• The Scandinavian Model and the Labour Market

  • Yann Le Lann | 25 May 09 | Posted under: Theory
  • The Scandinavian countries play a key role in the European social harmonisation process. Within the social representation at the European level, there is a sort of informal division of labour, with Denmark serving as the point of reference in terms of employment and Sweden as the model for consideration of different retirement systems. Why are European institutions so infatuated with the development of the Scandinavian model?

    Our hypothesis is that the European institutions’ appropriation of the Swedish and Danish reform experience is attributable to common agreement on the need to develop market mechanisms. Far from viewing the social state as a way of structuring relations of production antagonistic to the rules of the labour market, the aim of the social-state reforms in Scandinavia is the creation of institutions that allow the logic of the market to thrive. In this sense, we believe there is an “elective affinity” between the development of the Scandinavian model and “Social Europe”, as far as the latter is built on “common-market” principles. 
    This conclusion leads us to a re-examination of the characteristics of continental systems1 which, too often, are perceived as archaic vestiges of a pre-industrial logic (e.g. medieval corporations). In this regard, G. Esping- Andersen’s use of the term “corporatist” to describe these socialstate systems is particularly symptomatic.2 Our objective is not to engage in a defence of continental-type social-state systems, but rather to analyse how the importing of Scandinavian reforms into so-called corporatist models would threaten existing, hard-won social gains specific to this institutional area.
    To do this, we must try to show that the Scandinavian model has been developed in relation to the imperatives of the market, while some European social states try to maintain a de-commodification of labour. Consequently, we will focus on the analysis of two reforms that illustrate a return to the process of individualisation of labour relations: the reform of labour institutions in Denmark and the reform of the retirement system in Sweden. These two political experiences and their exploitation by the European Union require a reappropriation of the history of the social state as a political product antagonistic to the market.

    The Political Exploitation of the Scandinavian Model

    Enthusiasm for the Scandinavian experience has become – in France, at least – a commonplace of the public debate. However, the development of this interest in the Nordic states is built on a double denial: of the historical logic that led to the emergence of these states and of the way in which these models have evolved.

    The Scandinavian Model: An Expanded Social Compromise

    The first problem for a comparative approach aimed at promoting the Scandinavian model is that it reduces Scandinavian social policies to an accord on the world of labour. Continental analysis focuses on the similarities of the Scandinavian and continental labour markets without taking into account the fact that the integrationist dimension of social compromises is constructed in relation to citizenship, which permits the establishing of rights at a level prior to that of the world of work.
    The blindness of continental or Community analyses in the face of key elements of the Nordic compromises makes it possible to present Nordic policies as importable to other member-states. Disregarding social contexts, the Open Method of Communication (OMC) foregrounds “good practices” to adopt, chief among them being the social policy of the revised Scandinavian model. However, the Scandinavian social state can be used as a model only if the institutional particularities of its construction are denied. In the framework of European “benchmarking,” social protection policies are transformed into a strategic choice completely removed from any historical context. Good practices should be applicable everywhere. Fascination with the Nordic experience in the context of the European process supplants any analysis of the link between protection and the injunction to turn to the labour market inherent in the revised Scandinavian model.
    In contrast to this reductionism, Nicole Kirschen in “Another View of the Danish Model” invites us to take into account “security in its broader dimensions”.3 To use Beveridge’s phrase, the Scandinavian systems aim at guaranteeing their citizens social benefits from “cradle to grave.” These rights (and the responsibilities that come with them) are directly attached to individuals, labour- arket relations being, of course, reintegrated into a relationship to specific social rights. The Scandinavian system of social protection exists within the framework of a requirement for “individual responsibility” that implies strong participation in the labour market, compared with other countries.

    The French Version of “Flexisecurity”: Between Oblivion and Implementation

    Attempts to promote Nordic systems take many forms in the French public arena. They can be found in the reports of experts as well as in politicians’ declarations. All of these intellectual products share, for example, the same refusal to acknowledge the social context that has allowed the “Danish miracle” to emerge. The attraction that the evolution of the Nordic social states holds for the French elite can be explained by the difficulty of having to re-appropriate a social state that they themselves have helped to dismantle and by the existence of a popular majority that still rejects a minimalist state. These two constraints allow the Nordic experience to be presented as a renewal of the social policies that modernised post-World-War-II social policies without destroying them. At the same time, the political presentation omits the specific connection in the Nordic model between the labour market and the social state.
    As an example, to illustrate our point, let us look at the movement to stir up support for Danish employment policies in France. The “golden triangle” of Danish-style flexisecurity often loses an angle when it is imported to France. Flexisecurity consists of three parts: a free (“liberal” in the European sense) labour market, an unemployment compensation system, and, above all, and this is the key point, an active employment policy. But here’s how the point of conflict is partially attenuated whenever continental politicians call for the application of imported Nordic prescriptions: flexisecurity is reduced to a trade-off between better unemployment compensation and greater flexibility. And yet there is an enormous difference between continental and Scandinavian traditional employment structures and rates of employment, which is an obstacle to any direct incorporation of Nordic systems.
    During the French presidential campaign, the Socialist candidate tried to build a movement in favour of “flexisecurity”, without integrating it into a system to activate the unemployed or the retired, which is inherent in the Nordic experience she used as a reference. Ultimately, whether we like it or not, we have inherited a specific legacy. The specificity of continental models that attempt a disconnect between access to resources and participation in the labour market implies a rejection of activating people to enter the labour market. The antiseptic version of flexisecurity is presented as a “miracle-working concept” without the political elite needing to ask how it is tied to the structure of employment. The movement toward a tripartite flexisecurity presages a liberalisation of the the relations of employment that part of the political establishment does not want openly to espouse.
    This avoidance is not part of the Cahuc Kramarz report.4 For its authors, flexisecurity is only viable in the framework of a profound overhaul of public employment services. The objective of these services from now on should be to encourage the fluidity of employment, which implies the establishment of a public employment service that reinforces incentives/ injunctions to return to the job market. But, in the context of this report, flexibility is achieved through reduced opportunities for legal recourse by workers who face being laid off. Far from being a dead letter, the report serves as the basis for a series of reflections on the part of governments and societal protagonists. It was notably important in establishing the French First Employment Contract (CPE)5 as well as the agreement on modernisation of the labour market. These two radical modifications of the world of work in France provide for reduced opportunities for workers to seek recourse in case of cancelled work contracts, opportunities which had gone far beyond anything that could have been implemented in Nordic countries.
    Finally, between the use and the denial of Scandinavian reality, the political instrumentalisation of the Nordic experience at present serves more to deregulate the world of work in France than to de-commodify it. Still, we cannot remain fixed on the idea that the Scandinavian model is merely distorted by politics or experts. Rather, the importance of the Scandinavian model in the debate over the public policies of European member-states obliges us to interrogate the concept of work peculiar to the renewed Nordic model, and the reasons for its connection to the Europe of the “common market.”

    The Renewed Scandinavian Model and the Market

    The new significance of the reformed Scandinavian model derives its alteration of the connections between social protection and the labour market. The Nordic experience creates an institutional context that permits the development of the liberal logic promoted by the European Union.

    Selected Affinities with the European Process

    In his analysis of the Green Paper,6 J. V. Koster has shown that flexisecurity and the Scandinavian experience were in part adopted at the European level because they correspond to the liberal bias which is at the origin of European Union policies.7 After dismissing the Keynesian paradigm, the European Community developed a market orientation characterised by:
    1 a redefined public-private frontier, with a weaker role for the state and the revival of private enterprises as market protagonists;
    2 a new articulation of the social and the economic, whose crucial new norm is the limiting of social expenditures.

    It is striking to see the extent to which these concepts have been incorporated into the common principles of flexisecurity. In fact, the European Union considers, in the first place, that member-states should give highest priority to competitiveness as well as the ability of companies to adapt to global market conditions. Community doctrine, furthermore, urges member-states to consult the social partners and other interested parties (e.g. temporary employment agencies) as protagonists of the labour market, in order to take their requirements into consideration as much as possible.
    As far as the “re-articulation of the social and the economic” is concerned, it is clear that even if European reports on employment recognise that adoption of flexisecurity could generate additional expenses, “flexsecurity policies must be fully compatible with healthy and financially viable budgetary policies.”8 Public spending, therefore, is limited, reflecting the philosophy behind the Pact for Stability and Growth (PSC) and making the control of public spending the measure of efficient economic policy. What is more, financing and payment of unemployment benefits, for example, should, according to the current advocacy of flexisecurity, take into account the totality of their social effects, notably their effect in creating incentives to get jobs.
    The connection between flexisecurity and European policies rests on a common agreement that market forces are to have priority. The “renewal” of the Scandinavian model around an imperative to enter the labour market is largely reducible to the Community idea of “a Common Market”.  In fact, the main objective of the Scandinavian model, as coopted by the European Union, is ultimately to create an anthropological situation compatible with the market.

    The Marketable Individual and the Scandinavian Model

    The cleverness of the renewed Scandinavian model resides in its understanding that the social state is indispensable to the market (especially to the job market). Starting around the time of the liberal turn, the Nordic social state established the goal of creating a functioning market, in contrast to the Anglo-Saxon notion of a minimal social state that is supposed only to limit the social consequences of the capitalist logic.
    In order that the atomised nature of market relations does not result in poor participation in the labour market, the state must intervene to manage part of the process. The failure of the Anglo-Saxon model may be explained by the inadequacy of public education systems and child care. The fact that the Anglo-Saxon model considers the labour market as having been established before the intervention of the social state leads to a definitive “exit” from the labour market of, and radical kinds of exclusion for, certain populations deemed of no use to capitalism. In the renovated Scandinavian model, the state keeps control of the distribution of a share of resources, in order to maintain the individual sovereignty of citizens, which needs constantly to be re- stablished. The level of spending for the implementation of active employment policies in Denmark is an example, but it is through Swedish pension reform that the renewal of the connection between the state and the market is most obvious.
    Swedish retirement-fund reform is the type of “systemic reform” that obviates the need to modify pension parameters, which would be likely to stimulate a political debate that liberal governments prefer to avoid. To structurally overhaul the pension system, the Swedish reform freezes the contribution rate at 16% of gross salary (with a ceiling of 1.5 times the average salary). It definitively integrates increased life expectancy into pension calculations: During his/her working life, the worker accumulates contributions in a so-called “notional” account. At the time of retirement, at a freely chosen age, the accumulated contributions are divided by the life expectancy of the worker’s population group in order to determine the amount of the pension. Clearly, increased life expectancy increases the size of the denominator, so workers are motivated to delay liquidating their pensions in order to preserve the amount they will be paid: the connection between life expectancy and the length of working life is thus systematically assured, and makes it unnecessary to change a single parameter.
    The rupture that this reform represents does not  seem to be clearly recognised, so far, in the political and scholarly arena. And yet it constitutes a fundamental shift in the relationship between the state and the individual that goes against the very idea of politics. The state is no longer the sovereign capable of legitimately distributing economic resources after political deliberations. It is the social actor that establishes the individual as a “responsible” entity – and without abolishing their individual sovereignty – in the face of the one institution capable of putting individuals into a collective group: the labour market.
    The Swedish pension system’s activation of older people represents an attempt at creating an individual whose resources are no longer determined by his/her participation in a political community but solely by the degree of integration in the labour market. The  current reforms turn principles of sovereignty upside down in favour of individual logics compatible with the expansion of market logic. Creator and victim of this development, the social state is involved in a re-conversion that aims at reducing its role to the permanent establishment or re-establishment of an individual whose access to resources is subordinated to his/her participation in the labour market. The strict proportionality between the length of time of the pay-in and the amount of the pay- ut leaves the salaried person with no choice under the Swedish retirement system. Working longer (i.e. longer participation in the  labour market) is the only way to protect himself from a reduction in the rate of compensation. By making the individual responsible under this system, the social state abandons its role as the institution able to deliberate and act in order to provide a financial response to collective needs. 
    This trend does not mean that market relations rule all social relations. Rather, it means that the “public sector” is organised to provide a series of goods and services such as retirement insurance or certain services to the individual. However, in the context of the reformed social state, the distribution of public resources is systematically oriented toward improving participation in the labour market. By integrating two usually contradictory propositions into political thinking – the market is socially constituted, and the market must be hegemonic — the Scandinavian model achieves a synthesis of liberalism and pragmatism that is particularly difficult to deconstruct for those who would like to seek the emancipation of labour from commodity logic.

    The Social-State Model and Class Logic

    The importation of the logic of Scandinavian systems to continental countries does not represent “a modernisation” of pre- apitalist logic. It is, rather, aimed at attacking the emancipatory spaces that workers have achieved against the commodification of labour. The Scandinavian reforms affirm the primacy of an individual whose access to resources is subordinate to his/her participation in the labour market, while, by contrast, certain continental experiments have tried to achieve a disconnect between income and job categories.

    The Social State on the Continent: Corporatist or Wage-Based

    The current talk of the archaism of continental-type systems of social protection is an obstacle to the evolution of the struggle for labour’s emancipation. If we consider continental social-protection systems to be manifestations of corporatist solidarity, we cannot clearly discern the decommodification effected by these social-security systems. Rather than pitting one social-state tradition against another, it is a question of perceiving the extent and limitations of social gains in the context of the class struggles rooted in each country. Social Europe, as a concept that breaks with the Common Market, cannot be achieved without a mutual understanding of different experiences of social struggle.
    The wish to import the Swedish retirement-reform model to France is part of an ongoing liberal reform of the French pension system. Historically, the system has been based on a prolongation of remuneration for so-called “inactive” periods. “Salaire à la qualification”, and its continuation throughout retirement, has been set up, in part, against contractual relations that subordinate income access to the actual job position one occupies. In France, the wish to dilute shared-contribution pensions, as prolongations of salary, revolves around three complementary axes: 

    indexing of pensions on prices instead of wages;
    a ceiling on the rising rate of pension contributions;
    extension of the contribution period.

    The Bozzo/Piketty proposal, which aims at installing a Swedish-type system in France, is, finally, nothing more than the culmination of all the attacks formulated by Socialist and rightist governments alike against the idea of pensions as the prolongation of wages.9 For Bozzo and Piketty, pension contributions are the same as deferred wages – in other words, savings guaranteed by the state. By contrast, the French socialprotection is based on socialised wages. The principle of actuarial neutrality inherent in the Swedish reform is a direct attack on the collective dimension of a wage system organised around making resources collectively available.
    The continental social state, and especially the French social state, is the result of a class struggle that does not reflect a struggle between pre-capitalist (family, corporation) and capitalist forms of production. Rather, it is the result of an antagonism built in to capitalism which structures a conflict between the bourgeoisie and wage-earners. Any freedom won by wage-earners in continental systems is not a return to the corporation, but rather an attempt to access resources that are antagonistic to the capitalist system. The conflict between the will of capitalism to reduce labour to a commodity and the attempt of wage-earners to liberate themselves from this commodification explains the contradictory nature of the wage form. It is at once individual and social, that is, defined respectively by a contract and by job category (qualification). In fact, the form the wage takes is the central issue of a struggle that allows us to identify the capitalist or anti-capitalist nature of the reforms that affect it.
    By eliminating the collective dimension of the wage-earning class, the importation of the Scandinavian model of social protection wipes out everything that from now on would conflict with market logic. The denunciation of continental systems as archaic is not the result of exasperation with pre-capitalist forms that the hegemonic market has destroyed in any case. Rather, it comes from a desire to restrict anti-capitalist spaces by relegating to the past anything that has been built out of a desire to surpass the logic of the commodification of labour.

    Class-based Society and Social Models

    Extension of the “renovated” Scandinavian model means that the elements that it structures will have to be imported as well, specifically a relationship to labour that is primarily contractual. Developing a theory of the social state means understanding not only how class struggle has led to the creation of such a state, but also how such a state has established class relationships by legitimising or de-legitimising the spaces that favour the emergence of the working class as a class antagonistic to capitalism.
    The disconnect between access to financial resources and the quantification of work attempted by certain continental experiments cannot continue in the face of policies designed to activate workers to turn to the labour market. Higher rates of employment, which are the goal of European labour policy, are not compatible with the de-commodification of labour attempted by certain tendencies of the continental social state. By making the resources of individuals dependent on their participation in the labour market, the renovated Scandinavian model reinstates market relations in the world of work. Analysis of the development of the social state should not be done with the tools created by Community free-market liberalism: unemployment rates, compulsory contribution percentages, etc. We should be undertaking a critique of current social policies in order to understand the social state in relation to the emergence of a working class seeking, through its struggle against the commodification of labour, to liberate itself from capitalism.
    If we wish to bring forth a theory of the social state that is based on the contradiction of social classes, we should lean on those extant experiences which illustrate a partial emancipation from the logic of capital. The counter-reform directed against workers’ gains shows that pro-freemarket organisations have identified the wage arena as a space to take charge of again. In the face of their offensives, it is necessary closely to examine the reconstruction of the world of work around the figure of the worker as “self- entrepreneur”. By denying the collective dimension of the wage-earning class, liberal reformers are organising the occlusion of the class structure of society. Any critical analysis of the hegemony of the renewed Swedish model should be based not on the idea that national traditions should be protected, but rather on using and bringing forward the particular indigenous continental approach to the de-commodification of labour, one which tries to unify wage-earners as a class.
    The debate over social models  plays a special role in the classist structure of society. The desire to agree on a necessary development of commodified forms of labour is an attack on the emancipatory spaces won through wage struggles. The growing reference to Swedish and Danish models is tied to the newly discovered complementarity between the social state and the market. The aim is to guarantee distribution of the resources of a social state that establishes market domination by denying the class structure of society in order to lead the world of labour toward an individual logic of wage compensation.
    Constructing a labour market has one pre-requisite: transformation of the worker into an entrepreneur, in the sense that each worker does nothing other than valorise a capital, his/her “human capital.” To achieve this objective, it is indispensable to get rid of a politically determined salary, along with any opposition to the commodification of labour. We, therefore, must identify the relationship between the salary form and the emergence of a social state antagonistic to market forces as one of the most fundamental issues in opposing the logic of capital. 

    1. “Continental,” “Nordic” and “Scandinavian” are, of course, reductive terms, in the sense that they reduce social differences to spatial ones. We use these terms for want of better ones while we wait for typologies to be established that do not assume systems that protect workers’ rights to be archaic.
    2. G. Esping-Andersen, The Three Worlds of Welfare Capitalism. 1989.
    3. Nicole Kirschen, “Pour une autre approche du modèle danois”, Travail genre et société, April, 2008.
    4. Cahuc P., Kramarz F. De la précarité à la mobilité: vers une sécurité sociale professionelle, Report to the Minister of the Economy and the Minister of Labour, Paris, La Documentation Française, November, 2004.
    5. Contrat Première Embauche (CPE). Proposal for a work contract for youth under the age of 25 with a trial period of up to two years. Dropped in 2006 after massive social opposition. Agreement signed January 11, 2008, providing, among other things, for cancellation of the contract by “mutual agreement.” 
    6. Green Paper Modernising Labour Law to Meet the Challenges of the 21st Century . November, 2007.
    7. J.V. Koster. Green Paper Modernising Labour Law to Meet the Challenges of the 21st Century . Building a context around flexisecurity. 2007.
    8. Green Paper Modernising Labour Law to Meet the Challenges of the 21st Century . November, 2007.
    9. A. Bozzo and T. Piketty, Retraites: pour un système de comptes individuals de cotisations (Pensions: For a System of Individual Retirement Savings Accounts). 2008.

    Jan Lelann
    is a doctoral student at the University of Nanterre.

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