The Nordic
welfare state
Characteristics
Contemporary changes
Welfare state politics
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The emergence of a welfare state
Concepts and values
Features of the Nordic welfare model
Changes and challenges
The impact of globalisation
Future questions and dilemmas
What is a welfare state?
• a welfare state is a legal state in
which entitlement to a range of
goods is provided or guaranteed by
government
• the welfare state is an institution of
modernism: it directs society to
acknowledge altruism, solidarity and
collectivism as the founding
principles of a modern society
The welfare state
Concepts and principles
• Two main eligibility principles
– Selectivity; targeted groups, means tested
poor-relief or social assistance to the most
needy. Offers a safety-net of last resort.
Benefits are often meager and associated with
stigma, designed to make people desperate to
participate in the labour market.
– Universality; everyone is eligible based on
their rights of social citizenship or civil rights
(Marshall). Gives everyone the same status
and all citizens are endowed with similar
rights, irrespective of class or market position.
The welfare state
Concepts and principles
• Decommodification (Esping-Andersen):
– Decommodification is the effort that make
people lesser dependant upon the sale of their
labour power for income maintenance
– Decommodification occurs when a service is
rendered as a matter of right, and when a
person can maintain a livelihood without
reliance on the market.
– It refers to the degree to which individuals, or
families, can uphold a socially acceptable
standard of living independently of market
participation.
The welfare state
Concepts and principles
• Citizenship and democratic rights
– Civil Rights which refer to the rights of the individual in
law, like freedom of speech and religion, right to own
property, right to equal justice before the law etc.
– Political Rights which for example refer to rights to
participate in elections and democratic actions
– Social Rights which refer to the freedom or the right of
every individual to enjoy a certain minimum standard of
economic welfare and security. They include such rights
as sickness benefits, social security in case of
unemployment and the setting of minimum levels of
wages.
The welfare state
Concepts and principles
• There are two fundamental dimensions of
the welfare state:
– Security
– Equality
• Two basic means to pursue the goals of
welfare state:
– Direct payments of cash benefits (income
maintenance in case of unemployment)
– Direct provision of services (education, social
and health services, care for elderly people,
housing etc.)
The welfare state
Concepts and principles
• The welfare state is deliberately using
power to modify the play of market forces
– By guaranteeing individuals and families a
minimum income irrespective of the market
value of their work or property
– By helping people in case of unexpected
individual and family crises
– By ensuring that this will be the case without
belonging to a special class or having a special
social position in society (benefits and services
covering all the population)
Welfare state models
• The liberal model
– little involvement of the state in the provision of social welfare
– Social security is regarded as being a matter of individual
responsibility
– means tested assistance
– cater mainly for the lowest social strata
– targeted towards the ones who are incapable of self-help
– Governmental institutions are viewed as fundamentally unfit
for the distribution of goods and services
– private welfare schemes are strongly supported
– The classical liberal emphasis on market solutions and selfreliant individualism is favoured
– The role of women and other marginal groups is thus left to
individual efforts and the marked forces.
• US, Canada, Australia, UK
Welfare state models
• The conservative model
– focuses on the idea of subsidiarity.
• The church plays an important role
• the family is of great importance as the provider of welfare
– welfare rights are connected to social class
– occupational status are of great importance
– financed mainly by contributions from dependent
workers
– Institutions provide incentives for a one-breadwinner
family model
– marginal role of women in the labour marked
• Germany, France, Italy (sometimes included)
Welfare state models
• The social democratic model
– broad public participation in economic and social life
– a large share of public sector employment and investments in social
infrastructure
– universalism (a welfare state that includes the entire population)
– free or cheap education for all in public owned institutions
– free or cheap health care in public owned institutions
– child allowance for all families with children rather than income tested
aid for poor mothers
– universal aided old-age pensions including housewives and others who
have not been in gainful employment.
– Transfers and services are regarded as a right for all rather than a
charity for the needy
– All citizens are incorporated in one insurance system, but earnings
through years of employment also play a crucial role.
– a high level of (tax-financed) social welfare for all citizens
• The Nordic countries
Welfare state models
Strong influence from Keynes:
• The state must use money to stimulate
the economy
• Social policy, redistribution through social
policy measures and lowering of income
differences may be important factors of
guaranteeing smooth economic growth.
• “The social” and “the economic” was so to
speak regarded as integral and
inseparable part of the same
development. Premises for each other.
Two sides of the same coin.
The Nordic model – new
challenges
• What happened during the 1980s and
1990s?
– Growing criticism of welfare states amongst experts and
centre-right politicians
– The deep economic recessions in the beginning of the
1990s in Nordic countries gave credibility to that
criticism
– Increasing unemployment, dismal economic growth and
worsening public finances indicated that the Nordic
economies were not sustainable
– Question: was the crisis just a temporary
macroeconomic shock or a sign of a deeper structural
problem?
The Nordic model – new
questions
The debate in the 1980 and 90s
In particular 3 themes:
• Will the welfare state expenditure brake down a sound
national economy? Do we have a choice or must the state
submit to strong globalization tendencies?
• Are the welfare state structured in a way that is suitable to
meet welfare problems in society?
• Is targeting based on selectivity a better principle for
building a well-functioning welfare state than universality?
• Will more co-operation between public and civil sector be
advantageous in ensuring quality in service deliverance?
Should we move from welfare state to welfare society?
Welfare state models
• According to traditional economic theory,
welfare states should not be successful
economies because:
– High taxes are detrimental to work and
investment incentives
– Large public sectors create inefficiencies
– Benefits systems create dependencies which
depress private initiative
– Welfare states may not be sustainable in
longer run if people and firms become more
mobile
Welfare state models
According to neo-liberal thinking
• Equality and redistribution are often regarded as
obstacles to economic growth.
• We must choose between growth and equality.
• We must downsize the public sector and get the
high tax level down.
• The message has been that in order to be
competitive the Western countries – especially
those with high welfare expenditures and ‘big’
welfare states – must cut down their social
security to enhance growth and meet challenges
caused by globalization
Globalization, neoneo-liberalism
and the impact on welfare
state
• Often connected to: Neo-liberal policy,
New right, World Bank, International
Monetary Fund
• Emphasizes the importance of
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public sector reform,
privatization,
deregulation, and
residualized (reducing) public welfare
provision;
– and the establishment of new international
governmental organizations
Globalization, neoneo-liberalism
and the impact on welfare
state
• Possible effects of globalization
on social policy:
– lowering of social and labour standards
– privatization of public services
– creation of global health and welfare
markets
– growing reliance on voluntary and
informal provision
Globalization, neoneo-liberalism and
the impact on social policy
There seems to be a development in
understanding away from
– ‘TINA’ (there is no alternative)
in favour
– ‘TAMA’ (there are many alternatives
Impact on the Nordic model
The Nordic welfare state has still
• A strong commitment to ideals of
Equality, Social justice, Social
security, Solidarity, Social
intergration
• Work ethic is strong and full
employment remains a central goal
• Both a right to work and a social
duty to do so
However:
• New public management is introduced as a
method to restructure public sector in accordance
with neo-liberal ideology. With regard to changes
in delivering welfare services there is also
development towards
– more emphasis on duties rather than rights,
– stronger emphasis on efficiency and incentives,
– selectivity and individual responsibility seems to be
more significant than universality and solidarity and
– in general more strict criteria in getting welfare
benefits.
• This development is especially evident in some
workfare tendencies in contemporary Nordic
societies.
A shift in policy?
• The shift in policy has resulted in:
– active measures rather than passive;
– sanctions rather than incentives,
– duties rather than rights;
– a public contract approach rather than a
rights-based approach and
– emphasis on selectivity rather than
universality.
The Nordic model –
changes and challenges
Core values of the Nordic welfare model and some
changes and challenges:
• 1. Universal coverage
– Differentiation, individualization, need-based benefits, earned
entitlements
• 2. Welfare based on citizenship
– Economic citizenship,customer choice
• 3. Financing through taxation
– Insurance, partial payment
• 4. Equal rights and status
• increased marginalization, social inheritance, economic citizenship
• 5. Equal opportunities and results
– Increased marginalization, social inheritance, economic
citizenship
The Nordic model –
changes and challenges
Core values of the Nordic welfare model and some
changes and challenges (continue)
• 6. Dominant role played by the state
– Private, non-profit, voluntary sector, enterprises, civilian
society
• 7. Decentralized services
– Services based on entitlements, national standards
• 8. High-quality services
– Uncertainty about what public welfare services will be
provided, saving up
• 9. Generous benefits
– Welfare contracts, saving up
• 10. High level of employment
– Yes, but many working-age people outside the workforce
The Nordic model –
changes and challenges
Are the following trends threatening the
Nordic welfare state?
– a move toward more market-oriented views under the
influence of international neo-liberal discourses;
– criticism of taxation and welfare statism;
– the emergence of new managerialism with a focus on
competitiveness and effectiveness;
– criticism of welfare bureaucracy;
– the argument that the welfare state creates
disincentives to work and entrepreneurship;
– accusation of misuse of benefits;
– the ultimate argument that the welfare state, which is
dependent on sustained economic growth, is
unsustainable
The Nordic model – a
success story?
The Scandinavian countries have
• A relative flexible labour market including
flexicurity (flexibility for employers to hire and
fire and security for employees to get welfare
benefits if unemployed)
• Influential, but collaborative labour unions
• A business friendly climate for entrepreneurship
with less red tape than in many other industrial
developed countries
Challenges poverty?
Definitions
• Absolute poverty, lack of shelter, food and
clothes
• Relative poverty, measured by income i.e. 50 or
60 per cent of the median income
• Poverty as relative deprivation, according to
Peter Townsend (1979) poor should be defined as
those who do not have the resources to the diet,
activities and living conditions that else were
common in the society in which they live
• Consensual poverty, defined as not having what
the majority deems necessary
Challenges poverty?
• Poverty after social transfers is
significantly lower in Scandinavian than in
most other European countries
• Despite the universal welfares state in
Scandinavia, there is still a group of
around 11 per cent living on or below a 60
per cent poverty line
• The number of relative poor seems to
increase
• What is the “right” poverty eradication
strategy?
Challenges –
demographic?
Demographic challenges
• In most industrialized and post-industrial
countries, the age profile of the population will
change significantly in the decades to come.
• The contingent of 65+years olds will double in
many countries to around 45 per cent in 2050.
• The cost of pensions will increase
• The need of health care will increase
• Do we need a pension reform – less generous
and more in accordance with the dominant work
approach?
Challenges
immigration?
• Is immigration a threat?
Some studies seem to support the
assumption that increasing ethnic
diversity may be a challenge to the
generous and universal welfare
state, other seems to contradict the
general assumption that ethnic
multiculturalism undermines the
welfare state.
Immigration
Some controversial issues related to
religion, female emancipation, respect
Norwegian customs and behaviour:
• Should parents decide with whom their
children should marry?
• Should the veil be accepted at school?
• Should daughters be allowed the same
freedom as sons?
• Should one require imams to deliver their
sermons in Norwegian?
Challenges from contemporary
ideological and political trends?
• According to Giddens we are living in an era of
reflexive modernity: The influence of tradition,
class, religion and family is no longer as strong
as earlier. People have to choose from a variety
of life-styles in order to develop one’s own selfidentity.
• The core values seem to be self-realization, and
thus universal moral criteria may be weakened.
The question is how this individualism affects the
conditions of solidarity.
– Will solidarity become more unusual and unreliable?
– Will these cultural changes affect a comprehensive
welfare state?
Challenges from contemporary
ideological and political
trends?
• Increased individualism promotes market
solutions and nourishes political slogans
like freedom of choice which is a core
concept of the neo-liberalistic thinking
influencing many contemporary countries.
• If conservative and neo-liberal parties get
a majority in the parliament we might
expect more changes that will adjust or
even dismantle the classic social
democratic welfare state.
Conclusion
• Welfare state core values like justice and equality have a
strong normative status in Scandinavia and are strongly
rooted in culture and society.
• Unlike some other countries, the state and public
authorities have a strong position among inhabitants and
the welfare state has accordingly a widespread public
support.
• Therefore, election-campaigns advocating more
privatisation and downsizing public sector must focus
malfunctions like
– unnecessary bureaucracy
– Inefficiency
– unfair/inadequate benefits and services
• if the campaigns will succeed. Only focusing less taxes will
probably not be successful.
Conclusion
• On a general level, the influence of neo-liberal
ideology and market liberalism in economic policy
seems to be considerably less in the Nordic
welfare states than in many others.
• However and partly due to globalization, the
cultural, ideological and political changes in postindustrial capitalism, including contemporary
Scandinavia, will most likely have some impact
on the structure and function of the Nordic
welfare state. The welfare state will survive, but
probably to some extent be affected by postmodern individualism and neo-liberal economic
trends.
What kind of effects?
• Increasing acceptance of inequality among a
growing number of people
• more use of selective instead of universal
principle in welfare policy
• more use of private insurance instead of public
funding
• benefits more according to one’s contribution, not
according to individual need
• stronger emphasis on work fare and benefits
more linked to contribution in the working life
Future questions and
dilemmas
• What kind of services should be public ones?
• How should they be financed when needs
increase?
• What are the limits of user fees if we do not want
to create inequalities?
• What are the problems and potential of private
provision of publicly financed services?
• How to protect and secure the social rights of
people while controlling the rise of expenditures?
• Solution: To find strategies for increasing the
number of taxpayers. The work approach
strategy.