Discursive smoke screens: the politics of Nordic welfare reform.

Author:Kuisma, Mikko

It is now rather widely accepted, by politicians and academics alike, that the 'golden age' Nordic approaches to welfare are not sustainable within the framework of twenty-first century global capitalism. These old-style social democratic policies have been deemed by some to be incompatible with post-Fordism and the new politico-economic climate characterised by 'globalisation' (Giddens, 1998).

Curiously, this is despite the fact that Nordic countries have been able to demonstrate that they have open and competitive economies and flexible labour markets. The Nordic countries are also remarkably capable of adapting to the so-called new social risks. In fact, some commentators have gone as far as to argue that the 'new risks' are not so new at all for the Nordic countries (Timonen, 2004).

Nevertheless, these comparative victories for the Nordic countries in this new climate of globalisation seem to be somewhat neglected, as political elites and academic commentators are still largely swayed by the 'logic of no alternative' of neo-liberal convergence (Watson and Hay, 2003). This is clearly visible in the current policy debates, and also the broader discourse on the welfare state. Both are now characterised by an approach that emphasises short-term gains and losses, and sees the welfare state as a luxury item that needs to be cut back before it bankrupts the government, rather than a more long-term perspective that concentrates on a quality and skills-based argument where welfare is seen as a source of competitiveness and long-term growth.

At the same time, as the evidence put forward in this article shows, Nordic elites share and acknowledge the importance of the values of the Nordic model of welfare, and political opposition to the Nordic model is actually rather marginal. As such, Nordic politics is now largely characterised by a potentially deep dilemma. Namely, that politicians and other elites have internalised the supposed economic necessity of (neo-liberal) welfare reform, while understanding the political necessity of holding on to the more traditional discourses on welfare. The first is a useful tool for blame-avoidance; the second a means to secure popularity.

The problem is that as long as the supposed challenge of 'globalisation' to the Nordic model is accepted at face value, even those who support the welfare state will accept the 'economic necessity' of tackling it, and become reluctant reformers. And, for the keen reformers, even the best blame-avoidance tactics might not work against the problem that emerges from coupling a pro-welfare rhetoric with a quiet introduction of incremental changes that could eventually represent an end to the welfare state. Raija Julkunen is one Nordic commentator who has talked about a 'creeping disentitlement' (Julkunen, 2001, 29), which could pose serious long-term challenges to citizens' trust in politicians and the institutions of the state. After all, as Johan P. Olsen points out, while changing formal rules and incentives might not be such a tricky affair, people's habits of mind and their beliefs in legitimate political organisation may be rather difficult to change (Olsen, 2008, 12).

In this article, based on empirical research conducted in Sweden, Finland and Norway, I argue that Nordic elites continue to endorse the importance of the values of the Nordic welfare model, but that this discourse is now in direct conflict with the debate about financing the welfare state and concrete policy reforms being pursued. In other words, it seems that, while the hearts are still rather red, the heads are turning towards altogether different colour combinations. This colour-blindness of the Nordic elites is an interesting object for social scientific research; but from a political point of view it is a potentially dangerous illness. Indeed, some of the supposedly necessary policy reforms, if introduced in practice, may prove politically inflammatory and immensely unpopular.

These include policies that follow the neo-liberal principles of introducing more meanstested and needs-based policies, and reducing the level of taxation. A prime example is the Swedish pensions reform introduced in 1999 when 'the jewel in the crown' (Lundberg, 2003), the Swedish Labour Market Supplementary Pension, was replaced with a three-tier pensions system that includes a fully actuarial Premium Reserve System (PRS). This represented a clear qualitative shift towards recommodification, away from the old social democratic principles (Belfrage and Ryner, 2009, 263). It is ironic that the reform was introduced by the then Social Democratic government led by Prime Minister Goran Persson.

Some reforms are also being introduced through a more top-down method than citizens are used to. A good example of this took place in Finland in February 2009, when the centre-right government made a unilateral decision to increase the pension age from 63 to 65 years, a decision Prime Minister Vanhanen claimed to have made while skiing in Lapland (Helsingin Sanomat 12.3.2009). As a result the trade unions threatened to sever their links with the government, resigned from the Sata committee of social policy reform, and threatened wide-scale strikes (Helsingin Sanomat 28.2.2009). The Prime Minister quickly withdrew his proposition. This is a telling example of how elements of the Nordic model, both normative and procedural, seem to still be deeply embedded in the structures of society, raising the question of how far political and economic elites acknowledge this and, if so, what options are available for them.

This article proceeds in four stages. Firstly, I look more closely at the welfare state debates in Sweden, Finland and Norway and ask whether the values underpinning the welfare institutions are, indeed, still shared. The second section concentrates on the changing concepts of work and employment. The third section looks at the differences in approaches to welfare between the centre-right and social democrats and the final section will turn again to the question of the role of discourse and ideas in influencing policy reforms and the issue of discursive smoke screens.

Shared values?

After the economic crisis of the 1990s the Nordic economies made a remarkably swift recovery. They were able to deal with the problem of mass unemployment, felt most strongly in Sweden and in Finland where, at the height of the recession, unemployment levels rose close to 20 per cent (NOSOSCO, 1997). Despite this the recovery was strong and successful, and by the end of the following decade the only significant problem in this area was the high level of youth unemployment in Finland and Sweden (NOSOSCO, 2008).

The current crisis has brought back the challenge of unemployment and, again, Finland and Sweden have been hardest hit, with the OECD projecting a rise in the level of unemployment above 10 per cent for the first time in years (OECD, 2009). This is obviously going to place a significant strain on public finances, but it is clear that the welfare state still enjoys wide popular support and legitimacy (Timonen, 2004; Nilsson, 2007; Siltaniemi et al, 2009). For instance, in Sweden in 2006, 42 per cent of the population were against reducing the size of the public sector (Nilsson, 2007, 121). Indeed, it would not be surprising to see the levels of support for the welfare state and public spending in general rising during the recession.

Though the size of the public sector can be an issue for disagreement among the elites, they seem to share the basic values of the Nordic welfare model (Gulbrandsen and Engelstad, 2005). This cross-party consensus on the values of welfare is strongest in Finland and Norway; in Sweden the political polarisation between left and right is more palpable. While in Sweden the welfare state might be seen as a project of the labour movement and a monument to its hegemonic political position, in Finland and Norway it is linked more to the national project. One of the interesting aspects of Finnish conservatism is that it is not founded on the basic principles of liberalism, private ownership and entrepreneurialism, as for example in the UK (Moore, 1967), but more upon Lutheran protestant ethics and patriotism.

Nordic elites certainly display a clear vision or understanding of what the Swedish, Norwegian or Finnish model - or, indeed, the Nordic model - of welfare was crucially about. The values of equality and solidarity are still seen as the central motivators for policy solutions. Most of them also claim a stake in the system - most parties and organisations take some pride in the achievements of the welfare state. The Nordic welfare model is seen to benefit the whole society, not just a specific segment...

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