The general welfare states of the Nordic region have been described within a variety of perspectives.The following analysis by Prof. Stein Kuhnle is based on twelve characteristics which (in 1998) the Nordic countries appear to share in common.

The Nordic Approach
To General Welfare

AT THE START of the present century, the Nordic countries were among the poorest in Europe. But as the 1900s come to a close, that state of affairs has been reversed, thanks to a demonstrably successful blend of market economy, democracy, voluntary organizations and active government policies.

*For a definition  of "Norden", see Norden & Scandinavia.

All European countries may to some extent be described as general welfare states. What is distinctive about the Nordic approach is the dominant role of national governments in the formation of social policy, and the development of an extensive public sector for the implementation of that policy. The state also has an important social-political function in other European countries; but a much more prominent role is played by the private sector, voluntary organizations, and the family than is generally the case in Norden.*

The European invention of social insurance has since spread throughout the world
The invention of social insurance

Social insurance, which constitutes the foundation of the modern welfare state, is a European invention. In replacing the "poor laws" of Europe, national insurance programmes provided a more effective and humane response to the problems of old age, illness, industrial accidents and unemployment.

One of the first programmes to be established was workmen's compensation for Norwegian miners, in 1842. A number of limited insurance plans were developed throughout Europe during the following decades, but a major breakthrough occurred with the introduction of a national insurance system in Bismarck's Germany during the 1880s. The most lasting and significant innovation of the Germany system was the principle of state-supervised compulsory insurance. That principle was fiercely debated at the time, but has since been incorporated into most social insurance systems.

The European invention of social insurance has since spread throughout the world. As of 1995, some 165 countries had adopted some form of social insurance system; nearly all provide old age and survivors' pensions, as well as compensation for work-related injury. Less widespread is unemployment insurance, which currently exists in approximately sixty countries.

Historical factors help to explain why citizens of the Nordic countries tend to expect a great deal of their governments
The role of the state

In the early developmental stages of European social insurance systems, debate centred on the proper role of the state. There eventually emerged a variety of approaches, the basic outlines of which remain visible today. A rough distinction can still be drawn between a Northern European approach which emphasises national citizenship and a co-ordinated institutional structure, and a continental approach with more fragmentary institutions and a greater reliance on the family.

There are historical factors which help to explain why the citizens of Northern European countries in general, and the Nordic countries in particular, tend to expect more of their governments than do the peoples of Southern Europe and the United States. The feudalism of the Nordic region was less rigid than in continental Europe; and, although far from classless, Nordic societies were comparatively egalitarian during the pre-industrial era. They have always had fairly small populations, with a high degree of cultural homogeneity in terms of language, religion, social behaviour, etc.

In all of the Nordic countries, there was a forced merger of church and state following the Reformation, which helped to strengthen and legitimate the central government. In Southern Europe on the other hand, health, education and social welfare services remained the province of the "supra-national" Roman Catholic Church until quite recently.

The growing strength of the labour movement and the class-based struggles of the industrial era resulted in political compromises which laid the groundwork for the universal, egalitarian social insurance systems of today's Nordic countries. The notion of a "people's insurance" was already well-established at the turn of the century; but it was not until the 1950s and 1960s that such systems were more or less fully established throughout the region.

The state guarantees basic pensions and free or heavily subsidised health services for all residents
The Nordic model

In comparison with the rest of Europe, the Nordic general welfare states share twelve fairly distinct characteristics which, taken together, may be regarded as a specifically Nordic "model". Those characteristics are:

1. A greater degree of active state involvement than in other countries. For example, the state guarantees basic pensions and free or heavily subsidised health services for all residents, although the delivery of such services is usually administered by provincial or local governments.

2. By international standards, the greatest proportion of the labour force employed in the social, health and educational sectors-- roughly thirty percent.

There is a comparatively high level of trust between citizens and governments
3. Heavy reliance on the public sector for the provision of social and educational services; roughly ninety percent of all personnel in those sectors are public employees. The corresponding figures for other European countries range from 40-80 percent; in the U.S., the figure is 45 percent.

4. The organization of social insurance within co-ordinated national systems which have overall responsibility for basic pensions, sick-leave benefits, child allowances and health services.

5. A comparatively high level of trust between citizens and governments. Nordic societies are more "state-friendly" than other European societies.

Entitlement is not conditional on participation in the labour market
6. Comprehensive, or universal, social insurance systems which cover entire populations or sub-groups. For example: every resident is entitled to a basic old-age pension upon attaining retirement age, even in the absence of any history of gainful employment; child allowances are allocated to all families with children, regardless of income level; all residents are entitled to the best available medical services, irrespective of income, social status or other personal characteristics. This contrasts with most other European countries, where entitlement is conditional on successful participation in the labour market.

7. An advanced level of gender equality, especially as a result of legislation since the 1970s; essentially all benefits are "gender-neutral", in that women are treated as individuals with needs and rights of their own, rather than as merely wives and mothers. Nordic labour markets are characterised by high rates of female employment, nearly-equal incomes for men and women in comparable occupations, and a well-developed support system for working mothers.

8. Social insurance systems free of class or occupational bias. Those with high incomes are included in the same system as those with low or no incomes.

The egalitarian spirit of the Nordic countries very likely contributes to social cohesion and stability
9. General taxation as the principal means of financing, which has the effect of redistributing income. As a result of the Nordic countries' universal, redistributive social insurance systems, their poverty rates are among the lowest in the world. Minimum pensions are not especially high, but generous in comparison with those of most other countries.

10. A greater emphasis on providing services, as opposed to direct income transfers, than in other European countries. Those services include an extensive network of child-care centres, old-age homes, and in-home assistance for the severely ill and the elderly.

11. A traditionally strong emphasis on full employment as a goal in itself, and as a prerequisite for generating the necessary economic resources for the general welfare state.

12. Strong popular support. Such issues as children's well-being, public health, old-age care, etc., are consistently accorded the highest priority in opinion surveys and during elections. No political party seeking broad support can afford to ignore them.

Prof. Stein Kuhnle
Dept. of Comp. Politics
University of Bergen
N-5007 Bergen

Additional writings by Stein Kuhnle on this subject:
"Reshaping the Welfare State", in The Politics of the New Europe; Ian Budge and Kenneth Newton et al. (eds.), Longman, London and New York, 1997.
"The Nordic Welfare Model and the European Union", co-authored with
Rune Ervik, in Comparative Welfare Systems: The Scandinavian Model in a Period of Change; Bengt Greve (ed.), Macmillan Press, Basingstoke, 1996.
See also:
Three Types of
European Society

The Price of

The fact that the Nordic countries can be described with the foregoing list of distinguishing features does not mean that they have become "welfare paradises". As nations everywhere, they are confronted with a variety of old and new challenges. But in comparison with other developed countries, they are subject to far less severe and widespread levels of crime, alcohol and drug abuse, poverty and related problems. Furthermore, problems associated with single parenthood and unemployment appear to be less severe, due to the support provided by Nordic societies to those affected.

This comparatively favourable state of affairs is almost certainly a consequence of the institutions and social policies of the region's strong and efficient central governments. In addition, the comparatively egalitarian spirit of the Nordic countries, as expressed for example in their redistributive income policies, very likely contributes to greater social cohesion and stability.

Current challenges

Thus far, the 1990s have been a decade of considerable economic turbulence, resulting in unusually high rates of unemployment and growing strains on social insurance systems. Sweden and Finland have been most severely affected, while Norway has thus far managed to avoid cutbacks, thanks in part to its substantial oil and gas revenues. Iceland and Denmark occupy a middle position in that regard.

In recent years, all Nordic governments have stepped up their efforts to encourage and assist the jobless to find gainful employment. Some may be tempted to interpret that trend as a concession to neo-liberal ideology. But it is actually in complete accord with the traditional Nordic emphasis on the value of work and full participation in society. Politicians who blow the neo-liberal trumpet too loudly tend to encounter resistance in Norden. Thus, the basic structures of the Nordic general welfare states have remained intact, largely due to broad political compromises and the sufficient, if somewhat grudging, support of the voting public.

At this point, it is impossible to say whether the minor modifications to the social insurance systems of Sweden and Finland, and to a lesser extent of Denmark, may prefigure some kind of fundamental change. But so far, the institutions and programmes of the Nordic general welfare states have survived fairly intact, despite the severe challenges of recent years. It is therefore still appropriate to speak of the "Nordic model" of society.

-- Stein Kuhnle, March 1998    

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