Scandinavian Welfare Regime: Comparing Finland and Sweden

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The concept of the 'Nordic or Scandinavian welfare model’ has been discussed widely over the last almost 30 years. It has been an admired approach to the welfare regime. Axel West Pedersen and Stein Kuhnle explain in their book ‘The Nordic welfare state model. The Nordic Models in Political Science. Challenged, but Still Viable’ that the term ‘Nordic countries’ and the attention to their similar characteristics developed in the interwar period. When Finland and Iceland became independent the term ‘Scandinavian welfare’ began to give away to refer to all the Nordic countries that have been considered as the emblematic Nordic welfare case. 

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    The book also tells that there is no literature or ’guide’ on the specific nature or contents of a Nordic model. The most important elements can be considered to be an active role of local government, universal social rights, strong democracy, and equality. By the first, I mean that the state and local governments work closely together. Also, the state has less influence over decision-making than other countries traditionally have. The universal social rights are extended to the whole population and its services and cash benefits are targeted not only to the poor but the middle class as well. This has shaped it to be one of the kind in the past, when most of the world was preferring laisser-faire liberalism and capitalism, including little help for the citizens. The Nordic model favors small income differences. Together with universal social rights and social policy has an extraordinarily low rate of poverty. A strong democracy is again resulting in how political decisions are made in the Nordic countries. Pedersen and Kuhnle see this as ‘consensual governance’. This specific doctrine of conflict resolution and making the policy legitimacy as the basis for political decision-making has built up over a long period. It includes active participation and involvement of various civil society organizations in the political process before the final decision-making moves to the upper in the scale: to government and parliament. 

     According to the book, the roots of the Nordic model can be traced to the 1880s. It was the time when Germany was the forerunner, admitting sickness-, industrial accidents- and old age and disability insurance for workers. The turn of the century was a time with major social, economic, and political changes. Many historical happenings and factors, in the end, made the Nordic countries different from the rest of Europe until WWII. These include making the state responsible for poor relief, the pattern of land ownership, the social democratic parties, which came into power in all Scandinavian countries, and the cultural values, for example, the active role of woman participation.

In the 19th century, Finland was the latecomer. After WWII the major steps that Sweden took first were old-age pension policy and flat-rate benefits. The rest of the Nordic countries followed. The so-called ‘Golden Era’ was in the 1980s when the Nordic welfare model gained popularity. It was also when the Nordic model shaped as we see it now. Then came better individual rights, social security benefits, social assistance and house allowance, welfare services, female employment increased, health care improvements, and a lot of other things. As I see it, it was also when Finland started slowly catching up with Sweden and making its own decisions. 

   As been said the Nordic countries have similar decision-making patterns and after the 1980’s they have gone through a similar path towards welfare. When I am comparing the latest OECD I noticed that Finland has passed Sweden in noticeably many topics. For example, income inequality was higher in Sweden. The poverty rate from 2017 showed that Sweden has a higher poverty rate, especially with 0-17 years old. The difference was notably ratio being 0.093 in Sweden and 0.036 in Finland. Moreover, the overall poverty gap seems to be a little bit smaller in Finland. Sweden also ranks higher in the unemployment rates. Finland ranks better in education performance, even though it is nothing new. So to speak, Finland and Sweden have also more similarities with the education system. The traditional administrative areas are the same in Finland and Sweden, decentralization, deregulation, and managerialism. I wanted to make focus on something that seems to be different in these countries, immigration policies, hence all the decisions which have had a major impact on the immigrants. Further, it seems to be suitable, considering that in both countries it has been recently on the surface and attracted a lot of opinions. In fact, both Swedish and Finnish parties have used it as a major issue to gain votes.

   According to the comparative research project on Nordic welfare states ‘Immigration, housing and segregation in the Nordic welfare states’ (Andersson, Thalmann, Holmqvist, Kauppinen, Magnusson Turner, Skifter Andersen & Yousfi. 2010) the numbers of immigrants have grown rapidly in the past ten years. More specifically 105 percent in Sweden and 81 percent in Finland. Traditionally labor market and housing policies have been the fundamental elements of the Swedish type of welfare.  

According to the OECD index Sweden is one of the segregated countries in Europe. For comparison in 2006, 144 neighborhoods were nominated by immigrants while in 1995 there were only 58 of them. We can conclude that there has been a major migration flow that is continuing. Swedish settlement decisions were the reason why ethnic segregation has happened in Sweden. Basically, first-generation immigrants lived in high immigrant concentration areas in 2006 when they have children this number expands. Over time immigrants have come to live in much higher immigrant densities than they did only a decade ago. This has not only created so-called inequality but also created hierarchies of some kind. For example, immigrants from Africa and Western Asia and other “visible minorities” are much more likely to live in immigrant dense areas compared to immigrants from any of the Nordic or EU countries. Immigrants are also more likely to live in a less attractive environment, in suburbs far away from the city center. We can conclude that it is the increasing geographical concentration of immigrants with their social exclusion that has been the most problematic area of Swedish integration. The country has recently tried the placement policy for immigrants, but they tend to move to the suburbs. Integration problems are also now a reality. Many, especially those having arrived during the past 25 years from non-European countries, have subordinate positions on the labor and housing markets. 

  As the research project explains immigration policy itself started in the 1960s in Sweden. Back then it was mainly the labor market immigration from other Nordic countries. The labor market immigration ended in the 1970s and the other type of immigration increased: refugee immigration and family reunion immigration. The 1950s, 1960s and 1970s immigrants did very well in the labor market. After the 1970s, the integration policy has gone wrong. Some immigrant group has significant low education level and immigrant are discriminated in the labor market. To give an example, seven percent of all highly educated Swedish-born are found in the bottom income quintile (20 percent segment), the number is five times bigger for highly educated from the category Asia with Turkey, Africa, and Latin America. 

there have been aggravating factors for driven immigrant inequality. The social security system is mainly funded by payroll taxes. However, the taxes have little by little decreased since 2007. It happened when the Government introduced a lower tax on income from work compared to income from pensions and unemployment benefits. It has had its consequences on the overall welfare. Hence, recently it has been less favorable to people with real needs, for example to immigrants. 

  In the Swedish unemployment insurance system, to receive the benefits, you have to be a member of an unemployment benefit fund for 12 months and have been working at a minimum of 80 hours/ month for 6 months for 12 months. This has been difficult for immigrants who have just arrived. This increases their risk to be poor. 

However, according to the European Migrant Integration Policy Index (MIPEX), Sweden ranks at the top among 28 countries when summarizing over 100 different policy indicators. Also, Swedish people are the most pro-migration country in Europe. It is the result of many good policies that they have done in the long run.

   In 1995 Sweden granted Swedish language courses for immigrants. In 1975, multiculturalism was established. It meant that immigrants were granted the right to take part in local elections, their cultural organizations were given State and municipal economic support and immigrant children were entitled to get an education in their mother tongue in school. In 1986 Sweden launched the concept of the “freedom of choice” component. 

  The research project also states that the decomposition of the Soviet Union was a huge driver to Finland: joining to Council of Europe, the European agreement on human rights and membership of the European Union. These also had an impact on the Finnish immigration policy. On the contrary, In Finland, the labor market immigration started in 2000. The first major step was the labor-market goals in the Immigration Policy Programme in 2006 which was supporting migration for humanitarian reasons. 

Negative side in Finland is that immigrants are more likely than native Finns to work in jobs that do not correspond to their educational level, and in low-wage sectors. Their labor-market position is also often vulnerable, consisting of fixed-term contracts, part-time jobs, and discontinuous careers are common. However, Finland contributes to having more immigrant entrepreneurship than Finnish citizens.

All immigrants have the right to an individual integration plan for three years. The local immigrant offices draw up the personal integration plans in cooperation with the individual, the local social office and the local employment office. The plans usually include information on Finnish society and give guidance on how their degree qualifications obtained abroad can be updated to meet the requirements of the Finnish labor market. Different types of job training and language instruction are also available. In special cases, the integration plan also includes instruction in reading and writing. The state and many municipalities are quite explicit in wishing to avoid ethnic residential segregation. On the European level, Finnish policies and integration legislation rank well above the EU average. Concerning housing, approximately 60 percent of the municipalities rated their housing services and their capability to respond to immigrant needs as good or very good, whereas only around 20 percent found them to be quite poorly or very poorly organized. 

  When we look at the immigration issue in Finland, we must take into account that the immigration started not before the 1980s. Also, Finland has had time to follow Sweden’s immigration policies and the policies that have gone wrong. Maybe that is why the integration has gone relatively good in Finland. It is also commendable that there have been relatively few immigrants at a time. It has enabled them to better integrate into society, both financially and through other resources. So, it seems even unfair to say that currently, immigration policy has been more favorable in Finland. This, of course, must take into account the traditionally more liberal mindset in Sweden, as well as more favorable thinking on immigration. Now, they take in a lot more immigrants than Finland. To conclude, I would say, however, that Sweden cannot continue to follow the same pattern, taking in as many immigrants and developing so-called 'slums', where immigrants are becoming less well-integrated and at risk of exclusion. However, we may as well question whether the Nordic welfare model can survive at all. As the population ages, immigration and solutions to problems will be a big issue. In general, we may say that perhaps Sweden's role as a role model for the Nordic welfare model has remained in the past.

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