Knowledge on the Nordics

The Nordic Model at Risk?: Conversations on Regulation

December 11, 2020 Season 1 Episode 7
Knowledge on the Nordics
The Nordic Model at Risk?: Conversations on Regulation
Chapters
2:37
Challenging universal benefits & social care: providing effective & equal standards of childcare
12:20
Challenging tax & egalitarianism: Nordic elites
20:55
Explaining the Nordic labour market & current challenges
23:30
The gig economy
31:11
Workers from foreign companies in the Nordics
35:05
Immigration regulation & integration of refugees in the labour market
Knowledge on the Nordics
The Nordic Model at Risk?: Conversations on Regulation
Dec 11, 2020 Season 1 Episode 7

An ageing population, immigration, tax evasion and incoming foreign workers are frequently cited as threats to the Nordic Model. The universal welfare state is built upon citizens and the state fulfilling their particular roles: the state providing childcare, healthcare and benefits in return for people working and paying their taxes (’the social contract’). But don’t these roles require a lot of national regulation? And what happens to them when globalising forces (such as the arrival of workers from overseas, Europeanisation or international financial markets) hit?

In this podcast, we get to hear about some specific challenges which exemplify the overall context of how big and small crises have affected regulation in the Nordics. The podcast was recorded in October 2020 at the annual conference of the  Danish European Community Studies Association. Thanks are extended to the organisers for letting nordics.info be a fly on the wall.

Find futher reading and full biographies of the participants by clicking here.

If you would like to hear more about the Nordic Model, check out two earlier podcasts from @KnowledgeOnTheNordics: The Nordic Model: Heaven or Hell, or read more on nordics.info.

Support the show (http://www.nordics.info)

Show Notes Transcript Chapter Markers

An ageing population, immigration, tax evasion and incoming foreign workers are frequently cited as threats to the Nordic Model. The universal welfare state is built upon citizens and the state fulfilling their particular roles: the state providing childcare, healthcare and benefits in return for people working and paying their taxes (’the social contract’). But don’t these roles require a lot of national regulation? And what happens to them when globalising forces (such as the arrival of workers from overseas, Europeanisation or international financial markets) hit?

In this podcast, we get to hear about some specific challenges which exemplify the overall context of how big and small crises have affected regulation in the Nordics. The podcast was recorded in October 2020 at the annual conference of the  Danish European Community Studies Association. Thanks are extended to the organisers for letting nordics.info be a fly on the wall.

Find futher reading and full biographies of the participants by clicking here.

If you would like to hear more about the Nordic Model, check out two earlier podcasts from @KnowledgeOnTheNordics: The Nordic Model: Heaven or Hell, or read more on nordics.info.

Support the show (http://www.nordics.info)

Caroline de la Porte  0:08 
Sustainability of the welfare state, it's become more efficient, more effective over many years, many savings. And at some point, there's a tipping point where the quality just isn't enough... And whether then the Nordic model itself endures or whether that also changes.

Nicola Witcombe  0:26 
That was the voice of Professor Caroline de la Porte from Copenhagen Business School's department of International Economics, Government and Business. In this nordics.info podcast, we get to hear about some specific challenges which exemplify the overall context of how big and small crises have affected regulation in the Nordics. But it should perhaps come with a health warning. Through this process, we find that a lot of assumptions about the Nordic model can actually be questioned. The three challenges that we will be briefly looking at in this podcast are those two universal provision of childcare and very young children, tax evasion and incoming foreign workers, mainly in Denmark and Sweden. Caroline, along with her colleagues from Denmark, Sweden and the United States who all specialize in different areas of regulation, are ideally placed to help us answer some of these questions.

nordics.info is a research dissemination website based at Aarhus University in Denmark, and publishes material by researchers on many different aspects of the Nordic countries within the social sciences and humanities. Nordics.info is part of the university hub. Reimagining Norden, in an Evolving World (ReNEW). This podcast was recorded in October 2020, where I, the editor of nordics.info Nicola Witcombe, was permitted to be a fly on the wall at the annual conference of the Danish European Community Studies Association, also organized by Copenhagen Business School. And thanks for extended to the organizers for letting me listen.

Two key things people think about when they think of the Nordic model is universal welfare and gender equality. Universal childcare down to children as young as 1-3 years of age, the first year of a baby's life usually being covered by parental leave, has allowed high levels of female labor market participation. Here is Caroline de la Porte from Copenhagen Business School again, explaining the status quo taking Sweden and Denmark as examples.

Caroline de la Porte  3:00 
Three year old is important because that is a period, which is very important for women's labor market participation. In countries where there's not a lot of childcare for this age group, then there are much higher chances that women are not active on the labor market, not only during those years when the child is small, but even after that. So Nordic childcare is super important, it's one of the flagship initiatives of the Nordic social investment model, in the sense that with highly educated staff, the children benefit from being in childcare, they obtain cognitive and other skills and at the same time, it enables parents to work. And enabling parents to work is, we all know, that's important for the Nordic welfare state because it's part of this responsibility that everyone contributes to the welfare state, and then are enabled to obtain a whole lot of social life.

Nicola Witcombe  4:06 
The universal welfare state is built upon citizens and the state fulfilling their particular roles. The state providing childcare, health care and benefits in return for people working and paying their taxes. This relationship is sometimes called the social contract.

Caroline de la Porte  4:24 
Of course, Sweden and Denmark are are slightly different in this area, and in Sweden, there's more different wider variety of different arrangements earlier on, than in Denmark, where there's a lot more regulation. But still, the features of the model are quite similar in both countries with a very high proportion of public and funded childcare institutions, and also populations, parents, they use these childcare institutions to a very high degree. And in fact, what's interesting, this is not our case, but they use them a lot more than in Finland. In Finland, there's very little use of the childcare institutions for the very small children. The resources devoted to early childhood education and care are quite comparable in both countries. And you can also see that in terms of the responsibility part of the social contract in Nordic countries, the employment rates of men and women in full and part time jobs are quite similar.

Nicola Witcombe  5:35 
Caroline goes on to explain some of the tensions involved in delivering universal childcare.

Caroline de la Porte  5:42 
Two tensions, which is the national local subsidiarity, meaning how the national and local level interact in developing rules, so for example, staff to child ratios, regulatory standards in terms of the minimum level of education for staff in childcare institutions, and also the funding from the national level and from the local level,

Nicola Witcombe  6:10 
The social democratic government and recent laws in Denmark have been interesting in this regard.

Caroline de la Porte  6:15 
This has been one of the social democratic flagship initiatives that a reform has been undertaken whereby the rich municipalities, they redistribute part of the even more of their money now, they have a tax, which then comes into a pool, and it's redistributed to the poor municipalities. So that existed before. But now, in a sense, with increasing inequalities between municipalities, that's been addressed.

Nicola Witcombe  6:47 
So one of the tensions between the national and regional level, another related tension is over numbers of qualified staff.

Caroline de la Porte  6:57 
There have been some tensions around the issue of the number of staff, and especially the number of qualified staff in childcare institutions. There's been a pushback from parent organizations and from some political parties on the left. So the Danish government at least took a decision to have this ratio standardized, but it's not implemented. And actually, the Danish government also gave money to the municipalities to implement it, but municipalities haven't necessarily used it all for childcare. In Sweden, there is also a similar tension around quality, the main debates are about quality and child care and concern among parents that quality is not sufficient. And here also in Sweden, there is a similar proportion of of staff that are educated and then the rest are not educated. And in Sweden, there's also some differences between the municipal where there is a higher proportion of skilled staff. versus those that are semi privatized. So there is an issue there as well. And in both countries, the issue of privatization actually is also linked to another debate, which is saving a little bit of money, the demands for quality are not as high. And also for feminization. That means indirectly leading to families taking care of their children, rather than in childcare institutions.

Nicola Witcombe  8:28 
And what about the classic fiscal retrenchment budget cuts? Here is an interesting discussion with John Campbell, professor of Sociology at Dartmouth College, New Hampshire, pitching in:

Caroline de la Porte  8:43 
What's really interesting is in a context of permanent fiscal restraint, because populations are aging, how does that actually influence the area of childcare? If you look at the childcare expenses, or what's actually spent on childcare since the early 1990s, you can see that even if the decline doesn't look that dramatic, still there has been quite some decline in both countries, which means that money has been saved. And the question is, how hasn't this been done in the national local dynamics? What are the effects of this? And how is this actually then dealt with?

John Campbell  9:33 
The sustainability question that also came to mind here, if it's the case, you're finding fiscal retrenchment in these countries, combined with regulatory expansion in these countries. I wonder how sustainable that is. Even the national level, governments are saying, "You got to improve the quality you got to do better. You got to do more", but at the same time, they're cutting the budgets. How long can this go on for?

Caroline de la Porte  10:06 
Our understanding is that that is the main challenge. It's that sustainability of the welfare state, it's become more efficient, more effective over many years, many savings. And at some point, there's a tipping point where the quality just isn't enough.

Nicola Witcombe  10:23 
Well ostensibly about childcare, you can imagine that similar thoughts could be had about other aspects of welfare provision, within and outside the Nordics. The recent tensions between whether COVID-19 lockdowns should be a national or regional decision, and at which level they should be managed, both in the UK and the US being a case in point. Similarly, the following point raised by Anne Ilsøe, from the University of Copenhagen's Employment Relations Research Center, is also perhaps a pervading tension in any welfare state.

Anne Ilsøe  11:01 
I think they're quite important in the current debate on the Nordic welfare state. So one thing especially on childcare that I also find is this discussion or tension between universalism, coverage of as many children as possible, versus how do we integrate the vulnerable groups? And so in times of limited economic resources, there seems to be a lot of debates where these two aims are kind of struggling of fighting each other. So you know, if you give more money to the universal program, will they focus them on the vulnerable groups, leave all the others out? Or you know, similar debates.

Nicola Witcombe  11:49 
To sum up this first topic then, how the regulation of universal childcare plays out between the national and regional levels, exposes regulatory tensions that can be framed as threats to the Nordic model of universal welfare.

Two other things that are assumed about the Nordic model are that universal welfare is paid for by a high level of tax. And there is also a high level of egalitarianism, two aspects which may be linked in certain ways. The picture of the Nordic societies is often painted as a welfare bubble, untainted by outside influences. Here is professor Brooke Harrington, a sociologist at Dartmouth College in the US. She was formerly on the faculty of Copenhagen Business School in Denmark for eight years. She sets out a common understanding of the Nordic status quo in this area.

Brooke Harrington  12:58 
Elsewhere in the world, democracies suffer from a state of permanent conflict with their elites, that idea goes back a century to Pareto and Mosca, and so forth. But Scandinavia is supposed to be the exception to this; numerous people have written about it. And the idea is that the combination of homogeneity in the society and small population size and normative cohesion among the citizens of Nordic nations means that Nordic elites are different. They don't, they're not anti-democratic, they're pro democratic, they fully signed on to the idea that egalitarianism participatory democracy are blessings for all. Most importantly, Nordic elites are distinctive because they play by the rules, including the tax rules and the fiscal regulations. And that's important because welfare states are really expensive to run. And if the elites start closing their pocketbooks, your welfare states can be in big trouble.

Nicola Witcombe  14:13 
Like our previous topic, universal childcare, there are a number of tensions here too. First up is tax avoidance.

Brooke Harrington  14:24 
In illegal tax avoidance, they weren't breaking any laws. But they were still depriving their respective countries of quite a lot of tax money by putting assets offshore via  Mossack Fonseca, the Panama based wealth management firm.

Nicola Witcombe  14:40 
Secondly, not only tax avoidance, but illegally not paying tax:

Brooke Harrington  14:46 
Research on the tax gaps in the Nordic countries has shown that there's additionally a 25% tax evasion rate - that's illegal non payment of tax by the top 1% of households in Denmark, Sweden and Norway. So together, the legal tax avoidance and the illegal tax evasion, they add up to an enormous loss to the coffers of all the Nordic states. That puts a lot of pressure on the functioning of the welfare state. Only about 100,000 households spread across Denmark, Sweden and Norway, collectively are causing tax revenue losses amounting to 10s of billions of US dollars. That's a great gaping wound in the finances of the welfare state. And, in addition, at the same time, wealth is becoming much more stratified in those three countries and redistribution is declining. For sure, stratification is exceeding the rest of Europe, which is kind of extraordinary. So there's a new level of wealth in the Nordic countries that is distinctive from the rest of Europe and distinctive in the history of the region.

Nicola Witcombe  16:10 
Interestingly, while most of the researchers president agreed that it was certainly a phenomenon, that Scandinavian elites behave in an anti-egalitarian way, not all of the researchers present were convinced that it was a significant threat to the social and financial fabric of the Nordic welfare state. For example, money from the welfare state comes from many different sources, including other sources of tax, not just income tax, as well as national debt. Additionally, welfare spending has not gone down to a significant degree. So it is hard to draw an immediate correlation from less tax revenues from the elite and reduced welfare capacity. A third tension to do with elites is whether they are out of touch with the rest of the population and how dangerous this is. Swedish researcher Henrik Emilsson from Malmö Institute for Studies of Migration, Diversity and Welfare, explains that the Swedish elite and decision makers favor well meaning policies but this is not always what is wanted by the populace.

Henrik Emilsson  17:18 
But I think that Swedish elite is different than other Nordic elites as well. But there is something with the elites, I think can explain policy a lot. Swedish elites, they love to do nice policies, a lot of foreign aid, generous immigration policies, environmental policies. They want that more than the populations, I mean there is some progressiveness within Swedish elites that is strange and an international perspective. They behave differently than other people in society, that's for sure. Their values are not the same as the general population. Many polls have shown that there is something with the elites.

Nicola Witcombe  18:10 
This reminds me of debates about the rise of populism, albeit on a small scale in Scandinavia. And again, while the researchers hear debate about taxes and elites, it feeds into a wider conversation about challenges to the Nordic model. Similarly, here Brooke discusses with colleague John whether or not the Icelandic banking crisis can be put down to Nordic cronyism, or whether the reaction demonstrated the resilience of democratic processes to hold the elite to account.

Brooke Harrington  18:45 
About a decade ago, we saw the collapse of the Icelandic banking sector. And it was blamed on the failure of what were called incestuous elites to regulate each other. In other words, everyone in the Icelandic financial sector and the regulators of that sector, they weren't so socially interconnected, that it was essentially too costly for them to truly monitor and sanction each other's behavior. So the regulatory apparatus in Iceland couldn't do its job. And the whole banking sector nearly brought the country down.

John Campbell  19:26 
A part that you leave out, however, is the reaction. And the reaction was one where the society came together, voted the bums out, put in a new government that sort of cleaned up the mess called in the IMF and did some other things.

Nicola Witcombe  19:46 
The actions of elites should of course be questioned and democratic societies and a ream of Nordic institutions are in place to ensure that they are held to account. On the other hand, with such small populations, there are means risk that elites become more and more unaccountable in various ways which, when discovered, can be divisive.

Brooke Harrington  20:08 
And I theorize that this is happening in part, because of globalization and financialization, that when you take these, the tight knit social structures of the Nordic countries, there are assets within the context of national borders. But then you open up those national borders so that they don't mean much anymore, then what you get is something that can be quite dangerous to the rest of us. So for example, it's dangerous because globalization provides these wealthy elites with the means to escape national regulations, and national governments.

Nicola Witcombe  20:55 
Another key aspect of the Nordic model, and our final topic for today is how labor markets are organized. Many who don't know much about the Nordic countries are likely to assume that the labor market must be highly regulated by the state as the pervading image is of an interventionist government. However, the Nordic model is actually founded on the assumption that the labor market parties, the employer side and the employee side, can work out for themselves, without state institutions having to legislate on everything. What they do decide is usually written down in comprehensive collective agreements. And here is Jens Arnholtz, from the University of Copenhagen's Employment Relations Research Center, setting out the Nordic status quo in this area.

Jens Arnholtz  21:48 
There is a lot of flexibility in this negotiated model and its their different levels, both at the national level, the sectoral level, where you make agreements that can contain a lot of different elements, can solve various problems as they arise, but also at the local level, where you have room from a new group within like the negotiate local negotiations. But this flexibility is always very strongly embedded in strong relations, and especially, of course, by the fact that you have very strong trade unions to make sure that workers' interests are taken care of, even at the sort of local level. So that's one mechanism. And the other one is a mechanism that support that in embendment. So obviously trade unions have strong rights to collective action and there are strong incentives to organize. And finally, there's this underlying culture, I would say, of sort of finding compromise based solutions to problems. And I think some of these elements have been missing. I think this is what is actually missing in the literature. They don't regard this as very important. It's just "well, they regulate by collective agreements", but I think these mechanisms or conditions are extremely important for understanding why the Nordic labor market movements function as they do

Nicola Witcombe  23:15 
Like the previous two topics, now we are going to look at some of the tensions in this area. The analogy of the national level being a bubble hit by outside forces can also be helpful here. First, multinational company platforms arriving in the Nordics. Here is researcher, Fredrik Sóderqvist, from Blekinge Institute of Technology in Sweden, who explains briefly what happened when Uber came to Denmark and Sweden,

Fredrik Sóderqvist  23:49 
Uber and Denmark in 2014, this was a carpooling service, as they would describe it, others would describe as legal practice services. There was quite immediate and strong reaction to this. And the main issues here were that were brought up by the taxi industry and the unions were taxi regulations that they weren't following those. And there was a big debate on tax evasion. But however, little discussion on employment classification, which has been a major issue in most other countries where Uber has popped up. The regulatory response was that a new taxi Act was passed, which essentially said that the kind of services that Uber were delivering in Denmark were illegal. So as a result, Uber closed its operation in 2017. The Swedish case was different. Uber entered in 2013. But the Swedish taxi market was very much deregulated in the early 1990s. So there is de facto no restriction on new taxi vehicles in Sweden, and it's very, well, I'm not gonna say it's easy, but setting up your own taxi switchboard or company is much easier here. So Uber's business model was quite a fit to Sweden. Sweden had already accommodated them 13-10 years earlier, the big resistant that came up was Uber POC, which is the same the service that also operated in Denmark, and that was essentially the unlicensed taxi service. A public inquiry was set up in Sweden, which is the equivalent of actually having government talk about this issue that looked into existing taxi regulations, you know, should they be updated and whatnot. The results from that public enquiry said that the Uber model isn't going to be accommodated. And as a result, Uber shut down its services. But the tax authorities started proactively auditing all platforms, not just Uber but looking into should you be paying employer contribution, but also making sure that drivers are paying. So both in Denmark and Sweden, a lot of Uber drivers ended up with severe tax audits having to pay back money in the millions, if you sum them up. Again, there was no contention about employment status in Sweden at all.

Nicola Witcombe  25:54 
Interestingly, Fredrik, along with Anne Ilsøe from the University of Copenhagen's Employment Relations Research Center, are taking a look at how these employment platforms have been dealt with in parliamentary debates, mainly triggered by parliamentary questions in Denmark and Sweden. Here are some of Anne's reflections on Uber in comparison to smaller platforms. She uses the term rule intermediary, which basically means acting not necessarily as a rule maker or a rule taker, but something or someone who plays various roles to enable it to reach its regulatory goals.

Anne Ilsøe  26:39 
Uber didn't offer to accommodate itself to some of the existing legislation, and it did not actually participate in in rulemaking as a rule intermediary. And we are reflecting upon this fact that it's a large US based platform coming from the outside wanting to impose their business model, whereas we see examples of smaller platforms, perhaps more bottom up startup companies that actively seek to act as rule intermediaries using this voluntary system of collective bargaining, not only actually to solve labor issues, but also to accommodate to some of the tax issues. Because when you become an employer, all these tax issues are almost sold. They use this as a branding strategy to offer orderly conditions. But on the other hand, they experience challenges with regards to growth.

Fredrik Sóderqvist  27:41 
Parliamentarians in both countries are actually thinking that this is something that the social partners must handle and something that is outside our competence, although in practice, they have the full right be at both countries constitutions to actually regulate these markets. So there's a lack of debate about working conditions and employment status in both countries, if we view them through parliamentary debates.

Nicola Witcombe  28:05 
In this area, as in others, Sweden appears to have deregulated significantly more and earlier than Denmark. Here is John Campbell again, summing up the Uber case from his point of view, followed by Henrik Emilsson from Malmö Institute for Studies of Migration, Diversity and Welfare.

John Campbell  28:27 
This was really all about power dynamics in different ways. Outcomes were driven by powerplays or the absence thereof. So in the Uber case, for example, you know, Uber basically leaves the Danish market. Why? Well, it seemed to me that your story here was that because the taxi drivers that is labor, and the taxi companies, employers, are really well organized and really powerful in that industry. And just put up huge barriers, not so much barriers to entry, but barriers to survival long term, for a gig economy platform, like Uber. They basically drove it out. Uber said, "Forget it, we don't want to fight this fight. These guys are too powerful". In the Swedish case, the Taxi Drivers Union and the employers not so well organized. Plus, you had deregulated the industry previously. So in a sense, it was pretty easy for Uber to move in and survive in that market because they didn't have much well organized opposition. Plus, they had an institutional environment that is deregulated environment, which made it easy for them to get in there establish a foothold and do quite well. This is all, from my reading of this paper, this story unfolds as a result of power relations and the institutional framework within which the whole thing took place.

Henrik Emilsson  30:06 
I mean, I'm beginning to see a pattern in all the articles actually, and also, from my previous research on migration that I mean, in almost every case in our papers, Sweden has deregulatized at the previous moment, and much more than in Denmark. And from this, employer organizations and political parties have less respect for this traditional Nordic voluntaristic solutions.

Nicola Witcombe  30:40 
Importantly, some researchers consider that the market in Denmark is becoming similarly deregulated at a rapid rate. For example, there has been a new law with respect to taxis. Whether Uber will try to make a comeback here remains to be seen. A second tension is the clash between European labor market rules and those of the Nordic system, which can be called voluntary

Jens Arnholtz  31:11 
There is a clear acknowledgement in the literature that there is a regulatory misfit, the Nordics doesn't really fit the norms of the European Union. The way they're sort of more legalistic, the European Union's more legalistic and doesn't really fit well with the sort of negotiated model of the Nordic countries. However, the literature also points to the fact that there this seems to be a strong cultural compliance in the Nordic. So even though  they clearly have misfits, they, nonetheless, are really great at implementing directives, especially in the area of labor market policy. So at some poin, the issue was raised, whether this would then lead to a sort of a lack of autonomy that their model were being undermined.

Nicola Witcombe  31:59 
Here too, one gets the image of supranational forces hitting national regulation, like Brooke mentioned earlier with international financial markets.

Caroline de la Porte  32:10 
Okay, so this is not about free movement of workers. This is about free movement of services, where workers are posted temporarily to deliver a service and the advantage for the contractor in the Scandinavian countries is that they get the workers cheaper than they would their local workers. That's the whole point of posting. The Eastern European countries, when they joined in 2004 and 2007, they didn't really care about the workers rights, they were happy just to send them abroad. And for them, it was all about the business model. And in total, it's about 1% of EU workers. And if you put it in a full time equivalent, it's about 0.4%. But still, it's a it's a phenomenon that challenges the Nordic model in terms of the level of trust, which has been inherent in the model to land agreements, and which is now threatened because of something coming from the outside.

Jens Arnholtz  33:09 
The entity that are moving our companies. And so what the EU does is try to defend the rights of the moving entity, in this case, the companies, which means that they have, at least for a long time, defend the right of companies to avoid national regulation, because that was cumbersome and problematic for them. And so, it has sort of had this liberalizing tendency. And I tried to point to three problems that this raises for the Nordic models. And one is the market integration aspects of this, which is all organized for groups who have low wage expectations, because they come from countries with completely different wage levels, they're very dependent on their employer, so they support their employers in trying to avoid the regulation. And that in itself is a major challenge, it's not at all addressed in europeanisation literature, which focus mainly on the rules, but it is a challenge that the Nordic models nonetheless have to face and have to do something about. So I think that's a very important aspect. And then there is the, what I call EU legalism, which is sort of a misfit with this informal cooperative model that the Nordics is, so it's more universalistic, everybody has to be covered, there has to be no discrimination, there has to be transparency and so on. And then finally, these two problems, the pressure they put on the Nordic models, leads to politicization. It becomes a very conflictual issue and it shifts from collective bargaining to politics. And I think that's basically the biggest problem, so to speak.

Nicola Witcombe  35:05 
A final tension we can look at here is the integration of refugees in the workplace. For this one, we have to take a quick look at the general differences and approaches to immigration between the two countries being discussed. Again, Denmark and Sweden.

Jonas Felbo-Kolding  35:20 
You have Denmark as a first mover, so to speak in restricting access to asylum and family reunification, having consistently restricted family reunification and asylum seeking since 2001 and onwards. You have an integration regulation that has focused mainly on work-first approach. On the other hand, you have Sweden, who have opted for a more open migration policy, open migration regulation. First for asylum seekers, and in 2008, also for labor migrants. So having a system which is very much focused on actually being open and admitting immigrants, both for labor but also for humanitarian reasons. You have an integration regulation that has been designed from the goal of equal rights to everyone, also for non citizens, so for immigrants and focusing on a human capital approach. So you have these two systems, where in a Danish context, you have a work-first and you've also had a start aid, for example, where you've had special eligibility for immigrants having a lower social benefits standard. And then in the Swedish context, where you have equal rights, and you have a human capital approach. You see border controls being put in place in the Swedish context in 2015. You see, in 2016, and new and more restrictive temporary migration law. And in 2020, you see government commission on asylum and family migration. So you do actually, in the Swedish context, see a significant response in terms of the immigration regulation. And you also when looking at numbers, you had high numbers, we took about 13% of all asylum applicants in both 2014 and 2015 - that dropped significantly when going into 2016. So although the overall numbers for the EU stayed at about the same level as in 2015, the numbers in Sweden dropped from 162 applicants down to less than 30,000. So you also saw it in terms of the outcome side.

Nicola Witcombe  37:47 
Now, let's zoom in on how regulation has been taken or not taken with respect to getting refugees into work first and Sweden.

Jonas Felbo-Kolding  37:57 
From the Swedish context, we've had no major regulatory changes in the labor market integration regulation, after the 2015 refugee crisis, which is at least partly to do with the fact that a lot had already been done in 2006-2010 period where they had substantial reforms to the labor market integration policies. You still had social partner negotiations about introduction, jobs and other changes. In the general labor market regulations, the state actually increased social spending, so that when more immigrants were coming in, more funds were actually being allocated to the local level. Efforts were made, and this is where we're looking at the normative instruments, efforts were made by the state to mobilize both employers, civil society and local stakeholders through normative instruments. So you had the 100 Club in the Swedish context where the government tried to actually get larger corporations in the Swedish context to take on what could be called a societal or social responsibility in terms of the integration of refugees on the Swedish labor market. So what we see at the moment, or at least what we're claiming to see, is there were no significant changes to either the labor market integration and immigration regulation in a Danish context. Immigration regulation, this is perhaps because we already had tightened immigration regulation over a longer period of time, so there was actually not that much room to maneuver in terms of actually tightening it even further. You had the introduction of the temporary status, but otherwise, not that much could actually be done without breaching international conventions, Denmark was already on the borders of it. And in the Swedish context, you had no significant changes to the labor market integration regulation, but you did see significant changes and what seems at least to be a paradigmatic change in how immigration regulation is thought of in a Swedish context, which is really the most interesting part of what we saw in terms of the response to the crisis in the two countries. So a path dependent response in the two different countries as to both staying with the labour market regulation that was already in place, tweaking it here and there, but otherwise staying within the regulatory framework of it, and then seeing the major change in the Swedish context in terms of the immigration regulation that was changed.

Nicola Witcombe 40:35
To sum up this final topic then, what we see is that what is considered the backbone for the Nordic model that is how the labour market functions with social partners from the employers' side and the employees' side coming together to make their own decisions does not always hold true. There are actors that have present outside of this framework to a greater or a lesser extent. Perhaps Sweden is much more open to them than in Denmark, for example. This shows that there are great differences between the Nordic countries than at first glance. Likewise, the approaches to both refugees and integration in the labormarket have been quite different. Separately, these three issues may be considered small aspects of the overall labor market. However, taken together, again, they give this impression of pressure being put on the Nordic model from outside forces.

John Campbell 41:42
Maybe the Nordic model has become the Nordic model 2.0 in the sense that it is a much more mixed, two tier kind of model. The employment and economy litterature for the last 20 years has been talking about the difference between liberal and coordinated economies with the Nordics as being the sort of major example of the coordinated market economy. Maybe that language is no good anymore?

Nicola Witcombe  42:15
As so often happens, when you look into something in more detail, instead of finding clear answers, you find a set of new questions. Perhaps this is the case here. Explaining the perceived status quo can sometimes lead to a realisation that the the status quo is not eactly what you expected. Well, perhaps not 100% accurate, the picture of the Nordic model as a domestic one being threatened by outside forces is useful, as it provides an analytical lense to look at important policies that make a real difference to people and policymakers on the ground, a bit like the three main topics that we have looked at in this podcast, namely:

childcare, tax and foreign workers.

You've been listening to nordics.info podcast. Thanks go to researchers involved, the organisers at the event, Copenhagen Business School and the Danish European Community Studies Association and to our very own research hub, Reimagining Norden and Evolving World (ReNEW) funded by NordForsk. If you'd like to find out more, please visit nordics.info.

Challenging universal benefits & social care: providing effective & equal standards of childcare
Challenging tax & egalitarianism: Nordic elites
Explaining the Nordic labour market & current challenges
The gig economy
Workers from foreign companies in the Nordics
Immigration regulation & integration of refugees in the labour market