FEATURE
P.12
Vikings Turned Peaceful?
An insight into the Nordic economic model
Daniel Anand Rajmohan
G
one were the days of
Viking longboats seen
in the coast, carrying
berserkers and their
iconic helmets. Now in the 21st century, we notice the repeated successes of
Scandinavia and
we should aim to learn a lesson
from it.
If you could be born in any country,
where would you choose?
The Nordics cluster at the top of
league tables in everything from
economic competitiveness, social
health to happiness. In Norway, with
its GDP per capita at $99,300 and
number 1 on the Human Development Index, it will be very hard to
dispute the success of the
Nordic Model.
During the Cold War, the Nordics
offered a ‘Third Way’ between
centrally-planned USSR & free
market USA. Economists use the
term ‘getting to Denmark’ to show
modernisation both economically
and socially.
The Nordics have avoided both
Southern Europe’s fiscal mess and
America’s large inequality through
an efficient public sector. They also
provide
inspiration for Eurosceptics, as Norway has avoided EU
regulations.
The Nordics have a large state:
they employ 30% of their workforce
in the public sector, compared with
an OECD average of 15%. This
means
that
workers
benefit from long-term employment
and high job security, unlike the zero-hour contracts used by many
multinationals (e.g. McDonalds).
At a behavioural economic level,
workers who are not faced with imminent firing tend to spend more as
they do not have to ‘save for a rainy
day’.
Scandinavia also focusses on the
long term sustainability of growth.
For example, Denmark has a system of flexicurity which ensures
that employers have a flexible labour force, while employees enjoy
the safety net of a generous unemployment benefit system and an active employment policy from the
large public sector. This not only
results in business investment increasing, but also increases confidence in the economy due to efficient government allocation of resources.
Unlike Thatcherism, the Vikings
promote Trade Unions and cooperates with them. In 2010, Trade
Union density was 69.9% in Finland,
68.3% in Sweden, and 54.8% in
Norway. In comparison, Trade Union density was 11.3% in the United
States. Trade Unions are vital to the
economy as they protect workers’
rights and can help to negotiate
productivity deals. This enables
firms to increase output while being
able to afford to pay higher wages.
In an increasingly globalised world,
Trade Unions and the government
should be there to prevent the exploitation of labour from profit-driven
multinationals. Furthermore, there is
no need for a national minimum
wage in Scandinavia as employers
are paying the living wage.