Global Welfare Statehood - The Nordic Experience

Global Welfare Statehood - the Nordic Experience: discussions of the SI Committee on Economic Policy, Labour and National Resources in Stockholm, 11-12 June 2009

1. Global welfare statehood is a concept proposed by the Socialist International at its congress 2008 in Athens. The concept of the global welfare state combines market competition with social integration by decent work and public social security systems. Its fundamentals are based on human rights and on a political system with democratically responsible leaders overcoming corruption and other forms of political criminality.

The states in northern Europe developed their welfare states, beginning after World War I and improved it gradually after World War II, in a way that can be a model useful in a global dimension. In this understanding the world can make use of the Nordic model of welfare states.

2. The financial and job crisis at the end of first decade of the 21st century has a global impact. A serious and lengthy international recession is a fact. The world is probably facing a forthcoming shift in the perception of the market, the role of the state and globalization.

3. Effective measures are a must. The seriousness of the crisis means that political passiveness leads to greater unemployment. It is no use waiting. Initiatives aimed at unemployment and renewed economic growth needs to be introduced in international cooperation. State and global initiatives are called for.

4. The financial crisis has already given the world two ideological answers. The market is not a self-regulating organism and governments can never abdicate from the responsibility to set rules and intervene to restore economic stability. These two elements show in its simplicity that neo-liberalism have collapsed as an economic ideology, as the crises have pulled away its very foundations. The world is witnessing a historic breakpoint, more than 30 years after the beginning of neo-liberal policy in the US and the UK, and after this ideology and the unchallenged belief in the market were spread over the world. Already neo-liberal policy had an intended negative impact on the welfare state, but now in the crisis there is a danger that the welfare state will be destroyed.

5. Faced with a new global era, it is required that the global Social Democracy formulate solutions to the crises: the global welfare statehood. In this respect the Nordic model of welfare states can serve as an inspiration. The model has been used before and has shown superiority in offering security, stability and equity in times of crises. The Nordic experiences show that there is no disparity between a policy aiming at dynamic economy and social, welfare-oriented initiatives and a regime of full democratic freedom. On the contrary, it can actually be documented that welfare and justice are favourable, if not in fact a prerequisite to sustainable, lasting growth.

6. The values of the Nordic model of welfare states can contribute to the ongoing debate and reflection on current developments in the world. In these times of uncertainty about the future and calls for change, political values are very important. When the direction in which the world society should move is determined, focus has to be not only on short-term economic gain but also on long-term development. That is the reason why fundamental social values are so important and why a discussion of the values behind the Nordic model of welfare states can serve as guidelines. In terms of security and further development of the welfare states in the new global scenario, it is also crucial to adapt and develop the fundamental values of social democracy.

7. The Social Democrats and the trade union movement in the Nordic states are the architects behind the Nordic model of welfare states globally well known today.

8. The Nordic model of welfare states is about:


A strong public sector

A fair tax regime

Efficient social systems

Employment insurance

A labour market with a strong trade union movement and strong collective agreements

High employment

Education and training for everyone

The health and education systems are universal and mainly publicly dominated and the public systems for pensions and income security are more universal than in states with weak social systems.

The labour market is characterised by a fairer balance of power between wage earners and employers with greater gender equality, the result being a labour market characterised by negotiation and cooperation.

The Nordic model of welfare states with reasonable financial security in the event of unemployment and possibilities of competence development for unemployed creates narrower gaps between citizens than is the case in most of the states world wide.

9. The Nordic model has fostered excellent adaptability, which will prove an advantage in the coming times of crisis. The background to the Nordic model of welfare states consists of values such as unity instead of individualisation, safety in change instead of exclusion of individuals and protection of wage earner rights instead of social dumping. These values will also underpin solutions to the financial and job crisis. It is a top priority for Social Democrats and the trade union movement, to ensure new jobs and progress. Moreover, the aim at combating tendencies towards increased inequality, marginalisation of citizens and deterioration of wage earner rights.

10. The values and their institutional realization in specific current and future policies can be boiled down to three key concepts: full employment, welfare and social justice. These concepts efficiently describe the set of values that encompasses a contemporary, future-oriented societal model for the twenty-first century. Old concepts and notions have in fact been given new definitions as political developments have occurred in recent years. This is in line with the fundamental philosophy behind the political arguments used in Nordic attempts to ensure citizenship and welfare, enabling people to live their lives side by side in a reasonable way, while at the same time ensuring growth along with security and sustainable development for the populations in these states.

11. Increased information about and awareness of the basic values behind the social model and its actual design are the first steps towards political learning and inspiration that will have a positive effect on development in other states.

The main challenge is to explain the interconnection between implementation of a functioning social protection, social inclusiveness, equal opportunities and high and fair taxes. In many states, to collect taxes is a real and understandable problem. The SI will initiate the debate in the regions of the world of how a process to convince the citizens that a publicly financed social security is an advantage for all citizens.

12. Given that the Nordic model of welfare states is a weighty argument in favour of change processes in other states and that the model can be inspiring, it is important to highlight some of the points that are key in the development of the model:

  • People exposed to change must feel secure. Consequently, change based on security is an inseparable element.

  • The Nordic model of welfare states is developed on the basis of values such as social justice, solidarity and full employment. These values are not contrary to dynamic economy and sustainable development.

  • These fundamental values have brought the Nordic states through economic crises in the past and will also be a strong foundation when challenges and crises occur in the future.

  • The Nordic welfare states were developed in five more or less small states. Regional cooperation between those five states improved this model. SI will start a debate of how this model can be used as a successful experience on the way to a global welfare statehood, in other states and regions.

13. The Nordic model of welfare states has enabled to develop a social organization that facilitate in crises and has made these Nordic states prepared for adapting. The key characteristics of the social organization are:

  • Strong public finances. It is not only a question of reducing vulnerability for a small open economy, it is also the basis for a well-functioning economy, with low inflation and high increases in real wages.

  • Large public sectors, characterised by health and education and training being more publicly dominated and universally oriented, comprising everyone.

  • Supporters of free trade. However, free trade can never be taken for granted. Right now, protectionism is growing globally. Protectionism is not the solution. Fair trade is a necessary condition for high growth in the future.

  • Extensive public pension, income security and social protection, which are more universally oriented.

  • Therefore, the total tax levels are higher than in other states, but also aim at income equalisation.

  • Social bridges - a policy of protecting workers, not jobs. There are three main types of social bridges, life-long learning, adjustment insurance and re-introduction to working life. By providing social bridges one creates a flexible, dynamic society ready to adjust – even if it is painful.

  • The gender dimension’s impact on the economy. Policies designed to help both men and women to combine parenthood with working life. High quality public childcare centres’ and a shared parental leave-system. The system delivers: gender equality and therefore high employment ratio.

  • The green dimension and using environmentally friendly production are important means to create a sustainable society as well as a driving force for growth.

  • Labour markets with another power balance, greater gender equality and more influenced by negotiation and cooperation than in particular Anglo-Saxon countries, the USA and UK.

14. The high rate of labour market unionisation illustrates an important advantage of the Nordic model of welfare states. It indicates the foundation in the Nordic region, which are more characterised by negotiation and cooperation – and less by competition and market forces.

15. The Nordic states has outperformed during the last decade despite – or perhaps thanks to – a large welfare sector financed by high taxes. The crisis makes the case for keeping the Nordic Model of welfare states even stronger. It is not a race to the bottom. It is a race to the top.

16. The Nordic Model of welfare states needs to develop constantly, to keep people secure and dynamic. But there is no need to change model – as it is the model itself that is the base for social security.

17. The Nordic experience shows that those who claim that you cannot combine high growth with a fair distribution of income are wrong. On the contrary: the Nordic experience shows that it is possible to combine growth and social justice.