Nordic Welfare: the world’s supermodel? Elisa Fernanda Barreto Pérez 1 I Introduction In 2013, The Economist published a note inviting the readers to learn more about the new world’s supermodel. In the note, the author stated the Nordic model as a role model for both right wing and left wing politicians in order to improve American polity. He described how well the Nordics have been doing in different development areas, from economic competitiveness to happiness rates, implementing welfare policies with low budget deficit and high quality public services. This statement is my starting point to introduce the main goal of this essay, which is to find answer to the questions: what is the Nordic welfare model? What are the main differences between Nordic countries’ welfare policies and what are the challenges they face today? As the newspaper pointed out, the Nordics have brought a new way to develop a strong welfare state in a more pragmatic than ideological way, “the state is popular not because it is big but because it works” (The Economist, 2013). For a clearer discussion, I will refer to Scandinavian and Nordic countries as when talking about Denmark, Norway, Sweden, Finland and Iceland as some authors do (for instance, Knudsen and Rothstein 1994; Alestalo, Hort and Kuhnle, 2009). It is important to notice that the Nordics have built a special identity through the years. After the Nordic Council in 1952, Norway, Sweden, Denmark, Iceland and some time later Finland2, started a path of mutual cooperation taking advantage of the geographical, social, historical, political and economical characteristics they have in common. As Mikko Lagerspetz (2003: 52) distinguished, European geographical divisions have shaped the identities of countries and societies through history. These geopolitical identities steer the activities and decisions that governments make as a result of the categorization that was constructed over the years. Today, the five Nordic countries, plus the autonomous Faroe Islands, Åland and Greenland have been characterized for being a well-integrated region with a profound social concern. In this regard, the Northern periphery of Europe3 has built a good reputation for the way of solving problems in the public sphere. Besides the geographical characteristics, they share long historical and political relations, Scandinavian language affinity, Protestant Christianity, well defined local governments, effective rule of law and gender equality (Lagerspetz, 2003: 55–56). These characteristics introduce us to the definition of the Nordic welfare model. This essay has four sections: the first one answers the opening question that I proposed in the introduction: what is exactly the Nordic welfare model? Emphasizing in two characteristics: universalism and equality. In the second section, I notice the main differences between the Nordic countries welfare systems and some of the best-known policies implemented are discussed, I will center the attention on childcare policies. The third section contains an account of the main challenges the Nordic countries have in order to maintain of their welfare state in a less homogenous society and increasingly neo-liberal global trends. And finally, in the fourth section, I summarize the main concepts revised as concluding remarks. Licenciatura en Administración Pública, Universidad de Guanajuato. Correo electrónico: efbarreto.03@gmail.com Finland’s later addition in 1955 also responded to a special context in which the Finish state had to withdraw from other economical and political alliances as the cooperation with the Baltic countries (Lagerspetz, 2003: 51). 3 In this case, the center-periphery approach is used to explain how the “northerners” historically had to recurred to the “southerly centers” in order to extend their culture and knowledge. Today, the Nordics are part of the most advanced countries in the world though; see Allardt (2000: 129). 1 2 Punto y Seguido. Número 4. The Nordic Welfare Model Around 1930s, Sweden started to gain the international attention for the “middle way” system they were implementing; this is, the equilibrium between a strong state intervention and a liberal capitalism (Kildal and Kuhnle, 2005: 5). After Sweden, the rest of the Nordic countries followed its steps and started building what scholars know today as the Nordic (welfare) model. We can define the Nordic model as a model that combines a wellintegrated state-society relation, strong local government administration and the delivery of public services with an egalitarian and universal scope (Kildal and Kuhnle, 2005; Knudsen and Rothstein, 1994). The core of this welfare model is to reach economic efficiency, empower society and “enrich and equalize the living conditions” of the citizens (Erikson et al. 1987, in Kildal and Kuhnle, 2005: 5). To understand the Nordic model we need to make a revision of its two main pillars: universalism and equality. The Oxford English Dictionary defines the word universal as a characteristic that includes all the people in the world or in a particular group. In a welfare policy context, we can understand universalism as a quality that involves a big part of a community. The principal characteristic that universalism brings to the welfare model is that it is expected to cover the most of society, based on the fact that democratic states assure political status and social rights in an egalitarian way for the citizens (Kildal and Kuhnle, 2005: 14). In this regard and following the argument of Kildal and Kuhnle (2005), the welfare universalism has two dimensions: membership and allocation. On the one hand, the membership dimension recognizes the citizens as part of a specific population category such as families, seniors, underage people or workers. In a welfare universal model, people will receive the social rights that correspond to the community they are part of. Ensayo Elisa Fernanda Barreto Pérez. Even when the policies are very often targeted for poor people, in the Nordic model we can find a wide catalogue of policies for working population or families; where also middle and upper classes are integrated as beneficiaries of welfare services. Allocation, on the other hand can be described as the discretionary way to assign the welfare benefits. Professional evaluations are needed in order to have a better and more efficient assignation of services (Kildal and Kuhnle, 2005: 15). In this sense, decision-makers should be able to have different degrees of discretional margin and a category-based framework (Kildal and Kuhnle, 2005). Allocation and membership are characteristics that work as filters in the distribution of benefits (Kildal and Kuhnle, 2005: 16). Denmark for instance, has introduced in the recent years a multi-tiered system that differentiates between social groups (Kvist and Greve, 2011). Danish unemployment policy named “More in work” introduced in 2003 has two tracks, one for native and one for non-native people. Also couples can have more benefits if each one works at least 450 hours. The second pillar of the Nordic welfare model is equality. We can find two assertions derived from the egalitarian perspective: the Nordic welfare model is actor-oriented and multidimensional (Kvist et al. 2011: 2). It is actor-oriented because it tries to promote well being at individual level and multidimensional levels because it includes material, intangible and collective resources as essential supplies for each person. The Nordic model literature rests in great measure in the arguments of Amartya Sen’s economic inequality and John Rawls’ Theory of Justice (Kvist et al. 2011). Amartya Sen makes a wide approach about inequality in which he makes a differentiation between income inequality and capability of use the resources. Sen bases his study in the fact that personal characteristics may shape the way individuals are capable to use the resources they have at hand: Punto y Seguido. Número 4. “If the objective is to concentrate on the individual’s real opportunity to pursue her objectives, then account would have to be taken not only of the primary goods the person holds but also of the relevant personal characteristics that govern the conversion of primary goods into the person’s ability to promote her ends.” (Sen 1997: 393) In this sense, the capabilities that older, ill or disabled people has, make them be in disadvantage to the rest of the people. Meanwhile, John Rawls sets justice as the primary subject of social institutions and the distribution of “fundamental rights and duties and (…) the division of advantages from social cooperation” as their major task (Rawls, 1999: 6). With this assertion he introduces the veil of ignorance, this is, the starting point of which social institutions should place individuals in order to achieve a fair distribution of benefits. This original position assures the cooperation of equal individuals in favor of mutual gains (Rawls, 1999: 13). Following the arguments of Rawls and Sen, justice and equality have to be conceived in a broader way, considering individual conditions, capabilities and social systems, and not only the distribution of the income. Equality from this stand point guarantees that individuals would have the same rights and duties, and that the cooperation between actors results in benefits also for the less advantaged. In the same way, the Nordic struggle against social inequalities make use of education, health care and social services, more than cash benefits. In words of Kvist and others “the development of welfare states, the social services constitute a cornerstone for reducing social inequalities by giving equal access to healthcare, elderly care, education and hence guaranteeing equal opportunities in life” (2011: 9). Summarizing, universalism means that all the citizens would have the same opportunity to access to the welfare system and will receive benefits in virtue of the social category they are placed in. The social Ensayo Elisa Fernanda Barreto Pérez. institutions ensure that rights and duties are distributed in order to improve citizens’ capability to use the resources. On the other hand, one of the main actual debates concentrates on if today we can talk about a universal system when the Scandinavian countries are experimenting a big wave of immigration and the societies are becoming less homogeneous (Alestalo, Hort and Kuhnle, 2009). However, I will return to this point later. It should be stressed that Alestalo, Hort and Kuhnle (2009: 3) place stateness as one of the main characteristics of the “master statements” of the welfare model in the same level of universalism and equality. I will not refer to the stateness as a pillar but as the ground floor of the Nordic welfare model and in any case, of every welfare model. The pillars I am referring to above can be reshaped by the context and redefine the scope of welfare policies by external factors (such as migration). Moreover, the ground floor presents bigger challenges for being modified from the exterior or at least cannot be replaced, that is to say, stateness represents an “insider” characteristic. Stateness places the government as the protagonist who can define in which degree other actors or “intermediary structures” can intervene (Ibid.). In this regard, each Nordic country has made different decisions in the extent of the state intervention. I will make clear this differentiated way to develop their welfare systems in the next section. Nordic welfare systems in comparative perspective The Nordic countries have been known for their special concern about the incorporation of women to the labor market, strengthen the parentchild relation, and the long-term saving schemes. In a comparative analysis, the Nordic countries present a set of varied differences in their different Welfare policies. Being part of a homogeneous region with wide similarities doesn’t deny the individual agenda that each country follows. As Allardt (2000: 131) pointed out, in the decision making process, national interests always come first than the Nordic-level ones. Punto y Seguido. Número 4. As it was said before, stateness plays an important role in the establishment of welfare schemes. Sweden and Denmark, the first ones to develop welfare systems, have broad differences in the role that institutions play. On the one hand, the liberal Danish tradition allows actors from the private sector to participate in an easier way in the provision of welfare services than the other Scandinavian countries. On the contrary, the Swedish centralized administration makes it harder for the privates to intervene in the welfare administration; instead, Sweden takes advantage of larger bureaucracies and more intrusive policies (Knudsen and Rothstein, 1994: 216). In the recent years, Denmark, for instance, has extended the private childcare institutions and the citizens can choose between public or private ones. Private institutions have multiplied and even when municipalities establish the fees, they can set charges for other activities, as a result, child-care has increased its costs (Kvist and Greve, 2011:150). There is a rise also in private health insurance and private pension system, Kvist and Greve point that these new schemes of multi-tiered allocations bring social inequalities since “high income earners have better options than low income earners” (2011: 153). In general, the Nordics are family-friendly countries and have a special concern about public childcare and parental leave for the development of the child in the firsts years. In comparison to central and southern Europe, the Northern periphery has higher fertility rates, which are not against the high rates of women in the labor market. There are three policies that catch the eye in the Nordic welfare system: the effective day-care system, cash-for-care benefit and the father’s quota. The universal day care system permits every child to receive care attention as a social right. The cash for care scheme allows parents to stay at home with the child while receiving financial support from the State; parents can decide if the mother or the father stays with the child. The father’s quotas on the other side, seek to promote gender equality and improve the connection between the father and the child; the Ensayo Elisa Fernanda Barreto Pérez. Punto y Seguido. Número 4. On the other side, the Nordic welfare scheme also promotes the social security in a “business-friendly environment”; Sweden for instance, introduced in 2007 “lower replacement rates in unemployment insurance and simultaneously reduced state job creation measures” (Alestalo, Hort and Kuhnle, 2009: 31). Nordic countries have very low unemployment rates4 and the unemployment insurance has very strict assignation rules. Furthermore, with the high level of immigration they are experimenting, non-employment is still on the agenda. quotas are not transferable and work under a use-it-or-lose-it scheme (Eydal and Rostgaard, 2011: 165). Father’s quotas are a benefit apart from the general parental leave. In childcare policies, Sweden and Norway have the most flexible system between the Nordics, “parents can combine part-time day-care and partial allowance” (Eydal and Rostgaard, 2011: 170). Norway was the first country to establish father’s quota in 1993 and was followed by Sweden and Iceland. Today, Norwegian fathers can have 12 weeks off of work. Swedish parents have 480 days of paid parental leave, of those 60 days are exclusively for the father. Iceland has the most egalitarian scheme for parental leave, both parents can have three months and three more months can be taken by either of the parents. Challenges Alesto, Hort and Kuhnle (2009) assert that there are five main challenges that the Nordic countries face today: International migration, Globalization and European integration, Economic development, transformation of the class structure and ideological changes. Finland on the other hand, has not introduced father quotas and was the last one to introduce the cash-for-care policy. In Denmark, fathers have only two weeks of parental leave, and the parents who are inside the labor market cannot receive cash allowance, while in Sweden the parents cannot receive it if they are getting benefits of some other social support. Since 1970, Nordic countries have received a large amount of refugees, asylum seekers and family migrants (Alestalo, Hort and Kuhnle, 2009: 18). These demographic changes represent a modification in several social spheres; for instance, Sweden, Norway and Denmark had a rise in the number of Muslim and Catholic groups. For a very secularized and historically Protestant society, this phenomenon is a challenge because these religious associations also play a role as welfare services providers. A less homogeneous population brings to the table some questions for further research: what will happen with the children born in Nordic countries? Which schemes will be the framework for future allocations and membership for the universal welfare state? Will it still be universal? Additionally, childcare is a local service, that is, municipalities are responsible of the delivery of day-care. Iceland was the last country to introduce the day-care scheme in 2009, when 11 out of 77 municipalities established it. Municipalities also seem to be touched by the financial crisis, for instance, Denmark and Iceland have reduced costs by decreasing the opening hours and the benefits of the parental leave, respectively. A more fragmented population is also seen as a challenge since the social structures in Nordic countries are changing. During the consolidation of the Welfare system as we know it, the Nordic societies had more workers and farmers than urban population. Today, this characteristic has reversed with a big proportion of well-educated middle class. This change in class structure represents a challenge because workers and farmers were partly responsible of the universal, equal and state-centered welfare schemes that the Nordic model has today (ibid.); the fact that In addition to this, the Nordic countries also promote the early return of women to the labor market after maternity leave with the benefits of the day-care system, especially in Denmark. It is important to remark that middle class fathers tend to take the “father’s quota” more than lower class dads, and migrant families tend to take the cash-for-care benefits more than the nationals (Alestalo, Hort and Kuhnle, 2009; Eydal and Rostgaard, 2011). 4 Unemployment represents 7.1% in the region, 7.3% average for Nordic men and 6.8% for women (Norden, 2014). Ensayo Elisa Fernanda Barreto Pérez. they are reduced might let us think that it would have consequences in short and long terms. The Neo-liberal agenda also represents a challenge. When the economical crisis hit Sweden and Finland in the 1990’s, the Nordic Welfare state was strongly questioned for its “excessively generous sickness and unemployment benefits”. Today, Finish and Swedish economies are recovered and present a high growth; however, there is a special attention on the argument that the intromission of the State in people affairs creates dependence and “worsens the problems it sets out to solve” (Alestalo, Hort and Kuhnle, 2009: 24). Nygård (2006) states, by the average of the party positions, that Denmark and Sweden are the most open to a market orientation while Norway, Iceland and Finland have remained to the idea of Welfare maintenance. Anyway, “the positive attitudes towards the welfare state” prevail stable (Nygård, 2006: 376). The Europeanization is also a concern for citizens and academics. Nordic countries have had different stances in respect of the European integration. Denmark was the first Nordic member-state to join the European Union, followed by Sweden and Finland. However, the two Scandinavian countries remain using their local currency while Finland entered the Eurozone in 1999. Norway and Iceland stayed outside the Union but they are part of it as the three others of the European Economic Area (Alestalo, Hort and Kuhnle, 2009: 19). The five of them have become more integrated to the Union and its internal market, which can be a concern with regard to the social model. Conclusion Summarizing, I described how we could define the Nordic model taking the geographical identities into account. The way Nordic countries solve public issues helped positioning them as social-democratic countries5, with a wide concern of universal and egalitarian coverage. 5 The “social-democratic” model is a very debated concept since historically the Nordics have had minoritarian governments and the allies between parties have been a rule more than an exception. In this regard, we cannot say the Nordic Welfare Model has been a pure social-democratic achievement, see Alestalo, Hort and Kuhnle 2009. Punto y Seguido. Número 4. The degree of state intervention and the scope of the policies change between the five Nordic countries. Nonetheless, Finland and Denmark show a more open scheme for private welfare services providers but this doesn’t mean the Welfare schemes are disappearing in these countries. Finally, Nordic countries do not have it as easy as we could think; the high level of immigration and the economic crisis are virtual challenges for the continuity of high effective welfare systems. It is stated that Welfare states need the prosperity of economy in order to survive since welfare schemes disincentive the inversion (Offe, 1984). They cannot deny the capitalist schemes of their policies since the Nordic model can be described in a very broad way as “a platform of state regulated socially modified capitalism” (Kildal and Kuhnle, 2005: 5). Claus Offe said that this is the contradiction of welfare states: capitalism can’t survive with or without welfare schemes (1984: 143). It is not surprising that The Economist report (mentioned in the introduction of this essay), showed some surprise of the efficient and effective way public services are delivered in the Nordic countries since there are numerous reliable defenders of the negative impact of high taxes on the market. But Nordics have built one of the strongest economies in the world, even when “growth and efficiency are not the sole goals of Scandinavian national welfare politics” (Alestalo, Hort and Kuhnle, 2009: 26). We should be aware of the next moves of this supermodel, waiting for changes that will arise between the member countries and looking forward to analyze their impact in the rest of the world. This could be a topic for further research. Ensayo Elisa Fernanda Barreto Pérez. Bibliography Alestalo, Matti Hort, Sven E. O. and Kuhnle Stein. (2009). The Nordic Model: Conditions, origins, outcomes, lessons, Hertie School of Governance, Working Papers, No. 41. Allardt, Erik. 2000. 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