Labor Market V1

The Nordic states have characteristically placed strong emphasis on labour activation policies resulting in a well skilled workforce. Labour activation refers to a wide range of policies targeted at people receiving government social welfare. Often, the aim is to encourage the target group to re-enter the labour market. The Nordic countries’ long term investment in education and workers’ training has allowed the Nordic societies to adapt quickly to rapid technological changes, and become world leaders in fields such as information and communications technology (ICT).
The breadth of the of the social protection programmes in the Nordic countries is what sets them apart from the rest of the world. The Nordics believe in the principle of universalism. As a result, the social programmes are often targeted at various disadvantaged groups in the Nordic society, including the unemployed. There is focus on public sector and private efforts to address youth unemployment and mobilise internal labour resources by improving the opportunities for people who, through e.g. disability, ethnicity, educational background, gender, age or illness, have difficulty entering the labour market.
The following table gives a detailed analysis of the unemployment pension schemes in the Nordic countries in the year 2011-

The main objective of Nordic co-operation in the area of work environment is to promote health and welfare at work and thus also productivity in society. Co-operation focuses on creating a safe work environment which promotes good health,strengthens the sustainable use of the individual employee's resources, as well as prevents sick leave and premature retirement from the labour market. The aim is to continue to improve the balance between flexibility and protection for wage earners, as well as to promote gender equality and combat discrimination on the labour market.

The generous social assistance plans as detailed in the two tables below.

The labour market has developed on the basis of collective bargaining and a close dialogue between unions, employers and the state in the interest of the common good. Unions are strong and centralized. Nordic salaries and working conditions are quite considerably regulated by collective bargaining agreements. Unions and employers are also very much involved in the labour market and, in particular in drafting legislation governing the labour market. During corporate restructuring where the changes involve layoffs, the unions recognizes the necessity in order to protect the long-term competitiveness of the firm. This has clear benefits — because it means that the interest of the union is not only the short-term interest of the very group they represent, but the longer-term interest of wider society and they serve an important economic value: solidarity.
In contrast, in the U.S. model unions are typically weak and sector-specific. In other European countries, unions often are not as centralized and therefore can get stuck in adamantly defending a certain group or interest to the severe detriment of overall employment.
Thus, contrary to the prevailing stereotype, centralized unions and strong welfare systems — if set up the right way — work hand in hand to promote a society’s openness to structural change. In other words, while the laws make it is easy for companies to shed workers and implement transformative business models, employees are supported by generous social welfare programs.
Risk-taking on a society-wide basis: Another dimension that fosters risk-taking on a society-wide basis is what the Swedish historian Lars Tragardh calls “Nordic statist individualism.” The basic idea is that individuals who are free and secure are also more likely to innovate, experiment and take risks.
In contrast to the American model, which also emphasizes individualism, in the Nordic countries, every person has a positive (and positively acknowledged) individual relationship with the state. Accordingly, the role of the state and government is viewed not as an intrusion into individual freedom, but as an enhancement.
That added relationship makes individuals less dependent on family or other close relations. A woman can decide to have a baby in the full trust that society will take care of her needs regardless of what her family thinks about it. This assurance provides far-reaching individual freedoms: It supports a single woman who decides to have a baby just as much as a gay couple that decides to adopt. In addition, generous child care benefits also lead to considerably higher birth rates than in most of the rest of Europe
Pre-distribution, not redistribution
In the early 1900s, the Nordic societies were among the poorest in Europe. Then, through a number of reforms, arrangements and influential civic movements, they embarked on a path of development to become prosperous together.
The stark difference lies in how wealth is created and distributed. A lot of countries — such as the Asian tiger economies — got prosperous first and then started thinking of redistribution. In other words, first wealth creation, even if it is unevenly distributed, and then a focus on the smoothing of differences. But because of these built-in disparities of these economies, it has been harder to arrive at an equitable solution
In contrast, thanks to their long history of fair distribution from the very start of the modern economy, Nordic countries have had a very deep and fundamental level of social cohesion. One recent study has shown, for instance, that correlation between a child’s income with his parents’ is much higher in the UK than in the Nordic countries. What this essentially means that In the Nordic countries, you don’t need to be borne rich in order to prosper.
In other words, social mobility and equality of opportunity go hand in hand. Where there is high inequality, social mobility declines, observed even in the United States over the past few decades.

Normally held belief is that high taxes and a large public sector make a country less competitive. But in the wake of the European crisis, countries in best shape in Europe actually had quite a high share of state spending relative to GDP. In contrast, most of the countries in the most difficult — Greece, Portugal, Spain, Ireland — all have quite low levels of public spending relative to GDP.
This makes us ask, why is the Nordic method a success?
It is primarily because the Nordic governments are honest and transparent. The governments are subject to rigorous scrutiny; for example, in Sweden everyone has access to all official records. Two other important qualities add to this: pragmatism and tough-mindedness. On discovering that the old social democratic consensus was no longer working, they let it go with remarkably little fuss and introduced new ideas from across the political spectrum. They also pushed through reforms with great determination.
Does the Nordic model impedes productivity and efficiency? the espousal of a generous social welfare system and the pursuit of economic development are both incongruent objectives. In terms of recommendations for social policies, it clearly advocates a laissez faire approach. So, any political attempts to disrupt the market mechanism, for instance the de-commodification of social rights which is advocated in the Nordic countries, would be deemed as being ill-advised.