Authors:
- Giulia Consonni - Junior Researcher Mondo Internazionale G.E.O. Cultura & Società
- Giulia Pavan - Junior Researcher Mondo Internazionale G.E.O. Cultura & Società
- Marco Rizzi - Senior Researcher Mondo Internazionale G.E.O. Cultura & Società
- Francisco Duran Herrera - Head Researcher Mondo Internazionale G.E.O. Cultura & Società
Abstract:
Nordic countries have long been admired for their comprehensive and egalitarian welfare systems, which prioritize citizens’ well-being. This article explores the unique features of the Nordic model: the dual system of social security contribution, the solid gender equity policies, the high-quality and accessible healthcare, and an innovative way to address homelessness. By analyzing these aspects, valuable insights into the Nordics’ successful pursuit of social welfare and its implications for global policy development are provided.
1. Introduction
The Nordic model, encompassing Denmark, Sweden, Norway, Finland, and Iceland, has served as a prominent paradigm for numerous Western, industrialized societies to emulate over many decades. Its foundational elements comprise a welfare state with comprehensive, cost-free education and healthcare, a robust labor system bolstered by strong social security measures, and open markets with minimal trade barriers, complemented by broad social support and inclusion. This distinctive amalgamation of components has given rise to a social and governance model that harmonizes economic growth and dynamism with principles of equality and social cohesion. In this article, key aspects of the Nordic Social Security Contribution system, gender equality levels, the healthcare and housing system will be scrutinized and assessed.
2. Social Security Contribution
The Nordic model of contribution to social security funds is characterized by the implementation of a dual system, where both workers and employers have the responsibility to make financial contributions at a determined percentage based on a taxable base, which can vary depending on the specific country. This system aims to guarantee broad social security coverage for citizens and ensure access to necessary services and benefits in various welfare areas.
It is important to highlight that the amounts collected through this contribution system are usually linked to specific spending categories. In other words, the funds obtained through these contributions are destined to cover key areas of social security, such as healthcare, retirement, unemployment benefits, education, housing, and other essential social services. This linkage seeks to ensure that the collected resources are used efficiently and effectively for the benefit of citizens and the overall well-being of society.
In the following paragraphs a summary of the structure of contributions of each country is presented.
Denmark, (OECD, 2022)
Full time employees pay contributions to an unemployment insurance fund in order to be eligible for unemployment insurance and early retirement pension contribution consists of two parts: one of DKK 4,416 per year for unemployment insurance and the other of DKK 520 for voluntary early retirement scheme. In addition, there is a compulsory fixed contribution of DKK 1,136 to the Supplementary Labour Market Pension Scheme for full-time workers who work at least 117 hours per month. Fee decreases as the amount of hours decrease. The employer also contributes to the Supplementary Labour Market Pension Scheme. It is compulsory for the employer to contribute also to the Employers’ Reimbursement System (DKK 2,803); the industrial injury tax and the Employees’ Guarantee Fund.
Finland, (OECD, 2022)
Employees’ pension insurance contribution amounts to 7.15% of gross salary for those who are under 53 years old and 8.65% for those who are 53-62 years old and 7.15% for those who are 63-67 years old. Employees’ unemployment insurance contribution equals 1.5% of gross salary. The average rate of the employers’ statutory social insurance contributions in 2022 is 21.01% of gross wage
Iceland, (OECD, 2022)
Individuals with an annual taxable income of more than ISK 2,075,212 (around 14,400 euro) in 2022 pay two fixed annual fees: to the Construction Fund for the Elderly and to the Treasury, intended to finance the National Broadcasting Service . These fees are payable in the following year and decided in the budget process. The fee for the Construction Fund for the Elderly is ISK 13,284 in 2022 (paid in 2023). The fee for the National Broadcasting Service is ISK 20,200 in 2022 (paid in 2023). Individuals younger than 16 years old and 70 years or older are exempt as well as old-age pensioners. Employers pay a social security contribution on their total payroll cost to the Treasury. The rate for 2022 is 6.25% The proceeds go towards – but do not fully finance – the central government’s costs of old age, disability, health care and childbirth leave, the remainder of the cost coming from general tax revenue. In addition to the social contribution, there are two mandatory fees levied on the social security contribution base: the Promote Iceland Market Fee and the Wage Guarantee Fund Fee, 0.05%each.
Norway, (OECD, 2022)
Employees’ contributions to the National Insurance Scheme generally amount to 8% of personal wage income. If their wage is below NOK 64,650 (around 5,700 euros), they don't need to make any contributions. Once wage income exceeds this floor, an alternative calculation is made where the contributions equal 25% of the wage income in excess of the floor. The actual contributions made would represent the minimum between the alternative calculation and 8% of the total wage income. However, younger employees (16 years and below) and older employees (70 years and above) pay a lower rate of 5.1% of their wage income. For pension income, the rate is 5.1%. Self-employed individuals contribute 11.2% of their income related to labor. On the employer's side, social security contributions are mandatory for all employees in both private and public sectors, varying based on the location of the employer's municipality. The average rate is approximately 13%.
Sweden, (OECD, 2022)
A general pension contribution of 7% of personal income is paid by employees and the self-employed when income is equal to or greater than 42.3% of the basic amount underlying the basic allowance. The contribution cannot exceed SEK 40,100 (around 3,500 euro) since general pension contributions are not paid for income over SEK 572,900 (around 50,000 euro). The employees' contribution is offset with a tax credit. On the employer's side, contributions are calculated as a percentage of the total sum of salaries and benefits in a year. For the self-employed, the base is net business income, where the health insurance is higher, at 0.9%.
3. Gender equality as a basic principle of public policy
Gender equality represents a fundamental guiding principle in policy design and serves as a prominent characteristic of the Nordic countries. It extends beyond social policies, permeating all aspects of public policies and underpinning the foundation of the Nordic welfare states (Jørgensen, 2003). This comprehensive perspective on gender equality transcends the realms of family and employment, garnering broad consensus, and thereby mandating its application across all facets of life. Equity policies lay down overarching objectives that all governmental entities must consider when formulating and implementing their respective policies. It becomes the State's responsibility to equip ministries with the necessary tools and to ensure the integration of these objectives. For instance, Denmark exemplifies a thorough gender evaluation process applied to all new laws to ascertain whether they comply with gender equity standards. In Sweden, all ministries are obligated to present proposals addressing gender issues within their areas of responsibility. Moreover, various government bodies are established to address gender equity concerns and develop approaches for integrating gender equity into all policies (Rostgaard, 2014).
Equal opportunities, financial autonomy, destigmatizing gender roles in both private and public spheres, and empowering individuals and collectives represent key avenues towards achieving equity. Regulations concerning work-life balance, particularly in reconciling family, personal, and work responsibilities, find their roots in equality-focused measures aimed at eradicating discrimination against women, particularly in the workforce. The Nordic countries boast a longstanding tradition of promoting gender equality, positioning themselves as exemplary models in this regard (ibid.).
Equal Pay
The demand for equal pay for both men and women in the workplace has been a primary concern for women workers, particularly after World War II when they became a significant part of the labor force. However, their rights were markedly different from those of male workers, with wage disparities being a prominent issue. In response to this concern, the UN Declaration of Human Rights in 1948 (Art 23.2) established the principle of "equal pay for equal work”, further emphasized three years later in the International Labour Organization's (ILO) Convention No. 100 - the "Equal Remuneration Convention” - which advocated for equal pay for men and women engaged in work of equal value. The Nordic countries were at the forefront of such equality debate. Sweden's parliament discussed this issue in 1946, spurred by representatives of women workers in the public sector. This discussion had a significant impact and influenced the conception of the equality principle within the ILO. As a result, Nordic countries, including Norway (1959), Denmark (1960), Sweden (1962), and Finland (1963), ratified the ILO Convention No. 100, demonstrating their commitment to promoting equal pay (Milgrom et al. 2001).
Nonetheless, the Nordic countries have made noteworthy efforts to promote equal pay within their respective legal frameworks. Denmark, for instance, transposed the Equal Pay Directive into a specific law in 1976, and subsequent amendments were introduced to improve it. Finland established the "Martha" organization in 1899, an initiative by educated women aiming to advance economic and cultural conditions for Finnish families through women's cooperation. Article 6 of Finland's Constitution emphasizes equality before the law and particularly emphasizes equal wage conditions. Norway took proactive steps in addressing equal pay concerns by establishing the Equal Pay Council in 1959. In 1978, the country passed the Gender Equality Act, significantly reformed in 2001 reinforcing the principle of equal pay for both male and female workers in the country (Fransson, 2000; Hantrais, 2000).
Parental leave
The Nordic countries have been at the forefront of advancing parental leave and gender equality in the workplace, surpassing other European states in their legal systems. They have embraced international standards, such as ILO Convention No. 156, and various Recommendations and Council Directives, with the goal of fostering equal opportunities and treatment for parents in the labor force (Heitlinger, 1993; Landau, 1984).
Denmark, as early as 1978, transposed Council Directive 76/207/EEC, focusing on equal treatment for men and women in employment, vocational training, promotion, and working conditions. Subsequent amendments led to the establishment of the Act on Equality between Women and Men, creating the Gender Equality Ministry and the Equality Council for conflict resolution. The Danish law firmly prohibits gender-based discrimination, including dismissal or discriminatory treatment due to pregnancy or maternity, while providing similar protection for men on paternity leave. Both parents in Denmark are entitled to a total of one year of leave with full financial remuneration, and they can choose to split the leave to maintain contact with the workforce while caring for their children (Rostgaard et al. 2000).
Sweden has a rich history of addressing gender equality in the labor market since the 1970s, with guarantees for equal treatment enshrined in its Constitution and the Law on Equal Opportunities Act of 1979. Swedish legislation promotes gender equality as a fundamental principle, extending beyond labor standards. Their pioneering parental leave system allows both mothers and fathers to take part, with a total leave period of 480 calendar days to be taken within the child's first 18 months. One parent can transfer their entitlement to the other, encouraging a balanced approach to family and work responsibilities. Parental benefits are paid by the Social Security system, and maternity leave is guaranteed for all female workers regardless of employment duration, lasting around 38 weeks. Paternity leave is available for all fathers, and its duration is adjusted based on the joint leave taken by both parents (Pylkkänen & Smith, 2003; Wells & Sarkadi, 2012)
Also Finland has undergone significant legislative reforms on equality, with changes in 1992 addressing discriminatory practices based on sex and family responsibilities. The Equality Act between Women and Men further reinforces gender equality and work-life balance, prohibiting discriminatory conduct related to maternity, pregnancy, and other gender factors. Female employees can be temporarily absent from work for family-related reasons, and the employer must be informed promptly (Lammi-Taskula, 2008).
Norway, while not an EU member, has aligned its legal system with EU rules due to its membership in the European Economic Area. Its family policy centers on gender parity, allowing men and women to combine work and childcare. The Gender Equality Act, in effect since 1979, protects men on paternity leave. Parental leave in Norway lasts 54 weeks, and parents can receive financial support based on their contribution time (Naz, 2010).
In Iceland, the Constitution emphasizes equal rights for men and women, ensuring equal opportunities for both genders in developing their working capacities. Parental leave lasts for nine months, with each parent entitled to three months of non-transferable leave. Mothers are granted two weeks' leave before childbirth, and during the leave period, full-time employees receive 80% of their salary (Arnalds et al. 2013).
Gender equality in representative bodies
The pursuit of gender equality in representative bodies, spanning companies, trade unions, and public institutions, remains a pivotall objective within Nordic legal systems, featuring prominently in their latest reforms and social policies. Sweden's Equal Opportunities Act necessitates the formulation of equality plans through collective agreements. In Finland, notable strides were taken through the 1995 Equality Act to establish a minimum representation of women in political and representative institutions, including works councils. The recent major reform underscores the imperative of women's participation in politics and representative bodies, striving for parity with their male counterparts. Notably, Norway stands out as a trailblazer in this regard, becoming the first nation in 2003 to mandate gender balance on the boards of directors of public limited companies. Iceland's case is equally intriguing: dating back to 1914, the first women workers' organization was established, and in 1976, the first Gender Equality Act and the Gender Equality Council were founded. Women's associations actively advocated for their participation in the workforce to achieve independence. A remarkable milestone in Iceland's journey was the presidency of Vigdís Finnbogadóttir from 1980 to 1996, becoming the world's first democratically elected female head of state (Freidenvall, 2021; Raaum, 2005, Svensson, 2017).
All in all, Nordic countries' dedication to parental leave and gender equality through their comprehensive legal systems underscores their commitment to creating a balanced environment for personal, family, and working life.
4.Healthcare infrastructure
The Nordic welfare model is known for its comprehensive and egalitarian healthcare policies and laws that aim at prioritizing the well-being of citizens. These countries progressively developed robust healthcare systems that provide high-quality cures, broad accessibility to medical treatments, and emphasize the importance of preventive measures (Einhorn, 2019).
One of the cornerstones of the Nordic healthcare system is the provision of universal healthcare coverage. In fact, every citizen has the right to access healthcare services, regardless of his socio-economic status or pre-existing conditions. This implies that everyone receives all the necessary medical care without facing financial barriers. In order to provide such a broad accessibility to medical care, the Nordic countries finance their healthcare systems through high levels of taxation. According to statistics, a significant portion of tax revenues is allocated to the healthcare sector, enabling the governments to provide comprehensive healthcare services to all citizens (Einhorn, 2019). The necessary funds are collected also through the public sector, this is the case of publicly funded hospitals and clinics which are the primary providers of healthcare services. Further investments are devoted to healthcare research and innovation (clinical trials and technological advancements) in order to improve healthcare outcomes and stay at the forefront of medical advancements. To avoid disagreements on the degree of investments that should be devoted to healthcare or any other debate concerning healthcare policies, Nordic countries mostly decentralized their healthcare systems. In this way, the responsibility for healthcare provision is shared between national, regional, and local levels, allowing for more local decision-making and adaptability to regional healthcare needs (Lundgren, 2020).
Moreover, the Nordic model devotes significant importance to the provision of primary healthcare which refers to the socially accepted "essential healthcare measures", for the purpose of preventive care, early intervention, and health promotion. Primary healthcare centers are typically well-equipped and staffed by general practitioners, nurses, and other healthcare professionals (Manussen, 2009). Always with the purpose of reducing the burden of illness through health promotion and prevention, Nordic healthcare systems invest in many public health initiatives and awareness campaigns to encourage healthy lifestyles, disease prevention, and early detection of health issues. In addition, significant emphasis is placed on the role of the patient which should be empowered and involved in his own care. Nordic healthcare policies focus on patient rights, informed consent, and shared decision-making between healthcare professionals and patients. Moreover, patients’ feedback and engagement in healthcare policies and quality improvement processes are strongly encouraged. In fact, the Nordic healthcare systems stress the importance of quality measures and outcomes-based assessments (Lundgren, 2020). For this reason, regular evaluations are conducted to assess healthcare performance, patients’ satisfaction, and clinical outcomes, in order to drive continuous improvement and ensure the accountability of the healthcare sector. Overall, the Nordic welfare model's healthcare policies prioritize equitable access, preventive care, patient involvement and comprehensive social support. These valuable principles contribute to these countries’ reputation for high-quality healthcare and positive health outcomes for their citizens (Lundgren, 2020).
5. Housing and response to homelessness: the Finnish case study
In this paragraph, it is not the Nordic model in general that is considered but the Finnish radical and unique response to homelessness. A response that fulfills the right to housing, if not completely, at least much more effectively than in other countries where the State’s reaction to homelessness is far from producing a decline in the number of people living on the streets. Indeed, as of 2019, before Covid hit, Finland was the only EU country where homelessness was falling (Henley, 2019).
Before 2008, the Finnish response to homelessness was that adopted by many other states, the so-called “Staircase Model” where homeless service users have to demonstrate their capacity to move from one level of accommodation to another. Indeed, this system is structured around a model where a permanent accommodation is a reward gained through positive behavioral changes of the homeless person (Tainio and Fredriksson, 2009).
Studies outline that a great proportion of long-term homeless people have problems connected to alcohol and/or other drugs (Särkelä,1993). The Finnish “Housing First” Programme, launched in 2008 reversed the Staircase Model: by making the house unconditional, home is no longer a reward but the secure foundation to start solving one’s problems. This is essential since the minimum level of security and dignity represented by a house is the key to breaking the vicious circle and facing physical, mental, or drug problems. The programme made the number of homeless people decrease from 8000 to 3600 (Arte, 2023).
The Housing First Programme is not only about housing but also support services focused on the specific needs of individuals dealing with addictions and medical conditions. Even though leaving substance use is not a prerequisite for accommodation, residents are actively pushed to decrease or end this use. The basic principle is that residents’ basic needs must be satisfied, they should receive daily nutritious food, time to rest should be granted, and their underlying conditions should be treated. When people are treated with humanity and their fundamental needs are catered for, the use of substances and other problematic behaviors decline (Tainio and Fredriksson, 2009).
A programme such as Housing First costs, but, in the long run, it produces economic benefits and savings: according to the Y-Foundation, sponsored by the State, up to 15 mln euros per year. Indeed, when people are in emergency conditions, they tend to use more emergency services, such as emergency health services or police and justice services as they end up in jail more frequently. On the contrary, when they live in definitive accommodation, these services are much less needed (Arte, 2023).
Even though the issue of homelessness is not yet completely sorted out, the Finnish approach has shown its perks. The concept has been already considered by a few other States and it has been translated into various projects that largely differ from one another because of the specific characteristics of the place where it has been actualized. The challenge is to reproduce the positive Finnish experience in contexts that are, for many reasons, diverse from it (Atherton and McNaughton Nicholls, 2008).
6.Conclusions
The Nordic model of social security contribution exemplifies a dual system, with both workers and employers sharing the responsibility to financially contribute for broad social security coverage. These contributions are linked to specific spending categories, such as healthcare, retirement, unemployment benefits, education, housing, and other essential social services, ensuring efficient allocation for citizens' well-being. Denmark's system involves contributions to unemployment insurance and early retirement pension, while Finland implements contributions to employees' pension insurance and unemployment insurance. Iceland's system includes fixed annual fees for specific income groups, and Norway applies varied rates based on wage income. Sweden's general pension contribution follows gender equity principles.
The Nordic countries prioritize gender equality in all policies, encouraging equal opportunities, financial autonomy, and empowerment, particularly for women. Work-life balance and parental leave policies support women in the workforce. Their dedication has positioned them as pioneers in the pursuit of gender equity.
In healthcare, the Nordic model focuses on universal coverage, preventive care, and patient involvement. Publicly funded hospitals and clinics offer comprehensive services, with primary healthcare centers staffed by professionals. Patient empowerment and regular evaluations for improvement contribute to positive health outcomes.
In addressing homelessness, Finland's "Housing First" program offers unconditional housing and support services, leading to a remarkable reduction in homelessness. The program emphasizes meeting basic needs to break the cycle of homelessness and addresses underlying issues. Although it incurs costs, the long-term economic benefits and positive social outcomes make it an exemplary model for other countries.
The Nordic countries' comprehensive and humane approaches to social security, gender equity, healthcare, and housing showcase their commitment to the well-being of citizens and serve as inspirations for global policy development.
Sources:
Antti Särkelä (1993). Sosiaalityön asiakas subjektina ja ei-subjektina, Täydennyskoulutusjulkaisuja 7 [The Service User as a Subject and Non-Subject in Social Work, Continuing Education Publications (Helsinki: Lahden tutkimusja koulutuskeskus). (1-A)
Arte (2023). In Finlandia il Diritto alla Casa è Davvero per Tutti. Internazionale. https://www.internazionale.it/notizie/2023/05/25/finlandia-diritto-casa (1-A)
Einhorn E. (2019), Healthcare in the Nordics, Nordics Info, https://nordics.info/show/artikel/healthcare-in-the-nordic-region (2-B)
Hannele Tainio and Peter Fredriksson (2009). The Finnish Homelessness Strategy: From a ‘Staircase’ Model to a ‘Housing First’ Approach to Tackling Long-Term Homelessness. European Journal of Homelessness (3). (1-A)
Health Management (2010), Overview of the Healthcare Systems in the Nordic Countries, https://healthmanagement.org/c/cardio/issuearticle/overview-of-the-healthcare-systems-in-the-nordic-countries (2-B)
Iain M. Atherton and Carol C. McNaughton NichollS (2008). ‘Housing First’ as a Means of Addressing Multiple Needs and Homelessness. European Journal of Homelessness (2). (1-A)
Jon Henley (2019). 'It’s a miracle': Helsinki's radical solution to homelessness. The Guardian. https://www.theguardian.com/cities/2019/jun/03/its-a-miracle-helsinkis-radical-solution-to-homelessness (2-B)
Lundgren A. , Randall L. and Norlen G. (2020) STATE OF THE NORDIC REGION Wellbeing, health and digitalisation edition 2020, Nordic Council of Ministers, https://norden.diva-portal.org/smash/get/diva2:1482486/FULLTEXT01.pdf (2-B)
Manussen J. (2009), The Scandinavian Healthcare System, https://cdn0.scrvt.com/39b415fb07de4d9656c7b516d8e2d907/1800000000068243/cb0dfc126b65/Essay_Medical_Solutions_May_2009_Scandinavia_1800000000068243.pdf (2-C)
OECD, (2022), THE OECD TAX-BENEFIT DATABASE FOR DENMARK, https://www.oecd.org/els/soc/TaxBEN-Denmark-latest.pdf (1-B)
OECD, (2022), THE OECD TAX-BENEFIT DATABASE FOR FINLAND, https://www.oecd.org/els/soc/TaxBEN-Finland-latest.pdf (1-B)
OECD, (2022), THE OECD TAX-BENEFIT DATABASE FOR ICELAND, https://www.oecd.org/els/soc/TaxBEN-Iceland-latest.pdf (1-B)
OECD, (2022), THE OECD TAX-BENEFIT DATABASE FOR NORWAY, https://www.oecd.org/els/soc/TaxBEN-Norway-latest.pdf (1-B)
OECD, (2022), THE OECD TAX-BENEFIT DATABASE FOR SWEDEN, https://www.oecd.org/els/soc/TaxBEN-Sweden-latest.pdf (1-B)
Arnalds, Á. A., Eydal, G. B., & Gíslason, I. V. (2013). Equal rights to paid parental leave and caring fathers-the case of Iceland. Stjórnmál og stjórnsýsla, 9(2), 323-344. (1-A)
Fransson, S. (2000). Equal Pay for Equal and Comparable Work–a Question of Law or a Question of Labour Contract? (pp. 40-75). Copenhagen: Nordic Council of Ministers. (1-A)
Freidenvall, L. (2021). Equal representation without legislation: gender, power, and institutions in Sweden. Rowman & Littlefield. (1-A)
Hantrais, L. (2000). From equal pay to reconciliation of employment and family life. In Gendered policies in Europe: Reconciling employment and family life (pp. 1-26). London: Palgrave Macmillan UK. (1-A)
Heitlinger, A. (1993). International Women’s Policy Machinery. Women’s Equality, Demography and Public Policies: A Comparative Perspective, 51-77. (1-A)
Jørgensen, H.P. (2003). The Role of the Trade Unions in Social Restructuring in Scandinavia in the 1990s. (1-A)
Lammi-Taskula, J. (2008). Doing fatherhood: Understanding the gendered use of parental leave in Finland. Fathering: A Journal of Theory, Research & Practice About Men as Fathers, 6(2). (1-A)
Landau, C. E. (1984). Recent legislation and case law in the EEC on sex equality in employment. Int'l Lab. Rev., 123, 53. (1-A)
Milgrom, E. M. M., Petersen, T., & Snartland, V. (2001). Equal pay for equal work? Evidence from Sweden and a comparison with Norway and the US. The Scandinavian Journal of Economics, 559-583. (1-A)
Naz, G. (2010). Usage of parental leave by fathers in Norway. International Journal of Sociology and Social Policy, 30(5/6), 313-325. (1-A)
Pylkkänen, E., & Smith, N. (2003). Career interruptions due to parental leave: A comparative study of Denmark and Sweden. (1-A)
Raaum, N. C. (2005). Gender equality and political representation: A nordic comparison. Western European Politics, 28(4), 872-897. (1-A)
Rostgaard, T. (2014). Family policies in Scandinavia. (1-A)
Rostgaard, T., Christoffersen, M., & Weise, H. (2000). Parental leave in Denmark. (1-A)
Svensson, E. M. (2017). Gender equality in the governance of the Arctic region. Nordic Journal on Law and Society, 1(01-02), 16-64. (1-A)
Wells, M. B., & Sarkadi, A. (2012). Do father-friendly policies promote father-friendly child-rearing practices? A review of Swedish parental leave and child health centers. Journal of Child and Family Studies, 21, 25-31. (1-A)