or have been heads of government in Denmark, Finland, Iceland and Norway. Finland and Iceland have also had women
presidents: Tarja Halonen and Vigdís Finnbogadóttir. Whether the situation in Sweden is due
to chance, or reflects a covert backlash in society
against women’s drive for power, is hard to say.
Where the distribution of economic power in the
Nordic area is concerned, however, there is no
doubt about it: women are clearly being shut out.
One or two exceptions cannot shake male power
hegemony. It rests both on ownership—and active
company ownership is usually practiced by men—
and on career. Those promoted to the post of CEO
in a major company are, with very few exceptions,
men. As a result, company boards tend to be decidedly male-dominated.
In this power sphere, too, Norway has taken a
lead. The law passed there a few years ago requiring the boards of listed companies to introduce
gender quotas has yielded good results. Faced
ultimately with the threat of liquidation, companies listed on the stock exchange have filled their
quota of 40 percent women on their boards. The
Norwegian example has been copied by Iceland
and has influenced the discourse in other countries. In Sweden, Denmark and Finland, the politicians are more hesitant and hope that the power
of example will do the trick.
In Sweden, only 22 percent
of the board members and
2.7 percent of CEOs of listed
companies are women. The
issue of board representation is mainly symbolic since
company boards are a bastion of male power. The same was once true,
however, of the region’s political assemblies.
The major companies may be privately owned
but they also have owners of both genders, they
have employees of both genders and they operate in a society comprising both women and men.
There is good reason why in reaching decisions
they should have as broad a range of experience
as possible available to them and also employees
able to consider many different aspects. Consequently, political bodies are entitled to have a say
in how their executive boards are put together.
This is how the argument goes, and it is one that
many find reasonable without wishing to introduce legislation.
A further aspect of the Nordic model is a strong
belief in opinion-building and voluntary participation: establish objectives, provide concrete figures and trust that constant pressure from public
opinion will have the desired
effect. By applying this method, parties have managed to
make more women candidates available for election,
governments have been able
to appoint more women as
heads of public authorities,
and numerous organizations have boosted the
proportion of women at the top.
Parties have managed
to make more women
candidates available
for election
In parliaments and local councils, it is a matter of
exercising popular rule; it is there that we as citizens are able to influence matters. And our influence should not be limited by money or gender.
In both Norway and Sweden, the giant trade
union confederations have been led by women.
The Swedish employer organization has also appointed a woman at the helm. The fact that these
49
organizations have become less influential may
not be a coincidence. Women researchers have
frequently noted that when women enter the
corridors of power, that power tends to disappear
elsewhere. This is what happened within such
previous high-profile institutions as the church
and the national defense when they opened up to
women following a tough and prolonged debate.
Power is difficult to encapsulate and describe once
we no longer confine ourselves to formal posts.
These can be counted and we can be pleased that
their gender distribution is steadily improving.
A different kind of challenge is the one we encounter when formal power is to be translated
into actual decision-making and the exercise of
influence. Consequently, women as well as men
must ensure that they understand the rules of the
game and make use of their personal experience.
Here, men have been at an advantage for generations. In the Nordic area, however, women are
steadily catching up.
Denmark
Finland
Iceland
Norway
Sweden
EU
Occupation rate, ages 15-64
71.1
66.9
76.2
73.3
70.3
58.2
Occupation rate, ages 25-65
-
72.5
81.8
75.6
76.5
62.5
1.80
1.80
2.14
1.95
1.90
1.56
40
42
43
39
45
24
-
-
-
62
66
60
Fertility rate
Percent women in parliament
Percentage of women of
total higher education graduates
© 2012 Swedish Institute
Graphic design: FWD Reklambyrå AB
© Photos Cover: Anders Helgesson / Pixgallery, p. 4 Henrik Trygg / Johnér, p. 12 Johan Willner / Johnér, p. 15 Lena Paterson / Matton, p. 19 Tommy Andesson / Bildarkivet,
p. 22 Heléne Grynfarb / Bildarkivet, p. 25,29,30 Melker Dahlstand / imagebank.sweden.se, p. 27 Johan Willner / Johnér, p. 33 Ulf Lundin / imagebank.sweden.se,
p. 34 Adam Haglund / Maskot bildbyrå, p. 37 Hans Berggren / Johnér, p. 39 Helena Wahlman / imagebank.sweden.se, p. 40 Cecilia Larsson / imagebank.sweden.se,
p. 43 Katja Kircher / Matton, p. 44 Maskot bildbyrå, p. 47 Ulf Huett Nilsson / imagebank.sweden.se
Printed by: Åtta.45, Solna, Sweden
ISBN: 978-91-86995-13-3
50
“In international comparisons of global competitiveness, the Nordic
countries are almost always found at or near the top. What are the reasons?
Is there such a thing as a common “Model” particular to the Nordic region
and if so, will it last? Is it transferable to other parts of the world?
In this brief we provide bits and pieces of some plausible explanations
for the relative success of the Nordic societies. We hope these experiences
can improve the understanding of our way of doing things and inspire
debate and development in other parts of the world. Shared values are also
about sharing experiences with others.”
The Swedish Institute (SI) is a public
agency that promotes interest
and confidence in Sweden around
the world. SI seeks to establish
cooperation and lasting relations with
other countries through strategic
communication and exchange in the
fields of culture, education, science
and business. SI works closely with
Swedish embassies and consulates
around the world.
Global Challenge is an independent
think tank that promotes solutions
to global challenges relating to the
economy, environment and democracy.
Swedish Institute Slottsbacken 10, Box 7434 SE-103 91 Stockholm SWEDEN +46 8 453 78 00
The Norden Association is an NGO
founded in 1919 with the aim to support
the development of the cooperation
between the Nordic countries. With
its wide network of 60 000 members
organized in local branches all over the
region it has a major impact on the welldeveloped cross-border cooperation in
the Nordic region.
www.si.se

The Nordic Way

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