Nordic Welfare States in the European Context

Johan Fritzell, Bjorn Hvinden, Mikko Kautto, Jon Kvist, Hannu Uusitalo

• Publisher: Routledge
• Year: 2005
• Print ISBN:
  9780415241601
• eBook ISBN:
  9781134579006
• Topic: Politics & International Relations
• Subtopic: Health Care Delivery
• Index: Politics & International Relations

This important sequel to Nordic Social Policy (Routledge 1999) compares welfare state development over the last twenty years in Denmark, Finland, Norway and Sweden with that of Germany, the Netherlands, the United Kingdom and other Western European countries. Topics covered include:
* income distribution, health inequalities and gender equality
* gender policies, health and social care services and policy reaction to family changes
* social security and employment policies
* financing of welfare states.
In the context of globalisation, ageing populations, changing employment patterns and rising inequalities, Nordic Welfare States in the European Context offers an empirical analysis of welfare adaptations and a lively discussion of the historical development of European social policy. It finds a greater ambiguity regarding variation and trends than is commonly suggested. Contrary to expectation, there is little evidence of the Europeanisation of Nordic welfare states, rather the reverse. The comparable and empirical data used in this study make it a unique contribution to understanding current trends in European social policy.

1 Introduction: How distinct are the Nordic welfare states?

Mikko Kautto, Johan Fritzell, Bjørn Hvinden, Jon Kvist and Hannu Uusitalo

The aim of the book

This volume explores the issue of whether the Nordic welfare states have become more like other Western European welfare states in the past twenty years. Are there still notable and systematic differences, or has the distinctiveness of the Nordic welfare states evaporated over time? We address changes in social policies and living conditions from an empirical perspective using comparable data.

In our earlier volume, Nordic Social Policy (Kautto et al 1999), we examined the socalled ‘Nordic model of welfare states’ by looking at variations across the Nordic countries of Denmark, Finland, Norway and Sweden. We demonstrated how close scrutiny sometimes reveals substantial variation and even divergent trends between countries, but also how the latter may nevertheless result in less variation within a group of countries. We adopted a framework that encompassed the major upheavals in the economic and employment situation in these four Nordic nations during the early 1990s. Against expectations, the empirical analysis of welfare state adaptation to changing circumstances showed more stability than change, both in terms of social policy measures and living conditions. A central conclusion of the book was thus that even in differing economic situations the Nordic welfare states seemed to have developed in a relatively similar manner; if there was Nordic unity in the early 1980s, it seemed to have persisted into the mid-1990s.

This follow-up title continues from where Nordic Social Policy ended by shifting from an intra-Nordic focus to a larger Western European comparison. A broader perspective and the opportunity to update some of the data allow us to ask two important questions. First, how different are the Nordic welfare states as a group when contrasted with certain other Western European welfare states? Second, are such differences narrowing or widening over time? In other words, when we examine differences between the Nordic welfare states in a Western European comparison, taking account of recent policy developments and signs of growing inequalities in the Nordic countries, is talk of a distinct Nordic variety of welfare states still justified?

Most of the existing research indicates that it does make sense to talk about a Nordic model of social policy, or, models aside, it at least suggests that Nordic countries often group together when compared with other countries. With its roots in the mid-1970s and gaining renewed momentum in the 1990s, this strand of thinking has spawned such concepts as typologies, welfare state models or welfare regimes, welfare clusters and families of nations. Despite the variety of terms and criteria a common denominator in formulating typologies is the recognition that countries have qualitatively different types of social policies that to a large extent result from diverse social structures, and historical and political processes. Furthermore, the characteristics of welfare regimes are believed to explain much of the variation in outcomes for the population. Another suggestion is that countries associated with a particular welfare regime tend to follow similar development paths.

This position of regime-specific development is challenged by ideas in which convergence is expected to occur, either explicitly or implicitly. Such beliefs offer another interpretation for the development of social policy by questioning the permanence of contrasts between countries. While a common denominator here is the notion of narrowing disparities, the different views do not gather comfortably beneath a common label because of their varied assumptions about the mechanisms behind these convergent trends. One prevalent assumption is that convergence is stimulated by similar challenges, be they internal and/or external. For instance, external challenges are said to subordinate social policies to economic policies, and to confine autonomous national decision-making. Also, political actors with growing numbers of international contacts are believed to seek broadly similar types of solutions to similar pressures and problems. As a result, institutional arrangements and provisions are expected to become more uniform. Another view is that some countries pioneer policies that are later adopted by others; in this sense countries are reckoned to learn from each other’s policy innovations and good experiences. Previously, ideas about policy learning were often underpinned by notions of a more or less uniform evolution from simpler to more advanced policy arrangements, but such views are rarely articulated any longer. Today, regardless of what the underlying mechanisms are believed to be, convergence implies that the welfare arrangements of different countries will gradually become more similar.

In our attempts to judge whether the distinctiveness of Nordic social policy is lasting or dissolving we are here dealing with both of the above lines of thinking. Accordingly, the first general aim of the comparative studies that follow is to address variation, and especially to consider distinctive characteristics of the Nordic welfare states. What features of social policy distinguish the Nordic welfare states from others? To what extent does the level and distribution of welfare ¹ as measured by outcomes separate the Nordic countries from others? The second general aim is to address the issue of convergence and divergence by scrutinising European trends within certain important policy areas and in the light of established indicators on living conditions. Are policy solutions becoming more similar? How are the level and distribution of welfare developing?

In thinking about the distinctiveness of the Nordic welfare states it is necessary to consider both the similarities and the differences. To be distinct the Nordic welfare states should have features in common, but they should also be different enough as a group to stand a certain distance from other countries. Obviously the reference group and time period adopted are crucial for such judgements. The overall set of countries compared in this volume is formed of the Nordic countries and the other member states of the European Union. There are thus fifteen EU countries and Norway, or to put it in another way, four Nordic countries and twelve non-Nordic EU countries. As in the earlier volume Denmark, Finland, Norway and Sweden feature in all our analyses. In addition, we decided to incorporate three non-Nordic countries in the study analyses of all chapters. Germany, ² the Netherlands and the United Kingdom were chosen because welfare state arrangements and their consequences in these three non-Nordic countries are generally believed to be very different from each other and the reason these countries are often associated with distinct welfare state models. ³ Other countries have been included in the analyses and discussions when the study design has allowed this. As in the previous volume we start from the 1980s but place most emphasis on changes during the 1990s. In all chapters we have stretched our analyses to include the most recent data, but there are inevitably differences in the choices of reference year depending on the research questions or dictated by data limitations.

Having now specified the focus of the book, the countries to be compared and the time period for our studies, we next discuss issues that are crucial to all the chapters, namely the controversial ideas on differing European welfare models and pressures for convergence in European social policy. Finally, we present the common approach behind the comparative studies that form this volume and the research questions pursued in individual chapters.

The Nordic welfare model

While the notion of a ‘Nordic’ or ‘Scandinavian model’ has existed for some time, it was only in the 1990s that the research community entered into deeper discussions on the pros and cons of thinking in terms of ‘types’, ‘models’ or ‘regimes’ of welfare. Much of this discussion has centred around—for and against—the approach adopted by Esping-Andersen (1990, 1999), who suggested that the typically different relations existing between welfare states, labour markets and families can be characterised as three ‘welfare regimes’. These Liberal, Social Democratic and Conservative welfare regimes result from different historical forces, are organised according to their own logic, produce different outcomes, and follow qualitatively different development trajectories (Esping-Andersen 1990:3, 1996 and 1999; for earlier writing see e.g. Titmuss 1958, 1974; Wilensky and Lebeaux 1958; Mishra 1977; Korpi 1983; for overviews see Kvist and Torfing 1996; Abrahamson 1999).

Some scholars have criticised typology thinking in the first place (Baldwin 1990; Ringen 1991), while others engaged in discussion with Esping-Andersen have sought to identify the most crucial criteria for the establishment of welfare regimes (e.g. Lewis 1993; Orloff 1993; Sainsbury 1994; Anttonen and Sipilä 1996). Others have presented views on the appropriate number of welfare regimes (e.g. Castles and Mitchell 1990; Leibfried 1992; Ferrera 1993). Some have compared the extent to which measures of outcomes between different countries vary systematically with the regime type (e.g. Fritzell 1991; Bianchi et al 1996). Ultimately, many of these studies have aimed to empirically test the validity of the theoretical framework pertaining to welfare regimes.

Among the potential problems in using typologies is that they easily lead one to think in deterministic terms and to homogenise cases across areas and time. For instance, it may be tempting to argue that determinants of all welfare policies are the same within countries having more or less the same regime, or that countries believed to be close to a given regime are close in all respects. Yet within a country policies may have different determinants. The determinants of policies and policy outcomes may also differ between countries, and factors influencing policy may vary over time as has recently been shown by Francis Castles (1998). Moreover, similar aims or outcomes may sometimes be achieved through different policies (cf. ‘functional equivalents’ in Merton 1968). Evidently, then, if there is a ‘Nordic model’ there also seems to exist a varying number of other models, depending on the focus of studies. For instance, it has been argued that we can distinguish between five models of social insurance (Korpi and Palme 1998), five social care models (Anttonen and Sipilä 1996), four family policy models (Millar and Warman 1996), four gender policy approaches (Chamberlayne 1993) and three unemployment insurance regimes (Gallie and Paugam 2000), while there may exist only two health care models in Europe (Saltman et al. 1998).

One paradox when using welfare regime theory is that while social policy schemes are in a state of constant flux, the regimes themselves are mostly thought of as being stable. Yet it has been shown that countries’ associations with regimes are not carved in stone, because their welfare systems do develop over time, and countries may move from one regime to another (Kangas 1993). Sometimes development paths may be similar but with a different timing (Kangas 1994). It is thus not surprising that instead of a single Nordic model some prefer to talk about several Nordic models. For example, a number of authors have noted intra-Nordic disparities in the balance between economic and social goals (Mjøset et al. 1986; Kosonen 1998), in social policy schemes (e.g. Alban and Christiansen 1995; Ploug and Kvist 1996; Korpi and Palme 1998), in the balance between cash transfers and services, between private and public solutions, as well as institutional (e.g. Baldersheim and Ståhlberg 1999) and political variations (Marklund and Nordlund 1999). It is easy to expose differences between the Nordic countries, but harder to place them in perspective.

In other words, numerous objections against typologies have been raised from various viewpoints, and currently there is certainly no watertight typology covering the various dimensions of the welfare state that everybody agrees upon. Nevertheless, it is still plausible to think that differences in policy choices lead to differences in outcomes and that countries, as the important policy-making units, cluster around varieties of policy options and policy outcomes. This situation is not necessarily an impasse as it is possible to distinguish between empirically created models and theoretical ideal-types. In addition, and in contrast to empirical clustering of countries, the ‘Nordic model’ may be understood as an ideal-type in the Weberian sense, meaning that no country will embody all the characteristics of this model. An ideal-type model represents a standard against which empirical cases can be compared. It can be a helpful tool for empirical comparisons, as it allows researchers to study the degree of proximity or conformity of countries to the model (Weber 1949:90).

In our previous book, the list of Nordic welfare state characteristics included elements that characterised both policies and their outcomes (see Kautto et al 1999). Accordingly, a Nordic welfare model is associated with a broad scope of public social policy and political commitment to full employment, accompanied by active labour market measures. Universal flat-rate basic security and an earnings-related component for those with a work history are the elements of a fairly generous income security system. Another feature is local and publicly funded service provision to cater for all needs and the whole population (see also Erikson et al 1987; Kolberg 1991; Hansen et al 1993; Sipilä 1997; Kvist 1999). These characteristics mean that the ‘Nordic model’ has a greater share of public expenditure and a higher share of social expenditure of the GDP than other models, accompanied by higher taxation. With regard to outcomes, the idealtypical Nordic model should achieve low income inequality, low poverty rates and small differences in levels of living and gender equality. What is more, these various aspects are thought to interact and reinforce each other: only together do they constitute the whole that we may describe as the ‘Nordic model’ (Esping-Andersen and Korpi 1987).

The above characteristics do not represent an exhaustive listing, but do help us to understand the crucial elements in an ideal-typical Nordic model, and these we aimed to include in our empirical comparisons. It is clear that in reality, and as mentioned above, no one country will display all, if any, of these characteristics perfectly. And to be sure, countries are more or less close to or distant from a standard. A common starting point is that countries are the key unit of comparison and it is up to the individual chapter studies to show whether and how clustering of countries occurs in certain key dimensions. The authors also examine whether the Nordic characteristics located in different dimensions in previous research have persisted.

Is there convergence between the Nordic and other Western European welfare states?

Whereas welfare models are often portrayed as institutionally resilient to change, and even as ‘immovable objects’ (Pierson 1998), another strand of current comparative welfare state research focuses on pressures for change. This literature is of particular interest for the purposes of this book as it argues that welfare states are prone to change in response to pressures, and furthermore in a way that will ultimately lead to convergence of different types of welfare models. Again this is a controversial argument and we need to clarify our standpoint here.

Despite the recent growth of interest in convergence, the hypothesis itself is not new. In the context of societal development in general, early sociologists like Herbert Spencer and Auguste Comte advocated the idea that societies develop and modernise along a similar path in response to common causal factors and that this adjustment may ultimately lead to narrowing differences between nations. In the context of welfare state development the idea of convergence was formulated most explicitly in the 1960s and 1970s. This so-called first generation of comparative welfare state studies typically saw welfare state development as a response to changing societal processes, although there were different variants to this general functionalist hypothesis. The most influential school of thought is often labelled the logic of industrialism (e.g. Kerr et al. 1960; but see also Wilensky and Lebeaux 1958; Wilensky 1975). The basic underlying mechanism here is that technological and economic rationality engenders convergence in all advanced industrialised societies regardless of historical and political tradition, not only in terms of the institutions of the welfare state but more generally. According to this functional logic, all societies and their institutions were expected to evolve towards ‘pluralistic industrialism’. Within welfare state research this basic idea is sometimes embedded within modernisation theory (Flora and Alber 1981). As pointed out by Palme (1990), among others, the functionalist orientation was also prevalent in more Marxist-oriented writings, in which the development of the welfare state was largely seen as a necessary feature of modern capitalism (see e.g. O’Connor 1973).

In several branches of research these ideas were subjected to severe criticism, and for a decade or two the convergence hypothesis was abandoned (see e.g. the volume edited by Goldthorpe 1984). Few would then have foreseen that the notion of convergence would receive renewed attention in the 1990s. When the convergence hypothesis is spelled out today, it is usually accompanied by arguments stressing factors such as internationalisation, geopolitical transformations, technological revolution, liberalisation of money and capital markets and globalised culture. What is common to past and present convergence thinking is the tendency to portray the pressure factors as irresistible forces that will lead to increased similarity of welfare states. Another common element is the limited attention given to partisan politics. Despite many similarities one profound difference between the ‘old and new hypotheses of convergence’ (Montanari 2000) should be stressed: the former theories were mainly occupied with historically understanding how and why the growth of welfare states occurred in the twentieth century, whereas the latter are basically dealing with the necessity of welfare state restructuring.

Much of the current discussion on convergence in the context of social policy and welfare revolves around the twin themes of the effects of globalisation and European integration. In the literature the concepts ‘globalisation’ and ‘integration’ are often intertwined and their interrelationships are rarely specified precisely and explicitly. While analytically globalisation can be divided into different dimensions, economic globalisation, which is seen to result chiefly from unconstrained capital flows and operations of multinational enterprises, is clearly the dimension attracting most interest (e.g. Hirst and Thompson 1996). Those focusing on European integration, on the other hand, have directed attention to the political constraints created by the European Union and deepening European integration (Streeck 1995, 1996; Scharpf 1999), although the birth of EMU has added an economic flavour to the existing literature (see e.g. Pochet and Vanhercke 1998). To some extent these two aspects have been bound together in discussions of the role of international or supranational agencies as precursors for the development of ‘epistemic communities’ that share perceptions of current challenges and how they should be met (Deacon, B. 1998, 1999).

Globalisation is regarded as including processes that by-pass or at least affect autonomous decision-making, and some actually fear that nation-states have lost their ability to remain sovereign. One measure of sovereignty is the possibility of implementing fiscal policies and it is here that much of the discussion of welfare states is located. A key argument in the globalisation literature is that in a globalised world production forces have become so mobile that firms wanting to avoid high taxation, and especially labour costs, can shift their operations from one country or part of the world to another. Exposure to this threat forces nation-states to tax competition, or at least to modify their tax systems to prevent substantial emigration of firms and jobs. The fact that ‘tax evasion’ has become easier than before threatens tax bases, and thereby ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Figures
• Tables
• Contributors
• Preface
• 1. Introduction: How Distinct Are the Nordic Welfare States?
• 2. Still Different? Income Distribution In the Nordic Countries In a European Comparison
• 3. Nordic Health Inequalities In the European Context
• 4. Gender Policies and Gender Equality
• 5. Gender Equality In Earnings At Work and At Home
• 6. Changing Family Patterns: A Challenge to Social Security
• 7. Health and Social Care Systems: How Different Is the Nordic Model?
• 8. Towards Activation? The Changing Relationship Between Social Protection and Employment In Western Europe
• 9. On Condition of Work: Increasing Work Requirements In Unemployment Compensation Schemes
• 10. Moving Closer? Diversity and Convergence In Financing of Welfare States
• 11. Conclusion: Nordic Welfare States In the European Context
• References