Trust is the foundation stone of the Nordic model

16.09.14 | News
"The Nordic Region needs well-informed citizens in the future who will be more demanding of their politicians - because a sustainable Nordic welfare model will require major decisions in the future and continued citizen trust", said the economist, Sixten Korkman, Professor at Aalto University in Helsinki.

Korkman, who spoke on Tuesday at the Nordic Council of Minsters Sustainable Nordic Welfare conference, compresses the Nordic social-economic model into three characteristics.

"To begin with, we have similar labour market institutions, a strong degree of organisation in the labour market that has a decisive influence on how solutions for the labour market are designed. Here we differ from the other OECD countries.

"Secondly, we invest in human capital - day care, school, college and university and lifelong learning. A third factor is the welfare state. In itself it is nothing unique, but unlike other countries it is inclusive and comprehensive. The institutions that come with the welfare state create, in turn, a high tax burden" says Korkman.

Flexibility and social capital

The Nordic model's brand is strengthened according to Korkman by the countries striving for a system of balance of risk, combined with an openness for the global economy and acceptance of change. The interaction between the authorities, the public sector and well-functioning market forces provide scope for progress and cost effectiveness.

A prerequisite for the continuous preparedness for reform is trust, which according to current research, is a highly unique characteristic of the Nordic countries. This includes trust between citizens and the legal system, but also the political system.

"We have social capital, no doubt. In this lies a major future challenge. We must set much higher standards for our politicians to be able to make the right decisions for the future. Ultimately, it requires a well-functioning democracy so that citizens are well-informed when they make their political decisions", says Sixten Korkman.

Social mobility is the ultimate welfare index

Korkman emphasises social mobility as perhaps the most important hallmark of a functioning welfare model.

"In the Nordic Region it doesn't matter what family you were born into, which in my opinion is one of the most important criteria for a welfare state. We have much greater mobility between social classes that in, e.g. Great Britain and the USA", says Korkman.

All this, combined with a high level of female participation in the work force and low income inequality, is why, according to Korkman, magazines like The Economist highlight "the Nordic super model".

"At the same time the Nordic countries face major challenges - for example, globalisation and intensified competition, the technological development which results in polarisation of the job structure and an aging population. Added to this, Nordic citizens are demanding more and more from the welfare system.  

Longer careers and tangible Nordic co-operation

With reference to the report The Nordic model - challenged but capable of reform, Korkman states that the Nordic countries still have excellent opportunities to enhance welfare.

"Of course we will have to work longer. Young people will need to get into the labour market earlier, we will need to shorten periods of unemployment and extend careers at the end to broader the tax base.

Korkman also sees many gold nuggets in the differences in the Nordic countries and sees that the countries can learn a great deal from knowledge exchange.

"At the same time there is a clear potential for increased tangible Nordic co-operation. Innovation policies, social and health care, as well as research and development are just some examples where this would add value", said Sixten Korkman.  

The halfway conference for the Nordic Council of Ministers' project Sustainable Nordic Welfare took place in Copenhagen on 16-17 September. Follow the debate on Twitter with the hashtag #nordicwelfare

The Nordic model – challenged but capable of reform

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