Changing Social Risks and Social Policy Responses in the Nordic Welfare States

Insuring its citizens against the misfortunes that may threaten their livelihood is the defining feature of the welfare state. The first social insurance schemes that emerged in the late 19th and early 20th centuries were instituted to protect people in cases of work accidents, sickness, unemployment, widowhood and old age (if it occurred). By instituting such schemes, the state acknowledged that individuals were exposed to social risks conditioned by societal structures that were beyond their control (Rothstein 1994).

The purpose of this chapter is to provide a comparative backdrop on changing societal structures and risk profiles in the Nordic countries. The chapter is guided by two questions. Firstly, we ask to what extent labour market systems, household and ethnic demographic structures of Nordic populations have changed in the transition towards postindustrialism, with an emphasis on the most recent phase from the 1990s and onwards. Secondly, we ask to what extent it is reasonable to talk about a distinctive Nordic pattern in terms of the characteristics and distribution of new social risks in the population. These questions are addressed by offering an empirical account and discussion of changes in the socio-economic, household and ethnic composition of the population of the four major Nordic countries: Denmark, Finland, Norway and Sweden. To provide a basis for comparison we include, where possible, data from countries approximating the liberal, the employment-centred and the sub-protective welfare models — the United Kingdom, Germany and Italy, respectively (cf. Gallie & Paugam 2000).

Changes in family structures and family life, such as the growth in lone-parent families, joint custody and shared parenting arrangements are creating new and multifaceted challenges for the capacity of the welfare state. In managing and regulating this complex issue, policymakers need to adjust traditional policies to allow for changes in the social conditions of today’s children and parents, including changes in setting the boundaries between the state and the family and in encouraging labour supply of all men and women. The chapter examines the extent to which Nordic family policy systems acknowledge policymakers’ need to adjust traditional policies to allow for changes in the social conditions of today’s children and parents, including changes in and responses to increasing diversity in the family as well as the form of their response. The question driving this chapter is to what extent are the Nordic countries adapting to changes in lone-parent families.

Problems of reconciling work and family life are highlighted as one of the new social risk factors that accompany the transition towards a post-industrial society (Bonoli 2007; see also Chapter 3 of this volume). Perrons has observed that work intensification, as well as job insecurity, creates tensions that may undermine family life (Perrons et al. 2005). According to Leisering and Leibfried (1999), dual-breadwinner families in particular are facing such problems. Even in Sweden, a Nordic welfare state characterized by a high proportion of dual-breadwinner families, a policy framework that would protect dual-breadwinner families from the time constraints imposed by a demanding working life has so far only been enacted to a limited extent (Furåker et al. 2007). This chapter shows that problems of work-family life balance are indeed present in the Nordic countries — and asks why the protection of employees, and in effect, families, through the regulation of working time, has ceased to be on the political agenda. The question is addressed by conducting a case study of working time regulations across different periods in Swedish modern history.

The development towards a post-industrial society that has taken place in the Western world has led to new forms of social exclusion (Esping-Andersen 1999). Beck (1992) and Giddens (1990, 1991) discuss a late-modern society permeated by risks induced by the increasing individualization in a gradually more market-oriented welfare system and society. It has been argued that social risks are becoming ‘democratized’, progressively affecting a broader part of the population (Taylor-Gooby 2004). These developments call for the fostering of citizens who are active, entrepreneurial and self-governing and who are competent consumers in the social, economic, political and cultural spheres (Trentman 2007, Clarke 2007, Mitchell 2003, Roberts 2008).

Historically, the Nordic countries have only experienced modest levels of unemployment. The extreme cases are Sweden and Norway, which in the post-war period up until 1990 never experienced unemployment levels above 4 per cent. Thus, citizens could become sick, disabled and old but the risk of joining the ranks of the long-term unemployed was modest. This changed dramatically at the beginning of the 1990s when Sweden, Norway, Denmark and Finland experienced high levels of unemployment. This situation naturally increased the risk of unemployment. However, at the elite level, especially in Denmark, it also gave birth to the idea that the character of the risk had changed. In the simplest form, the diagnosis was that those with low education and those with a history of unemployment could never be reintegrated into the post-industrial labour markets (Larsen & Goul Andersen 2009, Goul Andersen 2003). This idea discredited the old Keynesian policies, which by means of macro-economic steering aimed at creating a demand for labour, and called for new ‘active’ policies which aimed at altering the character of the labour supply, that is, the motivation and qualifications of the unemployed. The Danish policy-makers labelled these supply-side policies ‘structural policies’ as they were aimed at lowering the level of structural unemployment.

Self-employment is often presented as a solution to the important issue of inclusion into the labour market for groups that find difficulties in being employed by others. Indeed, recent years have seen repeated calls by Nordic policy-makers for self-employment and entrepreneurship. However, promoting this form of employment is a delicate matter in the Nordic countries. In these countries, welfare systems have been based on the principle of lost wage income, while self-employed persons in need of protection have not been covered. This chapter explores how Nordic policy-makers through policy adaptations have tried to encourage people to enter into the risky position as self-employed. The chapter contextualizes these policy initiatives by discussing how promoting self-employment may also be regarded as a strategy for adapting labour markets to the need for flexibility imposed by the post-industrial economy.

Throughout the Western world, patterns of diseases and disabilities have changed as new forms have emerged (OECD 2010). While many old social risks affecting people’s health, such as inadequate nutrition and hard, physical labour, were related to scarcity, today we are witnessing health risks such as obesity, type II-diabetes, hypertension, cardiovascular disease, certain forms of cancer and so on that in intricate ways may be associated with abundance. Similarly, old social health risks, including dangerous work environments and poor housing conditions, were related to outward physical threats and are as such still present as risk factors, while new health risks appear to be more intangible and seemingly lifestyle related, sometimes even self-inflicted, like eating disorders (e.g. bulimia, anorexia) and deliberate self-harm. And in contrast to the old health risks, often manifested in conspicuous handicaps, the new health risks are less visible, and hence often labelled as ‘diffuse’ — for example, fibromyalgia, chronic fatigue syndrome, clinical depression and anxiety (cf. Øverbye 2005).

Sweden, Denmark and Norway, to varying degrees, have experienced an accelerating influx of immigrants and refugees during the four recent decades. While offering new opportunities, this influx is also posing new challenges for the welfare state (Brochmann & Hagelund 2005: 9; Djuve & Kavli 2007). Indeed, immigrants’ risk of failing to enter the labour market and integrate into society is considered an important new social risk that the Nordic welfare states have to deal with (Timonen 2004: 106). As for labour market integration, this challenge is reflected in the relatively large share of people with immigrant backgrounds among the unemployed and among other groups of working age not participating in the labour force (Statistics Norway 2012; Statistics Denmark 2012; Statistics Sweden 2012). This challenge is not as demanding when it comes to labour migrants¹ as they tend to have high labour participation rates, while immigrants who come in search for protection are more vulnerable to labour market exclusion (see Øverbye 2010).

In comparative social policy studies, Nordic welfare systems are grouped together as belonging to the same welfare model (e.g. Esping-Andersen & Korpi, 1987; Esping-Andersen, 1990; Kangas & Palme, 2005). Nordic welfare systems are known for providing allencompassing coverage of their social security systems. This coverage has traditionally included a combination of basic security and earning-related measures. In addition, the Nordic welfare systems have been characterized by the generosity of the benefits provided, by the high level of effectiveness of their income redistribution policies and by the large development of their social service infrastructures. Apart from a few exceptions (e.g. Saraceno, 2002; Lähteenmäki-Smith, 2005; Scarpa, 2009), comparative social policy studies have nevertheless also implicitly assumed that Nordic welfare systems display these ‘hallmarks’ in a geographically homogeneous manner and that, in these countries, regional variation of living conditions and also in the level of protection from social risks is minimal.

The welfare state can be regarded as ‘an expression of institutionalized solidarity’ (Stjernø 2004: 338). Indeed, institutionalized solidarity has been ascribed to the Nordic welfare states, whose origin and maturation have been strongly associated with Social Democratic ideology (Esping-Andersen 1990). Yet, recent decades have seen reforms that have made observers wonder if some of the Nordic countries are departing from the Social Democratic model. This chapter, using Denmark as a case, aims to discuss to what extent the handling of new social risks incorporated into social policy complies with the political ideology of liberalism.

Amidst the deep and interrelated global crises in finance and employment, the Nordic countries might look like heaven on earth. They could be regarded as such not only by individuals who are particularly vulnerable to the risks sparked by such crises but also by those belonging to the middle class. As recently asserted, one would opt for a Nordic country ‘[i]f you had to be reborn anywhere in the world as a person with average talents and income’ (The Economist 2013). In Europe alone, the Nordic type comprehensive welfare state has apparently fared the best in coping with the international recession while securing its population against social risks (see European Commission 2013). Certainly, recent years have seen policy-makers across Europe embracing policies originating from the Nordic countries such as ‘flexicurity’ (Schmid & Schömann 1999), activation (Knijn 2012: 28), gender polices (Haas & Rostgaard 2011: 192), child investment through public provision of child care (Lister 2009) and so on.¹